Exploring the effect of e-WOM participation on e-Loyalty in e-commerce

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Abstract

The idea behind the concept of Electronic Word of Mouth (e-WOM) is very important to the visibility of individuals and businesses seeking exposure on the Internet. e-WOM is defined as “any positive or negative statement made by potential, actual, or former customers about a product or company, which is made available to a multitude of people and institutions via the Internet” [39]. The purpose of this study is to understand how electronic word of mouth influences the online shopping patterns of customers. This study draws on motivation theory and identification theory to understand how e-WOM influences online shopping behavior. The results from the empirical examination are very encouraging. The proposed research model is supported as well as the accompanying hypotheses. The findings illustrate that the intrinsic motives (e.g., desire to help other customers) are more important than the extrinsic ones (e.g., monetary rewards) as the antecedents of e-WOM participation. It was also found that personal site identification has a greater impact on e-loyalty when compared to social site identification.

Highlights

► The impact of e-WOM participation on e-loyalty in terms of the participant. ► e-WOM participation behavior as a enhancer of social identity among customers. ► The mediating role of site identification. ► e-WOM systems development for improvement of communication among customers.

Introduction

Virtual community participation and User Generated Content (UGC) are the prevailing social activities in virtual spaces. Along with such trends, word-of mouth (WOM) transactions have also increased dramatically. WOM information on the Internet (henceforth e-WOM) has become an important information source for shopping. e-WOM is defined as “any positive or negative statement made by potential, actual, or former customers about a product or company, which is made available to a multitude of people and institutions via the Internet” [39]. e-WOM is known to have a strong impact on purchase decisions and is a key factor in the Internet shopping market [61].

Consumers now use blogs, search engines, internet communities, social media, consumer review systems and online instant messenger services to gather and disseminate product information. These tools are the basis for e-WOM networks and are used for information searching, decision-making, and forming brand images [13], [38]. The emergence of these e-WOM tools has changed the way customers interact with other customers as well as how they engage with businesses. Today's online shopper compliments and complains in a more aggressive and bolder way in this brave new world of faceless e-commerce [37]. Traditional word-of-mouth interactions are not as far reaching as e-WOM because they are restricted by time, space and relationships. This is in contrast to the e-WOM environment where there are very few restrictions in terms of time and place of interaction due to the fact that the Internet is always available. In essence, range and speed of electronic word-of-mouth is wider and faster than traditional word-of-mouth communication [17].

Most e-commerce sites attempt to encourage their customers to produce more e-WOM because consumer-produced information provides potential customers with a sense of trust [35]. e-WOM is considered a viable marketing strategy to attract new customers and to retain existing customers. Researchers have recognized the growing importance of e-WOM in e-business. For example, there have been several studies on e-WOM participation involving the motives of customers (e.g., [14], [39]), the effects of negative e-WOM (e.g., [13]), and the relationship between revenue and e-WOM (e.g., [15], [35]). Most of these studies deal with the role of e-WOM as an information source for customers, or focus on how to motivate customers to participate in the process. However, very little is known about the relationship between e-WOM participation and the participant's next purchase. The purpose of this study is to investigate the role of e-WOM participation as it relates to loyalty to an online shopping site.

In order to investigate the influence of e-WOM participation on e-loyalty, we developed an integrated framework that consists of theories of motivation, participation and identification. Cermak et al. and Wind and Rangaswamy found that customer participation in service specification or mass customization leads to an increase in customer satisfaction, loyalty, and repurchase [12], [66]. Creating e-WOM by writing comments or posting a review is a type of extra-role behavior carried out by the buyer. Our study uses motivation and identification theory to investigate the effect of e-WOM participation on participant's e-loyalty towards a web site.

In the next section of this paper, we will review previous studies on e-WOM; we will then present hypotheses and develop a structural equation model based on the theoretical framework, which is followed by introducing the measurement instruments and the survey items. Finally, we will present the empirical results and discuss them.

