An Empirical Study of Online Infomediarys Service Capability Signaling

Abstract

As the negative effects of Information-age such as privacy problems, junk mail became widespread, there has been a new stream of research in marketing that focuses on these problems. Chu and Kim(2003) proposed a theoretic model which states that corollary benefitssuch as free email, news, and sometimes monetary payment for providing information may be a possible signal to solve the consumersinformation asymmetry problem. However, despite the importance of empirical validation, there arent enough empirical studies which test these theoretical predictions. In this paper, we empirically examine the claim that corollary benefits can be a signal of hidden service capability of an infomediary. We find that consumers perceive lower level of corollary benefits to be adequate in case of well-established infomediaries. However, for an unknown infomediary, high level of corollary benenfit is important to signal capability. These findings are consistent with the predictions of the Chu and Kims theoretical research(2003)