The Commerce Platform’s Governance Mechanisms on Seller Users: From the View of the Brand Attachment Theory

Abstract

Because of the rapid development of information technology, more and more companies have started to exchange goods and services on the e-commerce platform. Under this new business model, the main challenge for e-commerce platform firms is how to govern user firms, especially how to improve seller user firms’ loyalty. Therefore, based on the review of the traditional channel governance mechanism, this study explores three platform governances （control, fairness and customization） by which one can increase seller user firms’ loyalty. Relationship marketing researchers suggest that the strong brand relationship between users and a platform firm is the main reason for users to be loyal to the firm. Prior research has utilized the brand attachment theory to systematically articulate the factors that can lead to a strong brand relationship. By following this direction, this study will also use the brand attachment theory to explicate the platform’s governance mechanisms and their roles in obtaining seller user firms’ loyalty. This study argues that the three platform governances can promote higher seller user firms’ loyalty, by increasing their brand attachment to the platform. According to the brand attachment theory, a user can build strong attachment to a brand if the brand can fulfill his/her goals of self-enablement, self-gratification, and self-enrichment. In the context of the e-commerce platform market, firstly, platform control strategy encourages seller user firms’ sense of self-efficacy and enables them to attain desired performance results. In other words, platform firms’ control mechanism promotes seller user firms’ performance satisfaction. Secondly, platform fairness strategy provides seller user firms emotional pleasures and trust towards the platform. That is, platform firms’ fairness mechanism promotes seller user firms’ relationship satisfaction. Thirdly, platforms customization strategy makes seller user firms identify with the concept or image of the platform. Specifically, platform firms’ customization mechanism promotes seller user firms’ self-concept connection. Therefore, this study posits that control, fairness, and customization will increase seller user firms’ loyalty through promoting their performance satisfaction, relationship satisfaction, and self-concept connection with the platform, respectively. Moreover, the relationship marketing literature also addresses the importance of brand switching costs in corporates’ user retention programs. Strong brand attachment will cause true loyalty, while high brand switching costs will lead to spurious loyalty. Therefore, this study analyzes the moderating effects of switching costs on the three platform governances. We suggest that high brand-switching costs buffer the effectiveness of these three governance mechanisms. Specifically, control, fairness, and customization will be less effective in building brand attachment to the platform when user firms are forced to stay in the e-commerce platform by higher brand switching costs. Finally, by collecting data from 177 seller user firms registered and transacting in key e-commerce platforms and using Partial Least Squares （PLS） to test the model, the empirical results show that the proposed research model and most hypotheses are verified.