Section snippets

Literature review

Compared to the offline environment, there exists a large amount of e-WOM information about specialized activity and product and service communities, along with consumer reviews [64]. Chatterjee constructed an imaginary internet shopping mall, and using an imaginary consumer survey, investigated the effects of e-WOM [13]. The results show that a negative consumer review has a critical influence on the consumer's trust and purchase intention at the internet shopping mall. Moreover, in the case

Theory building and hypotheses development

Based on the above discussion, the conceptual framework illustrated in Fig. 1 will be used to examine the importance of e-WOM in generating awareness. This framework draws on motivation theory, participation theory and identification theory. Motivational theory is the force behind the process of e-WOM participation. Secondly, participation explains how the customer's e-WOM posting behavior leads to positive and negative attitudes toward certain online shopping malls. Finally, identification

Research model

Based on the discussion of the six hypotheses, we also developed a structural model that is presented in Fig. 2. This model is designed to verify the relationships among motives, e-WOM participation, identification and e-loyalty in an e-commerce environment. As discussed earlier, intrinsic and extrinsic motives are set as preceding factors of e-WOM participation. Personal and social site identifications are set as preceding factors of e-loyalty. In order to verify our research model, a research

Measurement development

The unit of analysis of this study is the individual user of e-WOM systems. Measurement items for the focal constructs were derived from prior research and adjusted for our study. The survey was developed for the Korean online market space and careful attention to measurement issues were taken in order to insure psychometric validity. After measurement item development, items were translated into a Korean version of the survey. Since there are language-oriented differences such as nuance and

Results

Assessment of the research model was conducted using PLS (Partial Least Square). PLS is a structured equation modeling technique that can analyze structural equation models (SEMs) involving multiple-item constructs, with direct and indirect paths. PLS works by extracting successive linear combinations of the predictors and is effective in explaining both response and predictor variation [16]. PLS is a powerful tool for analyzing models because of the minimal demands on measurement scales,

Discussion and implications

This study attempted to examine the impact of e-WOM participation on e-loyalty from the perspective of the participant, not the reader. We introduced motivation theory to explain e-WOM participation, and employed identification theory to analyze the psychological aspect of the e-WOM participant. To achieve the goal of this study, we conducted a survey and proposed a model including 6 accompanying hypotheses. Implications from the results for academia and practitioners are discussed as follows.

Conclusion

We believe that e-WOM has become an important part of the online shopping experience. Understanding the phenomena is essential to electronic commerce systems and user behavior. This study has helped to bring additional insight to the relationship between customer participation in e-WOM and consumer purchases. The empirical findings suggest that the level of motivation encourages customers to participate in review systems, which is in line with prior e-WOM research. Specifically, it was found

Chul Woo Yoo is currently a PhD student in the Department of Management Science and Systems in the School of Management at the State University of New York at Buffalo. He holds a Master's degree in Economics from Seoul National University, Korea. His research interests include human factor in e-business, information privacy, piracy behavior, and agricultural information system.

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  • Cited by (0)

    Chul Woo Yoo is currently a PhD student in the Department of Management Science and Systems in the School of Management at the State University of New York at Buffalo. He holds a Master's degree in Economics from Seoul National University, Korea. His research interests include human factor in e-business, information privacy, piracy behavior, and agricultural information system.

    G. Lawrence Sanders, PhD, is a professor in the Department of Management Science and Systems in the School of Management at the State University of New York at Buffalo. He has also served as a department chair and the chair of the PhD program in the School of Management. He has taught MBA courses in the People's Republic of China, India and Singapore. His research interests are in the ethics and economics of digital piracy, systems success measurement, cross-cultural implementation research, systems development and decision processes.

    He has over 50 conference proceedings and presentations and has also published over 50 referred research papers in outlets such as The Journal of Business, MIS Quarterly, Information Systems Research, the Journal of Management Information Systems, the Journal of Strategic Information Systems, the Journal of Management Systems, Decision Support Systems, and Decision Sciences. He has also published a book on database design and co-edited two other books. He is currently working on a book on technology development.

    Junghoon Moon is an assistant professor of the Department of regional information at the Seoul National University, Korea. He received his Ph.D. degree from the State University of New York at Buffalo in 2006. He worked for several years as a system analyst and consultant. In addition, he is an associate director of Auto-ID labs sponsored by EPCglobal. Dr. Moon's research interests include Human factor in MIS/E-business, Technology Management, E-government, Information Policy for Food Industry, and Business Application using an Ubiquitous Sensor Network.

    He has presented his studies at KMIS, IRMA, AMICS and HICSS. At AMICS 2006 one of his studies was awarded as the best paper of the year. At HICSS 2007 one of his studies was nominated as the best paper of the year. He has published articles in many journals, including Online Information Review, Asia Pacific Journal of Information Systems, e-Business Studies, Journal of Information Technology Management, Information Systems Frontiers, and Technological Forecasting & Social Change.

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    Tel.: + 1 716 645 2373; fax: + 1 716 645 6117.

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    Tel.: + 82 2 880 4772; fax: + 82 2 873 5080.

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