Cultural influence on consumers' usage of social networks and its' impact on online purchase intentions

Journal of Retailing and Consumer Services 18 (2011) 348–354

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Journal of Retailing and Consumer Services journal homepage: www.elsevier.com/locate/jretconser

Cultural influence on consumers’ usage of social networks and its’ impact on online purchase intentions Sanjukta Pookulangara n, Kristian Koesler School of Merchandising and Hospitality Management, University of North Texas, 1155 Union Circle, #311100, Denton, TX 76203-5017, USA

a r t i c l e i n f o

a b s t r a c t

Available online 13 April 2011

Information technology has created an innovative way in which people communicate and interact. Particularly, social networking websites have become a popular virtual meeting place for consumers to converge and share information. Social networks allow consumers to voluntarily post personal information, upload photographs, send and receive messages, join groups, and blog at their leisure. Consumers now have the means to communicate their opinions about products and companies to other consumers ‘‘like themselves’’ at a critical point in the sales cycle—the beginning. Retailers have a lot to gain by utilizing and harnessing the power of social networking to enhance their overall marketing strategy. Social networking provides the opportunity to learn about their consumers’ needs, and then respond proactively and offers creative and effective ways to obtain insights not previously available. Additionally, social networking has moved from the fringes, become more mainstream and started influencing culture. Even though cross-cultural differences may exist and have an impact on the way people use social networking, at the end of the day it is all about being connected to each other and sharing information. It is imperative for retailers to incorporate social networking in their marketing strategy, as in today’s business having social networking as a part of the business model is the rule rather than the exception. This conceptual paper puts forth a research model using Hofstede’s cultural dimensions and Technology Acceptance Model 3 to examine the cultural influence on social networking and its influence on purchase intention. & 2011 Elsevier Ltd. All rights reserved.

Keywords: Social networking Culture TAM3

1. Introduction Consumers today are increasingly utilizing technology as an effective tool in their shopping experience. The popularity of Web 2.0 has helped in the growth and public popularity of social networks and has created a new world of collaboration and communication. Shopping has always been a social experience and social networking allows consumers to interact with individuals—many of whom are likely strangers. Social networks have not only transformed the research and purchase consideration phase, but it also provides shoppers a platform to advocate for the products and stores they love. Advocacy has always existed, but social networking has made this stage even more critical, amplifying the size of the audience reached (Swedowsky, 2009). The internet has become one of the most important communication channels in the world and growing internet usage is motivating some changes in the consumer purchasing process (Casalo et al., 2007). Consumers are increasingly turning to social

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networks in order to get information on which to base their decisions (Kozinets, 2002). They are using several online formats (e.g., blogs, podcasts, social networks, bulletin boards, and wikis) to share ideas about a given product, service, or brand and contact other consumers, who are seen as more objective information sources (Kozinets, 2002). This consumer-generated-content refers to online content that is produced by people, who were hitherto assumed to be only users or consumers of online content (Dwyer, 2007). The consumer-generated-media is defined as any positive or negative statement about a product or service made by potential, actual, or former customers, which is available to a multitude of people and institutions via the Internet (Stauss, 2000). The impact of social networks is increasingly pervasive, with activities ranging from the economic (e.g., shopping) and marketing (e.g., brand building) to the social (e.g., MySpace) and educational (e.g., distance education) (Teo et al., 2003). The otherwise fleeting word-of-mouth targeted to one or a few friends has been transformed into enduring messages visible to the entire world (Duan et al., 2008). Social networks allow organizations to track customer sentiment, customer service problems and dissatisfaction in their customer base. There is a greater sense of urgency for retailers to integrate this new

