The Effect of Virtual Community Participation on Online Purchase Intention: A Conceptual Model

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1 The Effect of Virtual Community Participation on Online Purchase Intention: A Conceptual Model Hazliza Haron, Mohammed A. Razzaque, The University of New South Wales Abstract Online social networking refers to the socialization activities that occur in the online environment when Internet users group together to form online relationship. The emergence of these virtual communities provides platforms for online consumers to share and exchange ideas, views and product/service related information. This opens huge opportunities for retailers especially those operating their businesses online. This study looks at the influence of social networking on consumers intention to purchase online. A conceptual model is proposed to enhance further understanding of the impact of social networking on consumer purchase intention. Introduction Virtual community has been defined by Rheingold (1993) as social aggregations that emerge from the Net when enough people carry on those public discussions long enough, with sufficient human feeling, to form webs of personal relationships in cyberspace. Internet users (and consumers) who join and participate in virtual communities tend to develop relationships with one another after a certain period of information-exchange in this platform. As the online relationships expand, more consumers tend to group together in various virtual communities to form their own social networks. Wellman et al. (1996) termed this phenomenon as computer-supported social networks ( online social networks ) where people are linked together and form social networks online by a mere computer network connection. Of interest to marketer, various product-related virtual communities are mushrooming in the Internet either on consumer initiatives or through company interests. This implies that consumers are spending more time on the Internet and have started to rely on online sources. Studies that examine the emerging role of online social networking phenomena from the viewpoint of a consumer researcher are still limited. In particular, very little is known about the influence of consumers participation in the virtual community on their online purchase decisions and therefore, this is an area of interest to the researchers. According to the various behavioural theories such as TRA, TPB and TAM, consumers purchase decisions flow from intention to adoption leading towards the possibility of repeat purchase. The objective of this research is to examine the role of consumers online participation on their online purchase intentions and thereby fill this gap in the literature. It also intends to investigate the mediating role of trust in the relationship between online participation and online purchase intention. Two general research questions have been formulated to achieve the stated objectives: i. What are the consequences of users participation in online virtual communities? ii. What is the mediating role of trust in the relationship between online participation and online purchase intention? 1

2 Conceptual Model and the Hypotheses The conceptual model (Figure 1) consists of antecedents ( homophily and tie strength ); mediator ( trust ); and consequence ( online purchase intention ). The model proposes that an online consumer s intention to purchase online is influenced by the extent to which trust is developed between an individual and other virtual community members. The extent of trust developed in online relationships depends on their online participation factors. Figure 1: Conceptual model Antecedents Mediator Consequence Homophily H7, H8, H9 Demographic (age, gender, edu., inc.) H1 Susceptibility to normative influence Susceptibility to information influence H2 H3 Trust H6 Online purchase intention Tie strength H10, H11 H4 Frequency of interaction H5 Ability Benevolence Membership duration Online participation Like in the traditional offline environment, social networks in the online environment grew rapidly as it only requires one individual to be connected to the Internet and join the online communities. Participation in these online platforms can develop through a variety of ways such as lists, Intranet, discussion forums, online games, online chat and many more. Relationships that develop online through interactions with other members can take in many forms such as one-to-one, one-to-many, many-to-one and many-to-many communications. An individual, who is a member of a large virtual community network can, at the same time, have an online social network of his own. According to Valck (2005), members participation in an online community could be topical or social. This research focuses on members social involvement and predicts how it relates to online purchase intentions. Homophily refers to group composition in terms of the similarity of members characteristics i.e. the extent to which pairs are similar in terms of certain attributes such as age, gender, education, lifestyle etc (Brown et al., 2007). As the members of online communities interact amongst themselves, they build deeper and stronger relationships. Often, these relationships are developed in conjunction with the product-related information exchange among members of the network. As a relationship matures, bonds between consumers and service providers 2

