The impact of word of mouth on service purchase decisions

Abstract

Purpose – Primarily, the purpose of this paper is to investigate the interaction and direct effects of tie strength between sender and receiver of word of mouth (WOM) and the receiver’s service purchase decision involvement on WOM influence. A secondary aim is to investigate how a distinctive conceptualization of perceived risk, consisting of two types (outcome risk and psychosocial risk), affects service purchase decision involvement. A conceptual model incorporating these constructs and associated hypotheses is developed and tested. Design/methodology/approach – In a survey of actual service consumers, respondents were asked to recall a recent instance where they had received service purchase information via WOM, and relate their responses to this instance. Established scales were used to measure the constructs. The hypothesized model was tested using structural equation modeling. Findings – Principally, findings demonstrate a strong interaction effect between service purchase decision involvement and tie strength. Also, results highlight the complexity of the perceived risk construct, suggesting that it is appropriately modeled as two types: outcome risk, and psychosocial risk. Research limitations/implications – This research has contributed to the service marketing literature by testing a model that predicts WOM influence. Evidence confirmed that the effect of service purchase decision involvement on WOM influence is moderated by tie strength. Additionally, a conceptualization of two different types of risk associated with purchase decisions was suggested, together with empirical confirmation of their hypothesized antecedent effects on service purchase decision involvement. Findings have special implications for the literatures of persuasion, social and interpersonal influence, as well as consumer behavior in general. Practical implications – To harness the power of WOM, managers should understand who their target audience is and how consumers are related to each other (tie strength) and to the service purchase decision (service purchase decision involvement). Recommendations are made with specific illustrations of how firms can leverage tie strength under conditions of low service purchase decision involvement to enhance WOM influence. Originality/value – The formidable power of WOM wields substantial influence on consumers, particularly within a service (vs goods) purchase context, typically characterized by higher perceived risk and lower search qualities. The significant interaction between tie strength and service purchase decision involvement is a unique contribution to the service WOM literature.