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1. eWOM: The impact of customer-to-customer online know-how exchange on customer value and loyalty

   Group 5: LEE WING YI, WINNIE (12003751) Lo Ka Foon, Daphne (12001082) Siu Chun Sing, Nicholas (12001066) Yuen Miu Kwan, Amy (11013435)
2. Agenda Background Definition Research objective Concept Hypotheses Research Method Findings Conclusion Limitations and Future research
3. Background Authors: Thomas W. Gruen, TalaiOsmonbekov, Andrew J. Czaplewski Journal: Journal of Business Research Volume: 59 Pages: 449 – 456 Year: 2006 Gruen, T. W., Osmonbekov, & T. Czaplewski, A. J. (2006). eWOM: The impact of customer-to-customer online know-how exchange on customer value and loyalty,59, (449-456)
4. Definition e-WOM : Electronic word-of-mouth can take a variety of forms, and thus can result in various forms of value to the participants who may derive economic, utilitarian or social value (Balasubramanian and Mahajan, 2001; Hennig-Thurau et al., 2004) Know-how: the accumulated practical skill or expertise that allows one to do something smoothly or efficiently (von Hippel, 1998) a type of knowledge that is tacit, complex, and difficult to codify Know-how exchange: an important facilitator of standard setting and innovation (von Hippel, 1988) as well as for the diffusion of innovations (Rogers, 1983) the activation of ‘weak ties’ as the professionals that are involved in the exchange are generally not personally close to each other (Brown and Reingen, 1987).
5. Definition C2C know-how exchange: the interactions among individuals that serve as an information source that enhances competency and knowledge (Hennig-Thurau et al., 2004, p.43) Value the perception of benefits received by the customer from the offering provided by the firm in relation to the cost or sacrifice made to obtain those benefits (Zeithaml, 1988) Loyalty intentions We restrict our examination of loyalty intentions to include the repurchase of the firm’s offering and WOM as an outcome (Richins, 1983) of the C2C know-how exchange
6. Research Objective - What
7. Research Objective - Why
8. Support literature The earliest research (Katz and Lazarfeld, 1955) found that WOM is more effective in influencing consumer purchase than advertising or personal selling. Further, Brown and Reingen (1987) explored the differences of WOM effects originating from ‘weak ties’ versus ‘strong ties’. Drawing on Granovetter’s (1973) theory on interpersonal connections being ‘strong’ and ‘weak’ based on importance, frequency of contact and social relation, they found that informational WOM comes primarily from ‘weak ties’ and most influential WOM originates from ‘strong ties’. Additionally, Duhan et al. (1997) found that consumers choose weak-tie sources when instrumental cues are important to them and they have higher levels of subjective knowledge. Richinsand Root-Shaffer (1988) link both enduring and situational involvement as well as opinion leadership to product news WOM, advice WOM and personal experience WOM.
9. Support literature On the outcome side, Bone (1995) finds that WOM can influence immediate and delayed product judgments and that the effect is stronger when the consumer faces an ambiguous experience and WOM source is perceived to be from an expert. Bickart and Schindler’s (2001) findings suggest that product information on online forums has greater credibility, relevance and more likely to evoke empathy with consumers than information on marketer-designed websites. Hennig-Thurau et al. (2004) delve into various factors that motivate consumers to engage in online WOM and participate in online forums. They found that eWOM participants exhibit a similar set of motivations as participants of traditional WOM. Such findings suggest that WOM mechanisms act in the same manner on the Internet
10. Concept As an overview of the model, we propose that the perceived utilitarian value individuals receive and their subsequent loyalty intentions can be influenced by C2C know-how exchange. In addition to motivation, an individual’s pportunity and ability to engage in C2C know-how exchange are hypothesized to facilitate C2C exchange (see Fig. 1).
11. Overall model of customer-to-customer know-how exchange
12. Hypotheses H1. C2C know-how exchange positively impacts the customer’s perceived overall value of the firm’s offering. H2. C2C know-how exchange positively impacts the customer’s loyalty intentions. H3. The higher the level of the overall value the customer receives from the firm’s offering, the greater the level of loyalty intentions.