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emerging medium in their marketing plan and create a social network based strategy that is true to the brand and allows the company to control the service experience for their customers. Retailers are utilizing the technology available today to sell their products or services over the Internet, respond to customer questions, offer additional products and services based on previous purchases, and evaluate customers’ satisfaction with their offerings—all without dealing with the customer in person (Kasim and Ismail, 2009). However, it is important to note that social networks is not a panacea and retailers should treat it as a catalyst for fresh thinking on how companies can improve service in the digital age (Swartz, 2009). Social networks have put power in the consumers’ hands and forces companies to deliver on their promises. The use of social networking by retailers to shape their service strategy is still in its nascence and needs to be explored further especially since alignment of social networking strategy and service strategy is crucial to the success of their business. In the same vein, consumers’ usage of social networks for information, brand recognition, and opinions about brand and/or retailers are influenced by their cultural background. Research has indicated that consumers differ in their service quality expectation based on their culture (Doonthu and Yoo, 1998). In general, consumers’ cultural values affect their expectations and perceptions of products or services, and therefore, their purchase choices and buying behavior (Kueh and Voon, 2007). Using deductive knowledge, it can be stated that culture will also influence usage of social networks. Social networking has given rise to the ‘‘culture of sharing’’ with individuals providing input on product and services for everyone to see. Given that culture may impact the way people behave and interact, it is imperative to examine cultures’ influence in social networking websites where much of the information is usually user generated. Little or no work has been undertaken to examine cultural influence on social networking which is increasingly used by consumers for sharing their experiences both good and bad. Usage of social networking is increasing at a tremendous speed, and it is influencing how people share knowledge across the globe. There is a lack of information on how this new media coupled with its international appeal is influencing purchase behavior and needs to be examined. Thus, this paper puts forth a conceptual model that utilizes Hofstede’s Cultural Dimensions (1980, 2001) and Venkatesh and Bala’s (2008) Technology Acceptance Model 3(TAM3). Hofstede’s Cultural Dimensions are used as a guide for the adapted research model because the dimensions help to explain elements of ethos within cultures. TAM3 is used as a guide for the adapted research model because it helps to establish the key factors in which consumers accept social networking. The remainder of this article is organized as follows. The first section provides relevant information related to previous studies. Then, the model is developed in two stages. First, the adapted TAM3 is presented, which is the core model. In the second stage, culture is introduced and the new conceptual model is presented that can be adopted to examine both the influence of technology acceptance of social networking as well as the influence of culture on the variable in the study. Finally, the article concludes by reaffirming the importance of social networks on the retail landscape and its’ emerging importance in the marketing mix.

2. Related literature Internet and virtual communities have transformed consumers, societies, and corporations with wide spread access to information, better social networking and enhanced communication abilities (Kucuk and Krishnamurthy, 2007). A recent study of

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Deloitte Touche´ USA revealed that 62% of US consumers read consumer generated online reviews and 98% of them find these reviews reliable enough; 80% of these consumers said that reading these reviews has affected their buying intentions (Industry statistics, n.d.). Consumers have also started utilizing social networks increasingly to learn more about brands as well as visit retail websites. For example, the active users on Facebook, who on average spend 15 h on the site per week contributes more than 3% of all traffic to the top retail sites online, with almost 25% of all the users posting links to other companies, products or services (Mahoney, 2009). Another study by Jansen et al. (2009) found that 19% of the Twitter users mention an organization or product brand in some way in their ‘‘tweets’’ with about 20% of all microblogs mentioning a brand, expressing a sentiment or opinion concerning that company, product, or service. Retailers are also pushing forward with inclusion of social networking in their marketing mix with 40% of e-retailers maintaining a social network page and 59% of top US retailers having a ‘‘fan page’’ on Facebook (Social-Network-Driven, 2009). According to Internet Retailer large majorities of the top 100 companies had a profile on Facebook (79%), Twitter (69%) or both (59%) (What’s in a Retail email?, 2009). Thus, it can be inferred that use of social networking for shopping or ‘‘social shopping’’ is transforming the retail industry especially e-retail, enabled by consumer technology, customer reviews and referrals, mobile capabilities and social networking sites (Social-Network-Driven, 2009). Previous studies have focused on electronic recommenda¨ tion agents (Gershoff et al., 2003; Haubl and Murray, 2003; ¨ Haubl, G., Trifts, V., 2003; Swaminathan, 2003), brand communities (McAlexander et al., 2002), and on companies’ usage of online consumer conversations to extract marketing knowledge (Sawhney et al., 2005). Studies have also examined the effect of social influence on consumers’ purchase decisions across a variety of contexts, (Argo et al., 2006, 2008; Bell and Song, 2007; Manski, 1993, 2000) as well as peer influence (Iyengar et al., 2008). The impact of technology on purchase intention has also been examined, including technical specifications of an online store (Zhou et al., 2007), website quality (Zhang and von Dran, 2002), intention to use, and ease of use (Ha and Stoel, 2009). Social search has also been examined with social interactions often used as the first stage of search intention to use (Evans and Chi, 2009), and respondents preferring social sites over search engines for opinion and recommendation questions (Morris et al., 2010); however, there is relatively little theoretical and empirical work available in adaption of new technology such as social networking and how this influences purchase behavior.

