International Journal of Academic Research in Economics and Management Sciences

August 2012, Vol. 1, No. 4

ISSN: 2226-3624

56

The Effect of Electronic Word of Mouth, Trust and
Perceived Value on Behavioral Intention from the
Perspective of Consumers

Milad Kamtarin
Department of management, Faculty of administration Sciences and economic, Vancouver
Island, University (VIU)
Email: [email protected]

Abstract

Several factors influence the ways customer tends to buy online and develop a habit for their
Online purchases. Many experts know creating and developing secure and reliable process, will
be the key of success in behavioral intention in Internet shopping. Yet the meaning of
Behavioral Intention in e-commerce is still shrouded in mystery convention. The aim of present
study is to examine factors that affecting the formation Behavioral Intention in Isfahan City. In
this regard, factors were considered in the overall format of the Behavioral Intention, electronic
word of mouth, perceived value and trust. This research used a Structural Equation Modeling
(SEM) to test the causalities in the proposed model. Trust has high effect on behavioral
intention.

Keywords: trust, perceived value, behavioral intention, electronic word of mouth

Introduction

Electronic commerce is new concept of retailing and has captured the interest of many retailers
and merchants because of the recognition that online shopping will is considered as an
alternative channel alongside traditional offline retail channels such as physical retail stores
(Chua et al., 2006).This new innovative pattern of shopping not only brings a great number and
wide range of merchandise to consumers; it also offers a huge market and numerous business
opportunities .The Internet has resulted in a great revolution for every industry. The working
efficiency, information transmission, and even cultural exchange have been unprecedentedly
improved.

Marketers are exploring non-traditional means to reach their target markets. The growth of
online retailing or Internet shopping has provided the apparel industry with additional avenues
to reach the consumer (Goldsmith & Goldsmith, 2002). Online retailing uses the Internet as the
medium to conduct purchases (Yu & Wu, 2007). Studies have touted the growth of on-line
shopping and the growing purchases of those with Internet access (Lin & Sun, 2009). In fact,
apparel products have been consistently ranked as one of the most frequently purchased items
through the Internet.
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Theoretical Background And Hypotheses

Trust is one of the major factors which influence the online buying (Kolsaker, et al., 2004).
Internet buying depends on consumers perceived risk and level of satisfaction and this
perceived risk can be reduced by the trust development (Kolsaker, et al., 2004). National
cultural plays an important role (e.g. Lim, et al., 2004; Yoon, 2009) in adopting the e-commerce.
Infrastructure is another important factor which is required for development of e-businesses.
The most important and the basic element of infrastructure are Information and
Communication Technologies (ICT), which affects the e-business capabilities (Okoli, et al.,
2010). The study has identified the factors of trust, culture, infrastructure of the internet
facilities with payment and delivery systems, and the education level, especially the computer
literacy in a country to be very important to have a larger impact on the overall ecommerce
activities in general, and on the buying habits of consumers in particular. According to Chiu et
al. (2009), in general, trust is viewed as a set of specific beliefs dealing primarily with the
benevolence, competence and integrity of another party. Benevolence is the belief that the
trustee will not act opportunistically, even given the opportunity (Chiu et al., 2009; Ndubisi,
2011). Competence is the belief in the trustees ability to fulfill its obligations as expected (Chiu
et al., 2009).]. Trust is important because it helps customers overcome perceptions of
uncertainty and risk and engage in trust-related behaviors with vendors, such as sharing
personal information or making purchases (Pavlou. and Fygenson. 2006), Trust issue is initially
important in that people are not able to guarantee that the information Captured from various
resources (e.g. their neighbors) is always trustworthy [Jung 2009].Trust refers to an individual
belief that others will behave based on an individuals expectation (Grazioli & Jarvenpaa, 2000)
and an expectation that others one chooses to trust will not behave opportunistically by
taking advantage of the situation (Gefen et al., 2003a). In online shopping, users feel fearful to
transact with e-venders in that transaction are conducted through Internet. Hoffman, Novak,
and Peralta (1999) indicated that the critical obstruction in e-commerce was the fear, including
the lack of standards for secure payment, the lack of profitable business models, and
consumers fear of distributing their personal data. Trust helps decrease these fears and
facilitate transaction in e-commerce by reducing fraud, uncertainties and potential risks

H1: Trust of online customers has an effect on their online purchase intention.

