An Empirical Study on the Influence of Perceived Credibility of Online Consumer Reviews

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1 An Empirical Study on the Influence of Perceived Credibility of Online Consumer Reviews GUO Guoqing 1, CHEN Kai 2, HE Fei 3 1. School of Business, Renmin University of China, School of Economics and Management, Beijing Forestry University, Beijing Suzhoujie Branch, China Everbright Bank, Abstract: Based on the Yale Model of Persuasion, including source factors, message factors, receiver factors, and social influence factors, a research model of perceived credibility of online consumer was constructed by literature review and theory analysis, and was tested using an online questionnaire that was distributed to users of nine famous online review sites. Based on results of the study, several managerial advices and future research were proposed. Keywords:Internet word-of-mouth, online consumer reviews, perceived credibility 1 Introduction: Raising the Question More and more enterprises realize that network technology brings them great challenges, they must try to search the corresponding reform and development opportunities. As an important form of Internet word-of-mouth, online review breaks through the time limit of traditional Word-of-mouth, brings great convenience for the consumers when they search information of the goods and services. If we want to understand the influences of online review to consumers buying decision, we must understand the influencing factors to perceived credibility of online review. Therefore, the research on influencing factors to perceived credibility of online review has important theoretical and practical value. 2 Literature Review Online review, also called online consumer review, is a new form of word of mouth communication. It is the text-based evaluations to the products, published by consumers on the network. Internet users can read and share these comments for free by online communities or online review. (Godes and Mayzlin, 2004). The current online review sites have sprung up everywhere, and spawn the development of online review. According to the different owners of online review site, Boush, and Kahle (2001) divide them into two categories: one category is sponsored by the retailers or manufacturers, such as the Amazon; the other is the third-party review sites, established by independent associations or interest groups, not for promoting the sales of products and services, such as the Mass Comment Network. In September 2008, U.S. Rubicon Consulting carried out a survey which 3036 Internet users (more than 13 years old) receive. It is shown that the comments and commentary written by the online users have a significant impact on consumer purchasing decisions, second to the traditional word of mouth. Survey also found that all online information has a significant impact on the shopping decisions; the most influential information is generated by the user. There are a number of factors affecting the credibility of online reviews, most of the current scholars develop their theory based on persuasion or attitude change model during the information dissemination process, which Hovland and Janis made at Yale University in 1959.They research it from three aspects: information content, the recipient. For online reviews, the users often express their views on a particular product or service through online reviews, the receiver is actually the one who has been persuaded by reviewer, therefore, many scholars bring this model into the research on the influencing factors of online perceived credibility. It has been investigated that the greatest influencing factors of website s credibility are Site Sponsor, Contact Information, Currency, Customer Service Response Time, as well as Site Structure. Currently in China, it doesn t dig so deeply about influencing factors of online perceived credibility 376

2 from the theoretical and empirical aspects. That is to say, we still have a lot of exciting research to do. This study will try to make it in China, drawing on the scale developed by other scholars from other countries or regions. 3 Theory and Research Hypotheses 3.1 Theoretical Basis This article constructs a theoretical framework of research (see Figure 1), studies the influencing factors of online perceived credibility from the source, the information content, receiver, social influence, based on the model of persuading rand introduced by Hovland in This study also thinks that receiver may be introduced as regulation variables. Research models are shown below. Source reputation of review Review consensus Message review quality review structure Receiver Perceived Credibility receiver s trust tendency Social influence review consensus Figure 1 Research Concept Model 3.2 Research Hypotheses Source and Credibility Many scholars released the third party review websites, which often issue consumers online reviews, have greater influence to the consumer perceived credibility. Therefore, in order to control the influence of website types on the research of perceived credibility. This article only takes the third review websites as a case study. That is to say, the research of the source only focuses on the reputation of the review. This research thinks, the reputation of reviewers will influence receivers assessment to the credibility of the review, thus we put forward the following hypotheses: H1: The reputation of the reviews has positive influence to online perceived credibility Information Content and Credibility This research examines the comments influence on credibility from two perspectives, review quality and review structure. Review quality means review contents authenticity, reliability, the correlation of the content and evaluated products, and whether subsequent buyers offer a lot of useful information. The receivers perception to review reliability will be affected by whether reviews are easy to understand, whether experience process of products or services are described in detail. Studies show that online trust is affected by the information s quality and quantity perceived by receivers in a great extent. Review 377