3. Culture and Social Networks Technology is, to a considerable extent, socially and culturally constructed (Schwarz and Thompson, 1990) and cannot be separated from human beings (Hendriks and Zouridis, 1999). Culture influences lifestyle, and lifestyle influences the way individuals communicate and interact with new media technologies (Brandtzæg, 2010). Online social networks have become a cultural phenomenon. Social networks, such as Facebook and Myspace have witnessed a rapid growth in their membership, and with the increase in popularity of social networking websites, it is safe to say that the world is becoming ‘‘smaller’’ and people are now inter-connected more than ever. The social aspect of shopping has been ingrained in consumer culture for a long time with shopping seen as an outlet to socialize. Asking someone where she got that great outfit, hearing about the latest sale from a friend or socializing at the mall are all integral parts of consumer culture. Social networking has enabled

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consumers to utilize technology to ‘‘social shop’’ online seamlessly. With the increased usage of social networks, it is important to understand the influence of culture on the usage of social networking especially with the wide spread popularity of this technology. Facebook’s introduction of natural language interfaces in several markets has helped propel the site to 153% growth, with an overall usage of social media growing to 25% worldwide during 2008 (Social Networking Explodes, 2008). Additionally, Nielsen Global Online Consumer Survey (Global Advertising, 2009) found that recommendations from personal acquaintances or opinions posted by consumers online are the most trusted forms of advertising worldwide. Culturally, every region of the world is different; hence it is important to understand whether social networks has homogenized culture and created consumers who think alike and behave in a similar fashion. Culture has been shown to affect marketing, including advertising, marketing strategies and buying habits (Green, 1999; Grier and Brumbaugh, 1999; Simester et al., 2000; Taylor and Miracle, 1996; Ueltschy and Ryans, 1997b), but relatively little theoretical and empirical work is available in a cross-cultural adaption of emerging technology of social networking. Culture as a predictor for online purchase has resulted in mixed findings regarding its impact on online purchase behavior (Kim et al., 2009). While some studies recommending online stores to adapt their atmospherics to the nuances of a given culture (Chau et al., 2002). Cole et al. (2000) felt cultural differences do not affect online retailers’ ability to attract and retain customers, citing that established online stores such as Amazon are globally successful using a standardized customer interface. Culture and lifestyle deeply influences behavior and with a greater usage of social networking by individuals it is soon becoming the lifestyle of choice across generations and cultures and needs to be examined more closely. Regardless of whether the retailers use cultural specific or global approach in their marketing it is urgent that they recognize the more pressing issue of incorporating social network in their infrastructure. Social media usage has fundamentally altered the consumer landscape, and for brands to remain relevant in this environment, they will need to adapt to both emerging technologies and shifting consumer behavior without delay (Feed, 2008). Hence, the majority of online effort by the retailers should be concentrated on reaching shoppers where they are already congregating by participating and encouraging conversations through third-party tools such as social networks (Swedowsky, 2009). In examining the extent to which social networks influence consumers’ involvement and eventually their purchase intention, this conceptual paper proposes examining the cultural influence on consumer intention of using social networking websites and its impact on purchase intention by using an adapted Technology Acceptance Model3 (TAM3) (Venkatesh and Bala, 2008) .