Perceived value has been identified as having four components (Grewal, Monroe, & Icrishnan,
1998: Parasuraman & Grewal, 2000): Acquisition value is the benefit buyers believe they are
getting by acquiring a product; transaction value is the pleasure of getting a good deal; in-use
value is the utility derived from using the product; and redemption

Value is the price of the product at the time of trade-in or end-of-life. The attributes of a
product serves the logical driver of perceived value within the frame work of these four
components inasmuch as customers place value on product attributes that are directly related
to their wants or needs. Customer perceived value is also important because it can lead to
brand loyalty (Chiou; 2004).Consistency between product attributes and customer values (i.e.,
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positive perceived value) reduces uncertainty and helps the customer build trust in the form of
reliable expectations of the provider in ongoing exchanges (Carver & Scheier, 1990). Previous
research supports this association between perceived value and trust (Sirdeshmukh et al.,
2002).

Consistent with the theory of reasoned action (Fishbein & Ajzen, 1975), this study speculates
that a customer's positive perceived value of both products and service can lead to trusting
beliefs and result in intentions to commit to a long-term relationship with an online retailer.

Consumers tend to change their behavior through learning. For instance, consumers who had a
bad experience with a restaurant are likely to avoid the restaurant and they also avoid
restaurants with negative reviews or found to be very crowded (Voight, 2007). Empirical results
support such a perspective by demonstrating that perceived value leads to purchase intention
(Chu & Lu, 2007; Dodds, Monroe, & Grewal, 1991) and the spread of information via word of
mouth (Babin, Lee, Kim, & Griffin, 2005; Pihlstrm & Brush, 2008). Powered by email, weblogs,
chat rooms, and discussion boards, online social communication will help consumers share
interests, experiences, and ideas in the shopping and purchase process. Then, consumers will
organize their shopping behavior through social learning. Based on these observation is, the
following hypotheses are proposed

H2: Perceived values of online customers has an effect on their online purchase intention

Online WOM activities are becoming increasingly important to customers retailers. Comparing
traditional WOM, online WOM is more useful due to its speed, convenience, one-to-many
reach, and its absence of face-to-face pressure (Phelps, Lewis, Mobilio, Perry, & Raman, 2004).
Traditional WOM communication consists of spoken words exchanged with someone else in a
face-to-face situation, while online WOM involves transmitting personal experiences and
opinions through the written word (Bickart & Schindler, 2001). An advantage of the written
word is that people can seek information at their own pace and within their own time frame.
Shu-Chuan Chu (2009) found that consumers' satisfaction with purchasing experiences has
effect on consumer commitment and positive word of mouth intentions.

In addition, because interpersonal sources in general are seen as more credible than non-
personal or commercial sources, consumers often rely on informal WOM when they seek
information for their purchases (Goldsmith and Clark 2008). As a result, generating positive
WOM has become a crucial technique for marketers to build and maintain strong brand
relationships with highly engaged consumers (Smith et al. 2007).

H3: E- WOM of online customers has an effect on their online purchase intention





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Figure 1: Research Model

Research Methodology

All subjects involved in this research were required to answer the questionnaire based on their
perception of internet shopping. The questionnaire explores the correlation among constructs
based on the literature regarding to determine key factors affect on behavioral intention. This
questionnaire consists of 29 items in four constructs. The participants indicated their
agreement with a set of statements, using a 7- point Likert-type scale (ranging from strongly
disagree to strongly agree) drawn from previously validated data collecting instruments. Out of
180 questionnaires, 165 were return with completed answers and were used in statistical
analyses due to the completeness of all questions.

Data Analysis

To test the proposed hypotheses, data were collected and analyzed using structural equation
modeling (SEM) supported by AMOS with maximum likelihood estimation. SEM is a second-
generation multivariate technique that combines multiple regressions with confirmatory factor
analysis to estimate a series of interrelated dependence relationships simultaneously. SEM is a
widespread technique in several fields including marketing, psychology, social sciences and
Behavioral
Intention
E- WOM
Trust
Perceived
values


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information systems .Hence ,the structural equation model (SEM) is applied to validate the
relationship among variables in the research model. This study applies Amos to perform data
analyses. The measurement model is used to test the validity and reliability of items and
constructs in the research model. Results of the measurement model are expressed (Table 3). A
confirmatory factor analysis (CFA) using AMOS was conducted to test the measurement model.
Seven model fit measures were employed to assess the models overall goodness-of-fit: the
ratio of X 2 to degrees-of freedom (d.f.), the goodness-of-fit index (GFI), the adjusted goodness-
of-fit index (AGFI), the comparative fit index (CFI), the norm fit index (NFI), the root mean
square error of approximation (RMSEA) and the root mean square residual (RMR). As shown in
Table 3 goodness-of-fit for theeach measurement model was met following the suggested cut-
off value. Table 4 show overall indexes that presented in path analysis. Giving that for
mentioned pattern p> 0.05, could result that the ratio of (chi-square) is fit for that pattern.
Goodness-of-fit (GFI) for pattern is 0.993(GFI >0.9), showed that there is not little difference
between reproduced and observed variance and co-variance, and it represented the good
fitness of pattern. RMR for mentioned pattern is 0.006(RMR < 0.05), that is little and showed
little error in pattern and good fitness of it. Comparative fit index (CFI) for mentioned pattern is
0.999 (CFI >0.05) and showed that the fitness of pattern is good. RMSEA for pattern is
0.023(RMSEA <0.05), this index too, showed that the fitness of pattern is good.

