The Effect of Social Rewards and Perceived Effectiveness of e-Commerce Institutional Mechanisms on Intention to Group Buying

Abstract

Previous studies have stressed the functionality and usability of group buying systems, although few studies have focused on social and psychological factors and the business perspective of online group buying. We believe that factors related to consumer psychology, relation exchange, and institutional mechanisms have not been fully explored by previous studies. These psychological and consumer behaviors are crucial for marketers seeking to increase sales rates. The phenomena are worthy of attention, given the potentially significant market gains offered by this novel business model. This study focuses on the application of social rewards in the group buying context and identifies the issue in the context of online group buying by incorporating factors such as reciprocity, reputation, trust, satisfaction, and perceived effectiveness of e-commerce institutional mechanisms (PEEIM). These factors are identified as critical factors affecting both online and physical shopping. With an online survey, we perform PLS analysis and the results suggest that PEEIM has significant effect towards online group buying intention. The results also suggest that SET factors contribute substantial impact to customer’s online group buying intention. Theoretical and managerial implications were discussed.