3 credibility will be higher by providing a detailed explanation or the practical use experience, so this article puts forward the following assumption: H2: The quality of review has positive influence on online perceived credibility. Review structure means the positive and negative online review, refers to the negative or positive evaluation of companies, products or services released by review publisher. The study shows that consumers often think negative information is more useful than positive information when they pick up the products. For consumers in our country, we think it still can get this conclusion, so we propose the following assumption: H3:Compared with positive review, negative review has bigger influence on online perceived credibility The Receivers Trust Tendency and Credibility Trust tendency is about personal characteristics, which means that the general willing to others dependence, based on patulous socialization (Mayer et al 1995).The researches of the trust under the network environment always put trust tendency in the individual level into the research model; they believe individual trust tendency will affect online consumers trust. People with a high trust tendency are willing to trust others, trust tendency and trust have strong relations, especially buyers and sellers are not yet familiar with each other. This article puts forward the assumptions: H4: The receivers trust tendency has positive influence on online perceived credibility Social Influence and Credibility We always use social norms and key groups to describe social influence. Combining the characteristics of online review, this study analyzes the social influence s force to perceived credibility from the perspective of consensus. Online review website will generally have a specific evaluation system for the certain review, and reader can mark scores, for example, by ticking the boxes of very helpful, not helpful, or agree, reject, etc. For online review, receivers may hold a low credibility to some review, but after seeing others vote, his credibility assessment would enhance. Therefore, it puts forward the hypothesis: H5: The reviews consensus has positive influence on online perceived credibility The Adjust Effect of Types of Recipients Adjust variables is the third variable to adjust the relationship between two variables. Different types of recipients, different relation strength with the other members of the website/bbs. Browse-oriented Internet users lack social contact with other members of the community, browsing the review on the surface, The social-oriented Internet users maintain powerful social relations with other members of the community, but they show low interest with community theme and comment information and activities. This research regards, different types of recipients, different perceived credibility on the same reviewers, content, the same social influences. Thus get below hypothesis: H1a: If types of recipients are different, the influence of reputation of review on online perceived credibility is different; H2a: If types of recipients are different, the influence of quality of review on online perceived credibility is different; H3a: If types of recipients are different, the influence of structure of review on online perceived credibility is different; H4a: If types of recipients are different, the influence of receivers trust tendency on online perceived credibility is different; H5a: If types of recipients are different, the influence of the reviews consensus on online perceived credibility is different; 4 Research Method This research adopts online survey method to collect the useful data, using professional web to generate network questionnaire. The questionnaire survey ranges from August 5th, 2009 to September 5th, This study selects registered users from third-party commentary website/bbs, such as the Mass Comment Network, Word of Mouth Network. We send s to them 378

4 stochastically, 270 questionnaires in all, get back 253 ones, eliminate invalid ones, 201 of them is valid questionnaires, 79.4% in effect. In order to observe variables effectively, this study adopted measuring scale developed by scholars at home and abroad, we use Likert 7-level measuring scale ( 1 for " completely disagree ",and 7 for "completely agree") to measure the reputation of review, the quality of review, the reviewers structure, receiver s trust tendency, types of receivers and review consensus. For the measurement of media credibility, it includes four core dimensions: reliability, accuracy, integrity and completeness. With reference to the measuring dimension above, combing the characteristic of online review, this study develops the measuring items about consumers assessment on perceived credibility of online review. 5 Data Analysis 5.1 Descriptive Statistical Results Variables average, standard deviation and all investigated variables Pearson correlation coefficient are shown in Table 2. In this study, all variables Cronbach's alpha are above 0.7, with high reliability. All of the scales have high internal consistency. As is shown in Table 1, we can see: in the significant level of 0.01, the reputation of review, the quality of review, the reviewers structure, receiver s trust tendency, types of receivers and review consensus are significantly positively related to the perceived credibility. At 0.05 significant level, about consumer individual factors, only gender is significantly associated with perceived credibility, other four survey data are not significant with perceived credibility. Table 1 Variable mean and standard deviation and the correlation coefficien Variables gender 2 age -.204** ** * -.249** ** *.146* * ** **.249** **.544**.471** **.298**.243**.249**.165* **.696**.255**.509**.361** Note:gender:1= male,2= female ; age:1= 16-21,2= 22-25,3= 26-34,4= 35-44,5= 45 and above ; occupation:1= students,2= working people,3= freelancers,4= others ; education background:1= junior school and below,2= senior school,3= university/college,4= master and above ; contact network time:1= 1year or below,2= 1 3year(include 1year),3= 3 6year(including 3 year), 4= 6 year and above. *p<0.05;**p< occupation 4 education background 5 contact network time 6 the reputation of review 7 the quality of review 8 the reviewers structure 9 review consensus 10 receiver s trust tendency 11 Perceived Credibility Mean standard deviation 5.2 Hypothesis Test Results In order to test the hypotheses, this study adopts hierarchical regression analysis, analyze the relations of 379