4. Technology acceptance Model 3 (TAM3) Technology Acceptance Model (TAM) is one of most widely used models to explain users’ behavioral intention to use a technological innovation. By treating social networking as a technology system and the consumer using the social networking websites as a computer user, we can apply TAM and test how well it predicts user intention to use the technology, i.e., the social networking sites. TAM, adapted from the Theory of Reasoned Action (TRA) (Fishbein and Ajzen, 1975) and originally proposed by Davis (1986), assumes that an individual’s information systems acceptance is determined by two major variables: (1) Perceived Usefulness (PU) and (2) Perceived Ease of Use (PEOU). TAM3 (Venkatesh and Bala, 2008)

is an integrated model of technology acceptance that combines TAM2 (Venkatesh and Davis, 2000) and the model of the determinants of perceived ease of use (Venkatesh, 2000). Venkatesh and Davis (2000) proposed an extension of TAM – TAM2 – by identifying and theorizing about the general determinants of perceived usefulness – that is, subjective norm, image, job relevance, output quality, result demonstrability, and perceived ease of use – and two moderators—that is, experience and voluntariness. TAM3 emphasizes the unique role and processes related to perceived usefulness and perceived ease of use and theorizes that the determinants of perceived usefulness will not influence perceived ease of use and vice versa (Venkatesh and Bala, 2008). 4.1. Perceived Ease of Use (PEOU) and Perceived Usefulness (PU) TAM posits that consumers’ intention to use a new technology like social networking is affected by two beliefs: (1) Perceived Ease of Use (PEOU) and (2) Perceived Usefulness (PU). The former concerns ‘‘the degree to which a person believes that using a particular system would enhance his or her job performance’’ (Davis, 1989); while the latter reflects the degree to which a person believes that using a particular system would be free of effort (Davis, 1989). In our model, PEOU and PU are examined with relation to using social networks by consumers. The model suggests that PU will be influenced by perceived ease of use because, other things being equal, the easier a technology is to use, the more useful it can be (Venkatesh, 2000) In general PEOU has a significant positive influence on intention (Lee et al., 2003). PU is a strong predictor of behavioral intention (Venkatesh and Bala, 2008) which in this study is the intention to use social networks for online shopping. 4.2. Subjective norm Subjective norm suggests that behavior is instigated by one’s desire to act as important referent others (e.g., friends, family, or society in general) think one should act, or as these others actually act (Bearden et al., 1989). In other words, subjective norms are the perceived social pressures an individual faces when deciding whether to behave in a certain way. Subjective norm is included as a direct determinant of behavioral intention in TRA (Fishbein and Ajzen, 1975) and the subsequent theory of planned behavior (TBP) (Ajzen, 1991). The rationale for a direct effect of subjective norm on intention is that people may choose to perform a behavior to comply with important referents even if they are not themselves favorable toward the behavior or its consequences (Venkatesh and Davis, 2000). Subjective norm has been found to have a positive link with perceived usefulness (Venkatesh and Davis, 2000). Additionally, the direct influence of subjective norm on intention has yielded mixed results with Mathieson (1991) finding no significant effect of subjective norm on intention, whereas Taylor and Todd (1995) did find a significant effect. It has been suggested that when subjective norms positively influence intention in the early stages of implementation of new technology (Taylor and Todd, 1995) and as the use of social networks for online shopping is relatively new we will assume for that subjective norms will positively influence intention. 4.3. Social search Social search can be defined as the process of finding information online with the assistance of social resources (e.g., friends and unknown persons) online for assistance (Morris et al., 2010). This kind of search may also involve conducting a search over an

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existing database of content previously provided by other users, such as searching over the collection of public opinion of websites such as amazon.com or the micro-blogging site Twitter. Social search is used increasingly by individuals to answer many type of questions. Additionally information generated by social networks impact purchase intention is a positive manner (Lim and Dubinsky, 2005). Thus, we suggest that consumers will use social search to learn more about brands and/or product via social networking websites and hence their perceived usefulness for social networks as well as intention to use social network will be influence by social search. 4.4. Self-efficacy Self-efficacy can be defined as individual judgments of a person’s capabilities to perform a behavior. The stronger the perceived self-efficacy, the more active the efforts (Bandura, 1977). Efficacy in dealing with one’s environment is not a fixed act or simply a matter of knowing what to do; rather, it involves a generative capability in which component cognitive, social, and behavioral skills must be organized into integrated courses of action to serve innumerable purposes (Bandura, 1982). Applied to using social networks, self-efficacy refers to consumers’ judgments of their own capabilities to participate in social networks and will impact their perceived ease of use. Previous research has indicated the relationship between self-efficacy and PEOU is positive (Venkatesh, 2000; Davis and Venkatesh, 2004) and hence we propose. 4.5. Intention to use social networks and purchase intention A survey conducted by American Marketing Association indicated 47% of the consumers would visit social networking sites to search for and discuss holiday gift ideas, and 29% said they would buy products there (Horovitz, 2006). Social networks utilizing social shopping applications have enormous potential to transform the apparel retail landscape. Social networks allow consumers to embrace the inherent social nature of shopping by not only providing relevant information via postings online but go beyond the traditional realm by satisfying much more hedonic needs: the need for approval from peers, the desire for self expression, and the desire for entertainment (Cohn and Park, 2007). Individuals adopt innovations with mainly private personal, individual consequences and, whether an individual considers an innovation for adoption is strongly determined by compatibility between the characteristics of an innovation and the needs of the individual (Valente and Rogers, 1995). In today’s connected world it would be safe to assume that social networks are an important technology innovation that directly impact consumers and eventually will impact their perception with regards to purchasing intention online.