3 get tighter (Hut and Speh, 1995); their trusting relationship will become more concrete and they are more likely to perceive each other as trustworthy to share important information between them and to create a common point of view (Tsai and Goshal 1998). In the online social interactions, there is evidence to show that generalized trust can develop in online social interactions (Best and Krueger, 2006); and level of involvement significantly influences the development of trust among members to participate online (Tung et al, 2001). Besides demographic factors, consumer characteristics pertaining to product consumptions could also contribute to a sense of homophily among members. Valck (2005) found that consumers susceptibility to normative and informational influence are positively related to online communities influence on their decision making process. Susceptibility to normative influence refers to the tendency to conform to others expectations and is motivated by a desire to identify oneself with another or to gain rewards or avoid punishments by complying with the group norms (Valck 2005). Susceptibility to informational influence is the tendency to accept information from others as evidence about reality (Deutsch and Gerard, 1955; Valck 2005). The similarity viewed in this trait could influence online consumers to view themselves as similar to one another hence together be influenced towards product consumption decisions. Tie strength, a multidimensional construct, refers to the combination of the amount of time, the emotional intensity, the intimacy (mutual confiding) and reciprocal services which characterize the tie (Granovetter, Strong ties exist between people who have strong bonds between them and have high levels of emotional closeness, reciprocity and indebtedness (Granovetter 1973; Marsden and Campbell, 1984). These characteristics tend to increase the likelihood for people to share information (Frenzen and Nakamoto, 1993; Hansen 1999). Weak ties are characteristics of people who are infrequently connected, interacted or contacted; are emotionally detached and typically heterophyllous (Lyons, 2004; Campbell et al., 1986; Granovetter, 1982). The interaction between two individuals in the online setting will be based on the weak ties notion. But the strength of ties notwithstanding, diverse amount of information can be accessed and shared between members increasing the potential for online influence. Even though exchanges in electronic networks actually occur through weak ties between strangers, there is evidence of reciprocal supportiveness (Wasko and Faraj (2005); Wellman and Gulia, 1999). Different strength of ties offer different advantages to individuals in terms of access to information and support (Haythornthwaite, 2005). Duration, frequency and intensity of interaction are likely to help users develop special bonding with others in the online community and thus strengthen their ties. The strong ties developed over time can motivate members to trust each other and make them more likely to rely on the product-related information posted or exchanged online. This study considers membership duration and frequency of interaction as measures of tie strength. Online purchase intention is defined by Schlosser et al. (2006) as consumers intention to make initial online purchase from a firm, despite their online purchase history with other firms. They emphasized that when a consumer is concerned about the risks of disclosing personal information in making an online purchase, the mere intention to purchase will reflect trust. Many prior studies on online purchase behaviour view trust as an important antecedent of online purchase intention. For example, Doney and Cannon (1997) contend that trust is a significant factor leading to actual and anticipated purchases; Jarvenpaa et al. (2000) found that both trust and perceived risk influence individual s intention to purchase online which was empirically confirmed by Verhagen et al. ( 2006 ). The literature clearly shows that trust is a multidimensional construct that includes consumer s willingness to purchase from online retailers. Schlosser et al. (2006) argued that different dimensions have differential but significant impact on consumers online purchase intentions. For example, for searchers 3

