Controlling Correlational Bias via Confirmatory Factor Analysis of MTMM Data

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Abstract
Confirmatory factor analysis of multitrait-multimethod (MTMM) data has proven to be a useful tool for assessing convergent and discriminant validity. However, researchers have not made full use of the results of MTMM analyses in examining the relationship between MTMM factors and variables outside the MTMM. Often, researchers simply average the various measures of each trait. Alternatively, they estimate LISREL MTMM models, but estimate only relationships between MTMM traits and the outside variables. In the present article, we show that these two approaches to analyzing data outside the MTMM produce equally highly biased parameter estimates when the actual correlations between MTMM method factors and the outside variables are substantial. An algebraic explanation and a simulated data illustration are given for the bias due to misspecification. Also, the problem is illustrated with a brief empirical example. Implications for applied research are discussed.