13. Hypotheses H4. Antecedents to C2C know-how exchange: MAO theory. H4a. The higher the level of the member’s motivation, the higher the level of C2C know-how exchange. H4b. The higher the level of the member’s opportunity, the higher the level of C2C know-how exchange. H4c. The higher the level of the member’s ability, the higher the level of C2C know-how exchange.
14. Research Model a. Model Overview: The perceived utilitarian value individuals receive and their subsequent loyalty intentions can be influenced by C2C know-how exchange Motivation, opportunity and ability engage in C2C know-how exchange are hypothesized to facilitate C2C exchange, all of which are set as independent variables in the model C2C Know-how Exchange serves as a mediating variable while loyalty intention is a dependent variable.
15. Research Model Outcomes of C2C know-how exchange Overall value of the firm’s offering The perception of benefits received by the customer from the offering provided by the firm in relation to the cost or sacrifice made to obtain those benefits (Zeithaml, 1988) The foundation for any ongoing buyer–seller relationship is the ability of the supplying firm to deliver fundamental value to the customer (Parasuraman et al., 1991). H1. C2C know-how exchange positively impacts the customer’s perceived overall value of the firm’s offering.
16. Research Model Outcomes of C2C know-how exchange 2. C2C know-how exchange and loyalty intentions An individual’s intention for repeat purchase is the plan of the customer to repurchase or upgrade a product. The rationale for the proposed direct effect of know-how exchange on loyalty intentions is supported by the norm of reciprocity (von Hippel, 1988) H2. C2C know-how exchange positively impacts the customer’s loyalty intentions.
17. Research Model Outcomes of C2C know-how exchange Overall value of the firm’s offering and loyalty intentions The conceptual and empirical understanding of the model is dependent on recognizing the link between the value received by a customer and their future intentions (Zeithaml et al.,1996) H3. The higher the level of the overall value the customer receives from the firm’s offering, the greater the level of loyaltyintentions.
18. Research Model Antecedents to C2C know-how exchange: MOA theory Originally proposed by MacInnis and Jaworski (1989) By extending the theory: Motivationis defined as a member’s desire or readiness to engage in know-how exchange with other members. Ability is defined as the the member’s skills or proficiencies to engage in knowhow exchanges with other members. Opportunityis assumed to be generally available, and the focus becomes the restrictions an individual faces (e.g., time, connection availability) on participating in the know-how exchange.
19. Research Model Antecedents to C2C know-how exchange: MOA theory H4a. The higher the level of the member’s motivation, the higher the level of C2C know-how exchange. H4b. The higher the level of the member’s opportunity, the higher the level of C2C know-how exchange. H4c. The higher the level of the member’s ability, the higher the level of C2C know-how exchange.
20. Research Model b. Questionnaire Scale development and pretest The variables were measured by a 7-point Likert scale (1=strongly disagree, 7=strongly agree) The questionnaire use the construct definitions, the background and suggestions for measuring MOA by MacInnis et al. (1991) Follow the recommended scale purification steps by Churchill (1979) An examination of the four decision rules for determining whether a construct is formative or reflective offered by Jarvis et al. (2003), clearly indicates that the measurement model for opportunity should be treated as formative
21. Research Model c. Sampling Techniques and Statistical Methods Research design and sample Non-probability sampling technique Self-selection sampling (Data is collected from those who respond) The context for the study was the Internet user forum of a popular software product, the Forum (Approximately 5000 registered members of the Forum use the Internet) Population of the research = 5000 registered members The Forum’s sponsor placed a pop-up invitation to respond to an online survey. Respondents were offered a summary of the results as an incentive for responding  Sample size = more than200 completed responses
22. Research Model Measurement Analysis Each variable was measured with multiple items. A factor analysis was conducted to check their unintentionality. To test for the construct validity of a variable, a principal-component factor analysis was conducted with a VARIMAX rotation.
