Linking structural equation modeling to Bayesian networks: Decision support for customer retention in virtual communities

Sumeet Gupta, Hee-Woong Kim

Research output: Contribution to journalArticle

36 Citations (Scopus)

Abstract

Bayesian networks are limited in differentiating between causal and spurious relationships among decision factors. Decision making without differentiating the two relationships cannot be effective. To overcome this limitation of Bayesian networks, this study proposes linking Bayesian networks to structural equation modeling (SEM), which has an advantage in testing causal relationships between factors. The capability of SEM in empirical validation combined with the prediction and diagnosis capabilities of Bayesian modeling facilitates effective decision making from identification of causal relationships to decision support. This study applies the proposed integrated approach to decision support for customer retention in a virtual community. The application results provide insights for practitioners on how to retain their customers. This research benefits Bayesian researchers by providing the application of modeling causal relationships at latent variable level, and helps SEM researchers in extending their models for managerial prediction and diagnosis.

Original languageEnglish
Pages (from-to)818-833
Number of pages16
JournalEuropean Journal of Operational Research
Volume190
Issue number3
DOIs
Publication statusPublished - 2008 Nov 1

Fingerprint

Virtual Community
Structural Equation Modeling
virtual community
Bayesian networks
Decision Support
Bayesian Networks
Linking
customer
Customers
Decision making
decision making
Decision Making
Bayesian Modeling
Prediction
Latent Variables
Testing
Relationships
Customer retention
Virtual community
Structural equation modeling

All Science Journal Classification (ASJC) codes

  • Information Systems and Management
  • Management Science and Operations Research
  • Statistics, Probability and Uncertainty
  • Applied Mathematics
  • Modelling and Simulation
  • Transportation

Cite this

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