5 variables, including dependent variables (perceived credibility), independent variables (the reputation of review, the quality of review, the reviewers structure, receiver s trust tendency, types of receivers and review consensus) and control variables (gender, age, occupation, education degree, time of contact network). In model 1, we puts control variables (gender, age, occupation, education degree, time of contact network), into regression equation to determine control variables influence on consumers purchasing decision by checking the significance of regression coefficient. In model 2, we add control variables and independent variables into regression equations successively to make sure independent variables influence on dependent variables, by checking the significance of regression coefficient. Each model variable variance inflation factor VIF is about 2, so it indicates that multiple linear of the regression models does not exist. The results of regression are shown in Table 2. From the analysis results, when only control variables exsit, F statistics in the regression model is not significant. When independent variables are added into the regression equation, F statistics in the regression model is very significant, which proves that the integral effect of model fitting is very good. The control variables include gender, age, occupation, education degree, time of contact network. Gender, age, occupation, education degree, time of contact network (p more than 0.05 in model 2, Table 2) have no significant influence on perceived credibility. From the model 2, the reputation of reviewers (β= 0.297, p < 0.01), review quality (β= 0.372, p < 0.01) and review consensus (β= 0.129, p < 0.05), the receivers trust tendency (β=0.153, p < 0.01) has significant positive impact to perceived credibility. Therefore, hypothesis 1, 2, 4 and 5 are supported. Table 2 Regression Analysis Results of Factors Affecting the perceived credibility Model 1 Model 2 Standard β Sig. Standard β Sig. Control variable gender Age Occupation education Contact network time independent variables the reputation of review 0.297** quality of review 0.372** reviewers structure review consensus 0.129* receiver s trust tendency 0.153** F ** R R

6 Adjusted R * p <.05;** p <.01 Adjustment action analysis of recipient type. As the hypothesis, according to scholars former studies, this study believed that types of reviewers play an adjusting role on the relationship between perceived credibility and 5 variables (the reputation of review, the quality of review, the reviewers structure, receiver s trust tendency, types of receivers and review consensus).we use two factors variance analysis to check the adjust effect. Table 3 Variance Analysis of Recipient Type Adjustment Action Hypothesis Type III Sum of Squares df Mean Square F Sig. H1a: 1 reputation of review ** Type of receivers * * * H2a: 3 quality of review * Type of receivers * H3a: 5 review structure Type of receivers * H4a: 7 receiver s trust tendency ** Type of receivers * * * H5a: 9 review consensus ** Type of receivers * * p <.05; ** p <.01 From Table 3, interaction effect of recipient type and the reputation of review, interaction effect of recipient type and receiver s trust tendency are significant (p< 0.05), hypothesis H1a, H4a are supported. 6 Conclusion 6.1 Research findings First, the results show that the reputation of review has significant positive impact on perceived credibility, the higher the reputation of review, the higher online perceived credibility. This conclusion is the same as the previous conclusion. In the traditional word-of-mouth dissemination, the receivers and 381