5. Culture and TAM3 Culture is a conceptually complex idea that has defied a comprehensive and agreed-on definition (Lam et al., 2009). Hofstede’s seminal work (1980, 2001) focused on the cultural dimensions of individualism, power distance, masculinity, uncertainty avoidance and long-term orientation. Individualism is defined as the degree to which a society emphasizes the role of the individual. Power distance is the degree to which the less powerful members of organizations accept that power is distributed unequally. Masculinity is the degree to which a society emphasizes tradition masculine values as opposed to feminine values. Uncertainty avoidance is the extent to which people feel

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threatened by unstructured and ambiguity. Lastly, long term orientation is defined as the extent to which a society exhibits a pragmatic, future-oriented perspective rather than a conventional historic or short-term perspective (Hofstede, 2001). Individualism, uncertainty avoidance, and long term avoidance are the three dimensions of culture that will be included in this study. Individualistic societies indicate looser bonds between the members, and hence, it is anticipated that the social interactions among the members of the society will not be strong, which could lessen the importance of influence of referents. On the other hand, in collectivistic cultures people for stronger bonds and hence it could be inferred that these individuals will be highly influenced by other members of the society. Societies that are high in uncertainty avoidance continuously feel the inherent uncertainty in life while societies low in uncertainty avoidance more easily accept uncertainty (Stremersch and Tellis, 2004; Yaveroglu and Donthu, 2002). Additionally, uncertainty avoidance is related to customers’ risk perception (Jarvenpaa and Tractinsky, 1999) and thus we can infer that depending on their level of uncertainty avoidance consumers will react differently to towards social networking. Individuals’ perceptions can also differ based on orientation with individuals in short-term orientation cultures expect to see quick outcomes while individuals in long-term orientation cultures prefer long-term goals. Thus, individuals in short-term orientation cultures experience materialist consumption pressures (i.e. keeping up with trends such as social networking) (Dwyer et al., 2005) and adopt new technology rapidly. Subjective norm is not only influence by individual level differences but also by cultural and societal value and norms (Hofstede, 2001; Triandis, 1989). Since cultural norms are a primary influence on marketing perceptions and consumption behavior (Winsted, 1997; Furrer et al., 2000), and any approach to marketing that does not account for the influence of culture on subjective norms is lacking foresight. Finally, self-efficacy is the confidence one has in their own abilities; however, ability is only as good as its execution (Bandura, 2007). Bandura (1986) suggested that self-efficacy is, in part, socially constructed and that such construction may differ as a function of national culture. Just as our culture teaches us what ideals to hold and what beliefs to endorse (Rokeach, 1973), it plays a role in how we construct our self-efficacy. 5.1. Moderating effects of culture Srite and Karahanna’s (2006) study tested a model in which Hofstede’s four main cultural dimensions moderated the relationships between PU and PEOU. The result of the study found that only masculinity—femininity dimension moderated the relationship between PEOU and intention. Additionally, Karahanna et al.’s (2005) study suggested that culture can moderate the relationship between subjective norm and the behavioral intention. Fig. 1 depicts the research model and the hypotheses based on the above information have been presented in Table 1.

