“…Hair et al (2012b), Jakobowicz & Derquenne (2007), and others espouse that this situation is a problem because OLS is used to regress the indicator-binary, in this case-on the (continuous) estimate of the latent variable and OLS is not appropriate for a binary dependent variable. Statisticians such as Tenenhaus, Vinzi, Russolillo, and others (see Russolillo, 2012;Tenenhaus & Hanafi, 2010;Vinzi, Russolillo, & Trinchera, 2010a;Vinzie et al, 2010b) hold an opposing view. In their view, adopting mode A is a statistical decision to use a covariance-based criterion that sets the outer weights to the covariance between the indicator and the estimated latent variable (i.e., the regression coefficient when all scores are standardized) and is not in any way meant as a model of the data (and similarly for mode B, which is a statistical decision to use a correlation-based criterion).…”