The Impact of Non-Normality and Estimation Methods in SEM on Satisfaction Research in Marketing

Tor W. Andreassen, Bengt Lorentzen and Ulf H. Olsson

Norwegian School of Management

Abstract

Structural Equation Modeling (SEM) assumes that observed variables are multivariate normally distributed. Violation of this assumption may distort the standard error of the path coefficient between latent variables and the test statistics. This paper discusses consequences of violating the normal distribution assumption imbedded in SEM. Based on real data from a large sample customer satisfaction survey we follow the procedures as suggested in leading textbooks. We document consequences of this practice and discuss its impact on decision making in marketing. Finally, we offer a guide to researchers confronted with this problem.

Keywords: Structural equation modelling (SEM), non-normality, estimators