Structural Model

The final step in model estimation is to explore the path significance of each causal relationship
for hypotheses and examine the variance explained by each path in the model. The structural
parameter estimates and the variance explained are presented in figure2. Three hypotheses
were supported. The results are reported and depicted in Table 5 and in figure 2. Thus we could
proceed to examine the path coefficients .figure 2 presents the results with a non-significant
path as a dotted line and the standardized path coefficients between the proposed constructs.
Thus Hypotheses 1, 2, 3 were supported. Moreover behavioral intention was significantly
influenced by trust , perceived value and e-wom.

Data Analysis and Findings

Table 1 shows demographic data. As it is shown, most of the respondents were female with 20
to 30 years of age. Their level of education falls mostly on categories of master degree and
amount of income falls mostly on category of more than 900$ a month.

Table 1. Descriptive Statistics Results

Characteristics Description Frequency Percent %
Gender Female 95 57.5
Male 70 42.5
Age Less than 20 years 0 0
20 to 30 years 85 51.5
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31 to 40 years 45 27.27
more than 40 years 35 21.21
Education Advanced diploma
and less
23 14
Bachelor 47 28.5
Master Degree 70 42.4
PhD and above 15 9.1
Income Below 300 dollars 14 8.5
301 to 600 dollars 15 9
601 to 900 dollars 60 36.5
More than 900
dollars
76 46

Table 2 represents descriptive statistics of variables. As it can be seen, all of variables have a
mean value more than 3 which among them

Table 2. Descriptive Statistics for preconditions to trust attitude

One-Sample Statistics
N Mean Std.
Deviation
Std. Error
Mean
E- WOM

165 3.2401 .85537 .07590
Perceived values

165 3.5040 .66035 .05860
Trust 165 3.6126 .93006 .08253

Table 3 General indexes of measuring patterns (CFA)

Index
E- WOM

Perceived
values

Trust
CMIN 12.309 50.394 18.105
DF 8 35 10
P 0.138 0.05 0.053
CMIN/DF 1.539 1.445 1.811
RMR 0.057 0.032 0.040
GFI 0.971 0.939 0.961
AGFI 0.924 0.886 0.890
TLI 0.960 0.954 0.915
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CFI 0.979 0.771 0.960
RMSEA 0.035 0.029 0.050

Table 4 Overall index of path analysis

Index CMIN DF P CMIN/DF RMR GFI AGFI TLI CFI RMSEA
Value 2.133 2 0.344 1.066 0.006 0.993 0.949 0.997 0.999 0.023


Table 5 result of hypotheses testing (regression weights)

hypotheses Description Estimate C.R. P
1 E- WOM

---> Behavioral
Intention

0. 35 4.873 0.000
2 Trust

---> Behavioral
Intention

0.51 5.703 0.000
3 Perceived
values

---> Behavioral
Intention

0.43 5.230 0.000


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Figure 2: Amos Result

Conclusion

In this study the factors that influencing the formation of behavioral intention were examined.
Theoretical framework was suggested that some factors are associated with behavioral
intention formation. The results provide valuable insights into understanding the factors that
affect the behavioral intention in internet shopping The P. correlation test showed that all of
the variables affecting behavioral intention. Furthermore, to understand which variable can
predict better the behavioral intention, we used structural equations model. As the result we
can state that hypotheses 1, 2, and 3 have been confirmed .In the model to forming behavioral
intention, perceived value, trust and e-wom be considered. In fact, by increasing these factors,
the probability of dependence variable will be increase. As shown in table 5. The new models
key statistics with accepted hypotheses are good since the GFI is 0.993, the CFI is 0.999, the
RMSEA is 0.023 and the p is 0.344. We can thus safely conclude that the new model is valid .We
suggest three possible directions for further research. First, more additional social factors can
be added to this model for explaining the adoption of human communication tools. Second,
because the results and findings of this study of the acceptance of e-commerce, a relatively
new research field, are derived from just a single study of a specific technology and only from
among respondents in Isfahan, generalizing and confirming this models applicability in
different research fields and among other groups would further validate both the findings and
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research model. Third, these results were obtained in only one time period, so longitudinal
research would help develop a better grasp of the interrelationships among variables over time.
Future work in these three areas would not only help develop a more sophisticated
understanding of e-commerce theories for researchers, but it would also offer useful
knowledge to those involved in promoting the making of purchases online to potential
customers.

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