Index Construction with Formative Indicators: An Alternative to Scale Development

Abstract

Although the methodological literature is replete with advice regarding the development and validation of multi-item scales based on reflective measures, the issue of index construction using formative measures has received little attention. The authors seek to address this gap by (1) examining the nature of formative indicators, (2) discussing ways in which the quality of formative measures can be assessed, and (3) illustrating the proposed procedures with empirical data. The aim is to enhance researchers' understanding of formative measures and assist them in their index construction efforts.