How Electronic Word of Mouth can be a critical success factor in e-business


This blog is based on the following study: Yoo, C. W., Kim, Y. J., & Sanders, G. L. (2015). The impact of interactivity of electronic word of mouth systems and E-Quality on decision support in the context of the e-marketplace. Information & Management.

EWOM 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 (Hennig-Thurau & Walsch, 2003). One of the best examples of EWOM systems and indeed a prototypical EWOM system is the customer review system. Customers can post text-based comments, insert video reviews, and even respond to other customers’ opinions on the product or service in question through EWOM systems. The emergence of these EWOM systems has changed the way that businesses engage the customers as well as other businesses.

To investigate the impact of the interactivity of EWOM systems and E-quality of a website on decision support satisfaction, Olivers (1997) cognition-to-action loyalty framework is adopted as an overarching theory. Oliver argues that consumers build loyalty toward a brand cognitively first, then affectively, next conatively, and finally behaviourally. Adopting interactivity theory and E-quality is appropriate to represent the cognitive aspect of loyalty phases. When decision support reflects customer needs and preferences, customers feel satisfaction with this support. Hence, adopting this construct, decision support satisfaction is useful in describing the emotional phase of the loyalty framework. Finally, E-loyalty is employed to illustrate the conative phase of loyalty. Based on this theoretical framework the authors explore the relationships of interactivity of EWOM systems, E-quality, decision support satisfaction, and E-loyalty by proposing four research questions that can be found in the figure below.

1

The interactivity of EWOM systems and E-quality are the strong predictors of decision support satisfaction. Therefore, H1 and H3 are supported. The effect of the interactivity of EWOM systems on E-quality is significant, validating H2. Decision support satisfaction is found to influence E-loyalty, thus validating H4. See figure below.

2

These findings indicate that customer perceptions regarding the interactivity of EWOM systems are very influential on their evaluation of an entire website and their level of satisfaction with decision-making support. This study illustrates that EWOM systems and websites with E-quality help customers enhance their decision making process.

When the four aspects of EWOM system interactivity (reciprocity, responsiveness, nonverbal information and speed of response) are well managed, users are likely to experience decision support satisfaction with the e-commerce site. This result indicates that e-commerce sites should be encouraged to provide a better EWOM environment for reciprocity and advanced EWOM system functionality, which enables multiple channel communications as well as quick and proper responses to customer requests.

The authors believe that EWOM has become an important part of the online shopping experience. Understanding the phenomena is essential for the success of electronic commerce systems.

References:

Hennig-Thurau, T., & Walsch, G. (2003). Electronic word-of-mouth: motives for and consequences of reading customer articulations on the internet. Int. J. Electron. Commer. , 8, 51-74.

Oliver, R. (1997). Satisfaction: A behavorial Perspective on the consumer. In M. Sharpe, Satisfaction: A behavorial Perspective on the consumer. NY: Armonk.

Yoo, C. W., Kim, Y. J., & Sanders, G. L. (2015). The impact of interactivity of electronic word of mouth systems and E-Quality on decision support in the context of the e-marketplace. Information & Management.

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