Customer Loyalty in E-Commerce

The high cost of attracting new customers on the Internet and the relative difficulty in retaining them make customer loyalty an essential asset for many online vendors. In the non-Internet marketplace customer loyalty is primarily the product of superior service quality and the trust that such service entails. This study examines whether the same applies with online vendors even though their service is provided by a website interface notably without a human service provider. As hypothesized, customer loyalty to a specific online vendor increased with perceived better service quality both directly and through increased trust. However, the data suggest that the five dimensions of service quality in SERVQUAL collapse to three with online service quality: (1) tangibles, (2) a combined dimension of responsiveness, reliability, and assurance, and (3) empathy. The first dimension is the most important one in increasing customer loyalty, and the second in increasing customer trust. Implications are discussed

Assessing Unidimensionality Through LISREL: An Explanation and an Example

Research in MIS often focuses on the relationships among latent variables of interest that cannot be directly measured. Because of potential error in measurement and associated confounding, indirect measurement of latent constructs requires formal assessments of reliability and validity. Without these measures, resultant paths in causal implications may be inaccurate, biased, and unstable. However, even with favorable metrics of validity and reliability, it is still possible for estimated models to be confounded. In many cases, such confounding occurs when a measurement item reflects more than one latent construct, that is, when there is a lack of unidimensionality. This problem can lead to false assumptions regarding the strength of paths between latent constructs and patterns of causality within a nomological network. While assessing unidimensionality is a critically important aspect of validity, it is not always formally tested in MIS research. This tutorial introduces the concept of unidimensionality from a LISREL Confirmatory Factor Analysis (CFA) perspective. Assuming that the underlying data distribution assumptions and model used are correct, the tutorial provides a step-by-step example of how to assess unidimensionality with LISREL. The tutorial also shows how a CFA can detect problematic multidimensional items and the problems that can occur if undetected

IN SEARCH OF A POSSIBLE THE MISSING VARIABLE - THE RELATIONSHIP BETWEEN TRUST, LEARNING INVOLVEMENT, AND KMS ADOPTION

Research shows that trust has a direct bearing on information systems usage patterns in a variety of contexts. Discussing the context of Knowledge Management Systems (KMS) training, this study suggests placing trust in a more background role as the facilitator. According to the view suggested, user involvement through learning is a key reason why employees after training decide voluntarily to continue using an information system, with trust facilitating the conditions that boost this learning.The relationship between trust and involvement through learning has not been previously studied, and the results open a new perspective on how trust operates. Theory is suggested why this should be the case. Data collected from a newly installed KMS show that when users’ involvement through learning is not included in the model, trust does directly affect continued use, but when involvement through learning is included in the model as a mediator between trust and continued use then trust does not directly affect continued use. Implications about the role of trust in systems implementation and especially in creating user involvement through learning are discussed

The Correlation Between Outsourcing and the Business Value of Information Technology

Ensuring a return on information technology investments and deciding to outsource are closely intertwined. This paper reports research conducted to examine the association between these issues from the viewpoints of experienced executives, managers, and consultants in comparison with those of veteran information technology professionals. The results show that the expected results from outsourcing are changing. Moreover, understanding the areas where managers and IT professionals agree and where they differ provides valuable insights into strategies for gaining adequate returns on IT spending

Building Effective Online Marketplaces with Institution-Based Trust

Despite the inherent risk arising from separating buyers and sellers, networked online marketplaces are proliferating. We describe how online auction marketplaces take advantage of institutional structures to build buyer trust in auction sellers, mitigate risk, increase satisfaction, and promote transaction intentions. It is hypothesized, based on institutional trust (Zucker 1986), that buyer trust in auction sellers can be increased, beyond past experience with sellers, through structural assurances, such as buyer-driven certification, auction house escrows, and credit card guarantees. We examined buyer transaction intentions, mediated by trusting beliefs, risk reduction, and satisfaction. The model is tested with 274 buyers in Amazonís online auction marketplace. The results support the hypotheses, highlighting the importance of institution-based trust in online networks. Implications are discussed

A Practical Guide To Factorial Validity Using PLS-Graph: Tutorial And Annotated Example

