A review of recent approaches for capturing heterogeneity in partial least squares path modelling

Purpose – The purpose of this paper is to critically review the latest approaches for capturing and explaining heterogeneity in partial least squares (PLS) path modelling and to classify these into a methodological taxonomy. Furthermore, several areas for future research effort are introduced in order to stimulate ongoing development in this important research field. Design/methodology/approach – Different approaches to treat heterogeneity in PLS path models are introduced, critically evaluated and classified into a methodological taxonomy. Future research directions are derived from a comparison of benefits and limitations of the procedures. Findings – The review reveals that finite mixture‐PLS can be regarded as the most comprehensive and commonly used procedure for capturing heterogeneity within a PLS path modelling framework. However, further research is necessary to explore the capabilities and limitations of the approach. Research limitations/implications – Directions for additional research, common to most latent class detection procedures include the verification and comparison of available approaches, the handling of large data sets, the allowance of varying structures of path models, the profiling of segments and the problem of model selection. Originality/value – Whereas modelling heterogeneity in covariance structure analysis has been studied for several years, research interest has only recently been devoted to the question of clustering in PLS path modelling. This is the first contribution which critically consolidates available approaches, discloses problematic aspects and addresses significant areas for future research.