4 whose goals are on intentions to purchase, the ability beliefs are a stronger driver than benevolence and integrity; while for browsers or passive virtual community participants whose goals are more personal and less outcome-oriented, benevolence influences their online purchase intentions more than ability. This study will be closely aligned with Ridings et al. (2002) who considered only ability and benevolence dimensions of trust in their virtual community s study since these constructs have been found to lead to the same behaviour in the context of virtual community as they bring the same meaning. Direct relationship between online participation and online purchase intention Past studies in the area of traditional social networks concur with the idea that homophily has significant influence on consumers behaviour. For example, McPherson et al. (2001) contend that people who are structurally more similar to one another are more likely to have issuerelated interpersonal communication and to attend to each others issue, which in turn lead them to have more influence over one another. Simpson et al. (2000) found a significant effect for the level of perceived homophily on the level of purchase intent. In the online context, Dolen et al. (2007) found that group similarity among members in chat rooms has significant influence on members satisfaction while Burgoon et al. (2000) report that the more customers viewed themselves as similar to their interaction partners, the better they rated the interface. Similar direct influence between online participation and the intention to purchase online is also assumed and hypothesized in this study based on previous review. Kozinets (1999) noted that virtual communities are likely to have members who are more than average in terms of specialised knowledge in the topics discussed and are more willing to contribute to the online discussion. Interaction and exchanges between members in a virtual community over time will generate a large volume of product-related information. The relatively convenient and low cost source of information makes it easier for consumers to seek further information online. Thus it can be hypothesized that the influence occurred in the online participation process will influence consumers purchase intention. Trust is the willingness of a party to be vulnerable to the actions of another party based on the expectation that the other will perform a particular action important to the trustor, irrespective of the ability to monitor or control that other party (Mayer et al. (1995), p.712). Individuals would be willing to share knowledge with others when trust exists (Mayer et al., 1995; Tsai and Ghoshal (1998). Developing trust, be it between consumers and retailers or between consumer and consumer, is difficult. It is especially true for the online environment. However, Ridings et al. (2002) suggest that involvement in virtual communities could develop trust between an individual and the community that he is a member of. Although online interaction lacks face-to-face cues, the frequency and intensity of interaction and length of membership in a virtual community could enable online trust to be developed. Based on the conceptual background discussed earlier, the following hypotheses are developed: H1: Similarity in the demographic factors will positively influence the development of trust among virtual community members H2: Similarity in the susceptibility to normative influence trait will positively influence the development of trust among virtual community members H3: Similarity in the susceptibility to informational influence trait will positively influence the development of trust among virtual community members H4: The higher frequency of interaction online will positively influence the development of trust among virtual community members 4

5 H5: The longer membership duration will positively influence the development of trust among virtual community members H6: Trust has a positive influence on the intention to purchase online among virtual community members. H7: Consumers similarity in demographic factors will positively influence the intention to purchase online among virtual community members H8: Consumers susceptibility to normative influence will positively influence the intention to purchase online among virtual community members H9: Consumers susceptibility to informational influence will positively influence the intention to purchase online among virtual community members H10: The higher the frequency of interaction online will positively influence the intention to purchase among virtual community members H11: The longer the membership duration will positively influence the intention to purchase among virtual community members Methodology The methodology for this study will be closely aligned with the quantitative research undertaken by Ridings et al. (2002) using actual websites or virtual communities. This would help capture the natural behaviour of online interaction and influence. The unit of analysis will be individual members in virtual communities and probability sampling would be used to select the research participants. Given the nature of the study, a web-based survey using questionnaires would be appropriate for collecting the research data. It is important to select a virtual community that is highly active i.e. have many message contributions. Witmer et al. (1999) has developed particular criteria for the selection of active virtual community based on certain minimal traffic volume and number of users posting. The criteria outlined below have been adopted from Valck (2005) based on her study examining virtual community s influence. o Abundance of member-generated contributions o Lively participation and high traffic o A large number of members o Enough variation among them in terms of community participation and consumer characteristics Data would be analysed using factor analysis and structural equation modelling (SEM). This is appropriate since SEM has been comprehensively applied in studies on an individual s technology acceptance (Gefen et al., 2003). Contributions and Managerial Implications The model proposed in the paper makes a major contribution by identifying the effects of consumers participation in virtual communities on their online purchase intention. This constitutes a part of a larger work, which. it is hoped, would contribute to literature. The role of trust in the virtual community environment is also highlighted and emphasized. From managerial perspective, this paper highlights the opportunity for marketers, especially online retailers, to enhance their customer relationship management. This paper suggests that online consumers can develop online trust from their interactions in the virtual communities. Online retailers should take up the opportunity to understand their online customers better by investing and engaging in virtual communities on their website. Immediate customers 5

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