Item Parceling Strategies in SEM: Investigating the Subtle Effects of Unmodeled Secondary Constructs

For theoretical and empirical reasons, researchers may combine item-level responses into aggregate item parcels to use as indicators in a structural equation modeling context. Yet the effects of specific parceling strategies on parameter estimation and model fit are not known. In Study 1, different parceling combinations meaningfully affected parameter estimates and fit indicators in two organizational data sets. Based on the concept of external consistency, the authors proposed that combining items that shared an unmodeled secondary influence into the same parcel (shared uniqueness strategy) would enhance the accuracy of parameter estimates. This proposal was supported in Study 2, using simulated data generated from a known model. When the unmodeled secondary influence was related to indicators of only one latent construct, the shared uniqueness parceling strategy resulted in more accurate parameter estimates. When indicators of both target latent constructs were contaminated, bias was present but appropriately signaled by worsened fit statistics.