Our discussion is based on the illustrative model depicted in Figure 1, which builds on an actual empirical study in the field of e-collaboration (Kock, 2005; 2008; Kock & Lynn, 2012). This illustrative model incorporates the belief that e-collaboration technology use () by teams of workers tasked with the development of new products in organizations (e.g., a new consulting service, a new car part) increases both team efficiency () and team performance (). Team efficiency () is related to the speed and cost at which teams operate. Team performance () is related to how well the new products developed by teams perform in terms of sales and profits.
In this illustrative model is the path coefficient for the link going from factor to factor ; is the loading for the jth indicator of factor ; is the indicator error for the jth indicator of factor ; is the measurement error associated with ; and and is the structural error associated with , which exists only for endogenous factors. An endogenous factor has at least one other factor pointing at it in the model.