23. Research Model Measurement Analysis The internal consistency reliability of the variables was assessed by computing Cronbach'salphas. The Cronbach's alpha values of all the variables, ranging from 0.767 to 0.916, were well over 0.700 Satisfactory
24. Research Model Measurement Analysis The final confirmatory factor analysis showed adequate fit (chi-square with 84 df=478; CFI=0.927, AGFI=0.856, RMR=0.062) with each item loading heavily on its expected factor and no substantial cross-loadings. Most of the factor loadings for the items appear above 0.6. The items were collected corresponding to each singular factor demonstrating a high convergent validity.
25. Research Model c. Sampling Techniques and Statistical Methods Testing of the hypothesized model Opportunity was measured as a formative scale Loyalty intentions is reflected by both repurchase and WOM, but the initial correlation analysis indicated that the effect of C2C exchange might differ from word-of-mouth as opposed to future product purchase intentions.
26. Research Model Final model ∴The single item used to measure purchase intentions was separated from the two word-of-mouth intentions items The hypothesized structural model was estimated using Amos 4.0 (Arbuckle and Wothke, 1999)
27. Research Model Percentage of the variance explained for the endogenous variables: ~ 52% of C2C knowhow exchange ~ 8% of overall value, ~ 28% of word-of-mouth intentions ~ 25% of future purchase intentions.
28. Research Model Hypothesis 1  Support ✔ Hypothesis 2  Partially support Hypothesis 3  Support ✔ Hypothesis 4a & 4b  Support ✔ ∵ Only motivation & ability had 95% significant ( p <0.05) effects on C2C know-how exchange
29. Findings C2C know-how exchange, overall value of the firm’s offering, and loyalty C2C exchange activities had significant effects on the overall value of the firm’s offering. eWOM communication is perceived to be a reliable source of information by customers. our findings provide empirical evidence of a direct benefit of eWOM for a company The findings suggest that eWOM communication impacts the perceived overall value of the firm’s offering in a significant manner.
30. Findings C2C know-how exchange, overall value of the firm’s offering, and loyalty C2C know-how exchange had a direct relationship with loyalty intentions, as well as an indirect relationship that was mediated through overall value of the firm’s offering. Our research provides evidence that the perception of value from the firm’s offering is also impacted by the value received through interactions with other customers of the organization. In our study, the effect of C2C exchange on future purchase intention is completely mediated by overall value of the firm’s offering.
31. Findings MOA and C2C know-how exchange While motivation and ability perform as expected, the effect of opportunity on C2C know-how exchange was not significant. The lack of a significant effect for opportunity probably reflects the nature of the context where the ‘‘opportunity’’ to participate in C2C exchange is ongoing. Many respondents had ‘‘pegged the scale’’ providing limited variance in the opportunity measures. The results of the analysis for this group did show a significant ( p <0.05) positive effect of opportunity on C2C know-how exchange. However, the standardized effect on C2C exchange was relatively small (0.10), compared with the standardized effect of motivation (0.49) and ability (0.42). Thus, it appears that opportunity plays a minor role in the Internet context, and it also points to the possibility that once a minimum threshold level of opportunity is provided, increasing levels of opportunity no longer have an impact on C2C exchange.
32. Conclusion Theoretical and managerial implications The study found that C2C know-how exchange affects managerially relevant outcomes, namely the value of the firm’s offering and the customers’ future intentions. Overall, the results provide evidence that the MOA theory offers a valid approach to providing theoretical and managerial insight to the phenomenon of C2C know-how exchanges as a specific type of eWOM.
33. Limitations and future research Limitations Measures of behavioral constructs were limited since only a portion of the total number of items selected from pretesting were used for estimating the final model The research represents a cross-sectional snapshot of a point in time, while the phenomenon builds over time. This reduces the ability to make definitive causal statements about the findings since they are iterative in nature Finally, the focus of the study was to examine impact of C2C exchange on the perceived value and loyalty intentions. However, other factors should be considered. The inclusion of other factors in the model may potentially diminish the overall impact of the C2C know-how exchange on the perceived value.
34. Limitations and future research Future research A longitudinal study that examines the relationship over time to understand how C2C know-how exchange might change is called for as a next step. Future research should address the limitations of this study and explore in depth other factors affecting perceived value in order to reveal the calibrated role that C2C know-how exchange plays in impacting the perceived value of the firm’s offering.
35. The end
36. Q & A