6. Study Implications Social networking is bringing changes to communication patterns and interpersonal relationships (Byrne, 2007; Hargittai, 2007; Humphreys, 2007). Social networking is a recent phenomenon and its proliferation and growing cultural impact is confirmation of the growing influence of technology on the consumer decision process. Social networking allows organizations to engage in timely and direct end-consumer contact at relatively low cost and higher levels of efficiency,

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Perceived Usefulness of SN

P3a

Subjective Norm P4b

P2

P3b

Social Search

Intention of Using SN

P4a P6a

P1a

P6d

P6b

SelfEfficacy

P5

P1b

Perceived Ease of use of SN

P7

Online Purchase Intention

P6c P6e

Culture

Fig. 1. Explaining online purchase intention using TAM3 and culture.

Table 1 Summary of hypotheses. P1a P1b P2 P3a P3b H4a H4b P5 P6a1 P6a2 P6a3 P6b1 P6b2 P6b3 P6c1 P6c2 P6c3 P6d1 P6d2 P6d3 P6e1 P6e2: P6e2 P7

PU will be positively influenced by PEOU. Intention to use social networks will be positively influenced by PEOU. Intention to use social networks will be positively influence by PU. PU will be positively influence by subjective norms. Intention to use social networks will be positively influenced by subjective norms. PU will be positively influence by social search. Intention to use social networks will be positively influenced by social search. Perceived ease of use will be positively influenced by self-efficacy of using social networks. Subjective norm will be influenced differently by members of individualistic and collectivistic cultures. Subjective norm will be influenced differently by members of low uncertainty avoidance and high uncertainty avoidance cultures. Subjective norm will be influenced differently by members of short term orientation and long term orientation cultures. Social search will be influenced differently by members of individualistic and collectivistic cultures. Social Search will be influenced differently by members of low uncertainty avoidance and high uncertainty avoidance cultures. Social Search will be influenced differently by members of short term orientation and long term orientation cultures. Self-efficacy will be influenced differently by members of individualistic and collectivistic cultures. Self-efficacy will be influenced differently by members of low uncertainty avoidance and high uncertainty avoidance cultures. Self-efficacy will be influenced differently by members of short term orientation and long term orientation cultures. The relationship between subjective norm and intention to use social networks for online shopping will be moderated by individualism/collectivism. The relationship between subjective norm and intention to use social networks for online shopping will be moderated by uncertainty avoidance. The relationship between subjective norm and intention to use social networks for online shopping will be moderated by orientation. The relationship between PEOU and intention to use social networks for online shopping will be moderated by individualism/collectivism. The relationship between PEOU and intention to use social networks for online shopping will be moderated by uncertainty avoidance. The relationship between PEOU and intention to use social networks for online shopping will be moderated by orientation. : Intention to use social networks will positively influence online purchase intention.

making it a very attractive alternative to the more traditional communication tools (OECD, 2007). Culture influences how people think and perceive an event and social networking is a massive convergence of culture, giving new meaning to basic cultural terms as ‘‘knowledge,’’ ‘‘wisdom,’’ ‘‘authority,’’ ‘‘trust’’ and ‘‘social transmission of meaning’’ (Maj and DerdaNowakowski, 2009). Social networking has allowed the evolution of new culture where it is no longer shaped just by individual values and ideologies but also by new rituals and communication tools in the social space of Web 2.0. According to eMarketer, the number of people creating content online will rise from 88.8 million in 2009 to 114.5 million in 2013 (The Future of User-Generated Content, 2010). Consumers via social networks are exerting an increasingly profound influence over culture and economy, with various industries transforming the way they do business. Retail industry is a prime example of this phenomenon with over 81% of people using consumer

reviews in their purchase decisions (Leggatt, 2009). Social networks are providing retailers with an opportunity to reach a new variety of consumers. Information generated by consumers in a social network platform is a considerable added value for other users and lack of such information on a retailer’s website would cause them to seek information, and possibly products, elsewhere (Vreeland, 2010). Thus, it can be clearly stated that not incorporating social networks as a part of the marketing mix is not only poor customer service, but also a surefire way to lose consumers. Culture has not been given its due when examining impact on new technology. Successful marketers are increasingly recognizing culture as the most powerful determinant of consumer attitudes, lifestyles, and behaviors (Cleveland and Chang, 2009). Additionally, retailers must address the possibility of behavioral heterogeneity and homogeneity within and across countries and cultures (Broderick et al., 2007; Tung, 2008; Yavas et al., 1992). Cultural groups and social phenomenon such as usage of social

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