Using the SmartPLS Software

Joe F. Hair, Jr. Founder & Senior Scholar

Getting Started with the SmartPLS Software

The next slide shows the graphical interface for the SmartPLS software. In the following slides we describe how to draw and execute a PLS-SEM model using the SmartPLS software program. Before you draw your model, you need to have data to use in running your model. The data we will use to run our example PLS model can be downloaded at the following URL: http://www.smartpls.de/cr/. When you get to the website scroll down to the Corporate Reputation Example where it says . . . Click on the following links to download files. SmartPLS can use both data file formats (i.e., .csv or .txt). Follow the onscreen instructions to save one of these two files on your hard drive. Click on Save Target As . . . to save the data to a folder on your hard drive, and then Close. Now go to the folder where you previously downloaded and saved the SmartPLS software on your computer. Click on the file that runs SmartPLS ( ) and then on the Run tab to start the software. You are now ready to create a new SmartPLS SEM project.

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To start using the software, left click on the File pulldown menu and click on New. Next click on the Create New Project option.

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Type a project name in this window. Then click Next.

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A project name for our example in this workshop has been inserted. You can use a different name if you wish. Now click Next.

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Click here to establish a link to your data. Click Finish Tab to continue.

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Double click here (on your project name) to get this screen with the above tool bar.

Notice that your indicator variables are now visible in this window.

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.
Click on the selection mode icon to select, resize or move constructs.

Click on the connection mode icon to connect constructs. Click on the insertion mode icon to draw constructs.

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SmartPLS Software Options

Find your new project in the Projects window, expand the list of projects to get project details (see below), click on the .splsm file for your project

Notice that new . constructs now appear in this window.

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Reputation model drawn with insertion mode and connected with connection mode.

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Next step is to rename constructs. To do so, make sure you are in selection mode, place cursor over construct, right click, and you will get window on next slide.
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Left click on Rename Object to get window on next slide.

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Type new name in window and click OK.

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New name has been typed in window. Now click OK.

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Now you must attach the indicator variables. To do so, drag them from the window on the left (left click, hold down, and move). Drop them on their constructs (release left button).

The four constructs are now renamed.

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Save Icon The three indicators are now attached to the COMP construct. You can now right click on the construct to get the window below, and then left click to reposition the indicators at the top of the construct.

Make sure to save the model by going to File Save or click on the Save icon.
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Structural Model with Names, Data and Paths

that indicators attached to All rights reserved . Cannot be reproduced Note or distributed without express written permission from Prentice-Hall, McGraw-Hill, SmartPLS, and session presenters. constructs are now yellow.

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Other SmartPLS Options . . .

Start calculation

Rename Construct

Hide used indicators Show measurement model Change reflective to formative

Questions for Indicator Variables Simple Model

Competence (COMP) comp_1 comp_2 comp_3 [company] is a top competitor in its market. As far as I know, [company] is recognized world-wide. I believe that [company] performs at a premium level. Likeability (LIKE) like_1 like_2 like_3 [company] is a company that I can better identify with than other companies. [company] is a company that I would regret more not having if it no longer existed than I would other companies. I regard [company] as a likeable company. Customer Loyalty (CUSL) cusl_1 cusl_2 cusl_3 I would recommend [company] to friends and relatives. If I had to choose again, I would chose [company] as my mobile phone services provider. I will remain a customer of [company] in the future. Satisfaction (CUSA) If you consider your experiences with [company] how satisfied are you with All rights reserved . Cannot be reproduced or distributed without express written permission from [company]? 19 cusa
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Click here, select PLS Algorithm to calculate model results.

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This dialog box appears when you select the PLS Algorithm.

Missing values have not been configured so you will have to Cancel this option and go to the datafile to set up.

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Default Settings to run PLS Algorithm Click Finish to run

Trade-off in missing value treatment: Case wise replacement can greatly reduce the number of cases but sample mean imputation reduces variance in your data. Preferred approach to deal with missing data is combination of sub-group mean and nearest neighbor, or use EM imputation using SPSS.

Always use path weighting scheme

Double click on the datafile to get this screen.

After double clicking on the datafile you get this screen. Check the box on the left to indicate missing data in your datafile. Then change the Missing Value in the window to -99, as shown below. Finally, check the X beside the Full Data tab at top. That will close and save your changes

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After missing values have been

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When you select the PLS Algorithm option this revised dialog box appears. It now shows the newly configured missing value option of -99.0.

All other options are correct so check the Finish tab to run the model.