This tutorial explains in detail what factorial validity is and how to run its various aspects in PLS. The tutorial is written as a teaching aid for doctoral seminars that may cover PLS and for researchers interested in learning PLS. An annotated example with data is provided as an additional tool to assist the reader in reconstructing the detailed example

Customer Loyalty to an Online Store: The Meaning of Online Service Quality

Service quality is crucial in retaining customers in both online and traditional stores. However, measuring online service quality is hampered because of the unique aspects of online service quality that are not part of the widely used service quality instrument, SERVQUAL. Identifying these dimensions and assessing their relative importance is the objective of this study. New service dimensions are identified: lack of annoying banners, beneficial search engines, site security, quick response time, and customer recognition. Data dealing with Barnes & Noble.com (www.bn.com) indeed show that all five dimensions are correlated with increased customer loyalty. The data also show that service quality overrides the effects of perceived risk, cheaper prices, and cost to switch a vendor. Data dealing with the traditional Barnes & Noble bookshops and including the new dimension of customer recognition shows that the these new dimensions do not contribute beyond SERVQUAL. These preliminary results suggest that although SERVQUAL is a good instrument for assessing the service quality of traditional stores, additional dimensions are needed to capture some of the unique aspects of online service. The results also confirm that in both traditional and online shops, service quality reduces the effects of perceived risk, cost to switch, and relative price

DOES REPUTATION REALLY SIGNAL POTENTIAL SUCCESS IN ONLINE MARKETPLACES, OR IS IT ONLY A TRIGGER?

The implicit assumption in online marketplaces is that reputation, registered as the average of previous ratings, represents a market opinion of the trustworthiness of a business party and that this predicts eventual satisfaction with the expected outcome of the transaction. Extensive research indeed shows that such reputation does result in a higher probability of the seller being chosen in both services and goods markets, presumably because buyers believe that higher rating sellers have a better probability of delivering. Whether reputation actually predicts successful completion of the project and payment, rather than bid choice, however, is an unknown. This study answers that question. The data show that only when the rating value is above 5.5, which is rounded up in the market presentation to a caption of “above average”, is there a significant relationship between previous rating of the seller and eventual payment

Increasing User Motivation to be Involved in IS implementation through Justice and Trust: The case of a Knowledge Management System

Although it is well known that users benefit from being involved in the implementation of information systems, it is an open question how trust and justice interact to achieve this in cases where the users have no say about the new IS. To our knowledge, this study is the first to quantitatively examine the relationships between perceptions of justice, trust and user motivation in the context of a knowledge management system (KMS). Specifically, we studied the impact of justice and trust in a KMS recently implemented at all 78 branches of The National Insurance Institute of Israel (TNIII). The KMS encompasses all aspects of TNIII activity, and enables fast, reliable and secure communication between TNIII employees and the public they serve. The sample consisted of 300 full time employees (response rate 62.6%). The respondents were randomly selected as potential survey respondents from 22 branches of TNIII. The researchers collected data over a four month period, traveling country-wide between the various branches. It was hypothesized that KMS users would more motivated to be involved when they feel they will receive their share of benefits from the KMS (distributive justice), are treated with fairness both formally and informally (procedural and interactional justice respectively), and when they are given enough information to make their involvement meaningful (informational justice). The findings from 190 completed questionnaires show that interactional justice affects motivation. Distributive justice increased trust, and lack informational justice decreased trust. However, contrary to predictions, neither procedural justice nor interactional justice significantly affected trust. Trust affected motivation to be involved. Overall, our study provides a starting point for a better understanding of how perceptions of justice and trust in the vendor of the KMS during the implementation process affect user motivation. The results show that some aspects of justice build trust while others build motivation. More specifically, trust in the vendor develops through distributive justice and informational justice as applied by the organization to the users. By identifying the rules individuals use to evaluate organization and supervisor fairness, managers can better grasp employees\u27 justice perceptions and indirectly influence important organizational outcomes, including motivation regarding new KMS for leveraging organizational advantage. The perception of fairness is crucial in many organizational settings and should be considered in the context of IS implementation