7 disseminators are often known each other, the source of information has high credibility. But in the network environment, most of the receivers and disseminators are strangers, disseminators can use net, nicknames to release word-of-mouth information, the high credibility of traditional word-of-mouth has been challenged. Therefore, websites principles, such as accumulated scores, reviewers reputation (rank, authority, etc) assessment by other Internet users voting become an important basis to check the credibility of source information. This empirical study also confirms the existence of influence. Secondly, this research results show that the quality of the review content has the biggest influence on perceived credibility. Recipients perceived judgment about a piece of review is mainly based on content itself. The higher the quality of content is, the higher the perceived credibility is. The analysis shows that, if the content is closely related to product/service, having more details about product/service, containing a large number of useful information, describing the reviewers direct experience of product/service, its influence on the recipient's perceived credibility is bigger. Third, the study shows that the review consensus has significant positive impact on online perceived credibility. It indicates that recipients will focus on evaluation system about reviews, such as how many people leave bad review, or good one, if they think it is believed. Fourth, receiver s trust tendency has significant positive impact on online perceived credibility. Mayer etc (1995) think, personal trust tendency and trust has a strong relationship, especially they are not familiar with each other. Under the network environment, many receiver and publishers never meet each other, the strong relationship does exist. 6.2 Managerial Implications Any research is based on practice and service practice, this study is no exception. This study has positive significance, which can be utilized by the enterprise The Online Review Website Must Strengthen the Construction and Improvement of Evaluation System Online review website should strengthen the construction of the assessment about the reputation of review publishers. By the empirical study, we see that the reputation of review publishers has positive influence on perceived credibility. It is a must and important for a online review website to perfect the evaluation system. A perfect evaluation system should be concise, which can identify and eliminate malicious users for gaining credit points, make readers easily identify the patterns relationship with the reputation degree. At the same time, the online review website should perfect evaluation system of the review content, which includes the quantificational voting systems, such as review s favorable or bad evaluation, or how many scores the review should gain. Furthermore, readers message and review should be encouraged. All of these can strengthen the perceived credibility of review, thus forming the user group loyalty, increase the websites visit capacity Enterprises can Launch Marketing Activities by Using the Online Review Online review is playing an important role in consumers' decision-making process, enterprises should pay attention to and make good use of online review, to launch marketing activities. At present, most of specific products or services often have one or two well-known professional website or BBS, for users to publish and exchange various views and experience. Enterprises should focus on the review of enterprise products, collect their opinion, improve the products or services, according to consumers' reviews, and give a feedback to consumers in time. Secondly, the enterprise can interact with the consumers, by inviting some website, BBS users, especially those active users, such as well-known ID, high prestige users, to try their products and services, and encourage the release of product/service. This review has higher reliability, and has greater influence for other consumer decision-making Research Limitations and Direction of Future Research Although this study gains some beneficial research achievements, but also has certain limitations to be solved in future. Firstly, in the sample selection, due to the limited time and funds, the research data are all collected from several well-known third-party BBS/comment website. Although these websites have high credibility, but some differences do exist, therefore, some factors from websites are also likely to 382

8 affect the credibility of the review. Secondly, the answer is completed, based on the receiver s memories of online review within a week, so participants may not answer real reaction, according to their actual situation. In the study, the evaluation of variables is based on respondents subjective judgment, which may be affected by the factors such as the mood. It will affect the objectivity of data. Thirdly, in this study, review structure is divided into positive reviews and negative reviews, but there are still the reviews including positive and negative information. And most of the collected data in this study are positive review, which resulted in review structure s influence on perceive the credibility is not significant. Fourthly, about the research of social factors, map of social network, is a good way to make a concrete analysis of social influence. However, social network is so complicate to draw, takes a long time, and need to use some advanced algorithm and mathematical model. Because of the restrictions on study time and relevant professional ability, we have not dug further mining. Therefore, various kinds of research method can be explored. References [1]. Guo Guoqing, Yang Xuecheng. Word-of-mouth marketing and its application in the era of Internet. Finance and Trade Economic, 9(2006), p (in Chinese) [2]. Yang Xuecheng, Qian Minghui. The Influence of Online Reputation on Consumer's Decision. Contemporary Economy & Management, 3(2006) (in Chinese) [3]. Jin Liyin. An empirical study on the impact of EWOM on consumers buying decisions. Economic Management, 22(2007) (in Chinese) [4]. B.Bickart, R. M. Schindler. Internet forums as influential sources of consumer information. Journal of Interactive Marketing, 15(2001), p [5]. D. M. Boush, L. Kahle. Evaluating negative information in online consumer discussions: from qualitative analysis to signal detection. Internet Applications in Euromarketing, 11(2001). [6]. J. J.Brown, H. P. Reingen. Social ties and word-of-mouth referral behavior. Journal of Consumer Research, 3(1987), p [7]. D.Godes, D.Mayzlin. Using online conversation to study word-of-mouth communication. Marketing Science, 4(2004), p [8]. R. C.Mayer, H. J. Davis, F. D. Schoorman, J. Pointon. An integrative model of organizational trust. Academy of Management Review, 3(1995), p

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