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PLS Results for Simple Example

Outer loadings, path coefficients, and R2 shown on model

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PLS Results for Simple Example

The structural model results enable us to determine, for example, that CUSA has the strongest effect on CUSL (0.504), followed by LIKE (0.342). COMP (0.009) has little effect on the dependent variable CUSL. The three exogenous constructs together explain 56.2% of the variance of the endogenous construct CUSL (R = 0.562), as indicated by the value in the construct circle. COMP and LIKE also jointly explain 29.5% of the variance of CUSA.

Click here to obtain reports that summarize model results.

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Checking the algorithm stop criterion

This is an example of the reports that are available from SmartPLS. The type of information provided is shown in the menu on the left. For example, the Stop Criterion Changes is highlighted. Above the report shows the software took 4 iterations to obtain a solution.
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To determine the statistical significance of the path coefficients, we must run the bootstrapping option. To do so click on the .splsm file tab to return to the SEM model with the tool bar. All rights reserved . Cannot be reproduced or distributed without express written permission from
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The above table of values is the default report for the Path Coefficients. To make this table easier to understand left click on the Toggle Zero Values button at the top left. The results are shown below.

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Summary of PLS-SEM Findings

1. The direct path from COMP to CUSA is 0.162 and

the direct path from COMP to CUSL is 0.009.

2. The direct path from LIKE to CUSA is 0.424 and the direct path from LIKE to CUSL is 0.342.

3. The direct path from CUSA to CUSL is 0.504.

4. Overall, the model predicts 29.5% of the variance in CUSA, and 56.2% of the variance in CUSL.
To determine significance levels, you must run Bootstrapping option. Look for under the calculate option.

Click here, select Bootstrapping option.

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Significance of PLS-SEM Parameters = Bootstrapping

PLS-SEM does not assume the data is normally distributed, which implies that parametric significance tests used in regression analyses cannot be applied to test whether coefficients such as outer weights and loadings are significant. Instead, PLS-SEM relies on a nonparametric bootstrap procedure to test coefficients for their significance. In bootstrapping, a large number of subsamples (i.e., bootstrap samples) is drawn from the original sample with replacement. Replacement means that each time an observation is drawn at random from the sampling population, it is returned to the sampling population before the next observation is drawn (i.e., the population from which the observations are drawn always contains all the same elements). Therefore, an observation for a certain subsample can be selected more than once, or may not be selected at all for another subsample. The number of bootstrap samples should be high but must be at least equal to the number of valid observations in the dataset. The recommended number of bootstrap samples is 5,000.

When you get this dialog box make sure you have chosen No Sign Changes, the number of cases is your sample size (344), and the number of samples is 5,000. Then click the Finish tab to obtain the results.

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SmartPLS Bootstrapping
If you have missing data do not use mean replacement because bootstrapping draws samples with replacement. Use Casewise Replacement.

Use individual (sign) changes option Make sure the number of cases are equal to the number of valid observations in your dataset. Set cases = samples size (or higher)
Caution!!! It is a common mistake to set samples equal to the overall number of observations.

The t values can be compared with the critical values from the standard normal distribution to decide whether the coefficients are significantly different from zero. For example, the critical values for significance levels of 1% (a = 0.01) and 5% (a = 0.05) probability of error are 2.57 and 1.96, respectively (two-tailed test) . All rights reserved . Cannot be reproduced or distributed without express written permission from 35 One-tailed test for 5% (a = 0.05) level is .98. Prentice-Hall, McGraw-Hill, SmartPLS, and session presenters.

By clicking on Report Default Report you get a detailed overview of the bootstrapping results. The original estimate of the outer weights is shown in the second column = Original Sample (0). If this number is divided by the Standard Deviation (STDEV) you get the t value. For example, divide 0.5361 (0) by 0.0445 (STDEV) and you get 12.047 = the t statistic shown below.

The t statistics in the table on the right indicate that all measurement model loadings are statistically significant (> 0.05).
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The t statistics in the table below indicate that four of the five structural path coefficients are statistically significant (> 0.05). The only non-significant path is COMP CUSL (t value = 0.1705).

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Brief Instructions: Using SmartPLS

1. Load SmartPLS software click on
2. Create your new project assign project name and data. 3. Double-click to get Menu Bar.

4. Draw model see options below:

Insertion mode = Selection mode = Connection mode =

5. Save model.

6. Click on calculate icon

and select PLS algorithm on

the Pull-Down menu. Now accept the default options (or insert your own) by clicking Finish.

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