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Customer behavior of online group buying: an investigation using the transaction cost economics theory perspective

Author

Listed:
  • Mohammad Alamgir Hossain

    (RMIT University)

  • Shahriar Akter

    (University of Wollongong)

  • Shams Rahman

    (RMIT University)

Abstract

As online group buying (OGB) businesses increasingly face strong competition, understanding the beliefs, attitudes, and behaviors of their customers is critical. Hence, the purpose of this study is to understand why customers choose one OGB vendor over others. By extending the transaction cost economics (TCE) theory, we explain OGB customers’ purchase behavior. We conducted a two-stage online survey. The first survey (T1) captured the perceptions of the respondents before making a purchase (i.e., purchase intention and its antecedents, namely unpredictability, trust, customizability, and frequency of OGB use). In the second stage (T2), we collected responses from the participants of the first study who committed at least one purchase in the last month. The second survey collected responses about the frequency of OGB use, purchase behavior, and online customer review (OCR). Data were analyzed with partial-least-square-based structural equation modelling technique (PLS-SEM). Results suggest that unpredictability, trust, and customizability influence purchase intention and are influenced by the frequency of OGB use. In addition, customizability decreases unpredictability. Finally, in seeking an answer to how to convert potential customers into actual customers, we found that OCR is a moderator of the relationship between purchase intention and purchase behavior. The findings from the longitudinal study extend TCE theory in electronic markets by capturing the OGB dynamics (i.e., antecedents and effects), the mediating effects (i.e., purchase intention) and the moderating effect (i.e., OCR) in a robust nomological relationship.

Suggested Citation

  • Mohammad Alamgir Hossain & Shahriar Akter & Shams Rahman, 2022. "Customer behavior of online group buying: an investigation using the transaction cost economics theory perspective," Electronic Markets, Springer;IIM University of St. Gallen, vol. 32(3), pages 1447-1461, September.
    • Handle: RePEc:spr:elmark:v:32:y:2022:i:3:d:10.1007_s12525-021-00479-y
    DOI: 10.1007/s12525-021-00479-y
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    References listed on IDEAS

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    Cited by:

    1. Wang, Shuai & Ma, Shuang, 2023. "Is product customization always beneficial in the context of C2M platforms? A signaling theory perspective," Technological Forecasting and Social Change, Elsevier, vol. 197(C).
    2. Rainer Alt, 2022. "Electronic Markets on platform culture," Electronic Markets, Springer;IIM University of St. Gallen, vol. 32(3), pages 1019-1031, September.

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    More about this item

    Keywords

    Online group buying; OGB; Transaction cost economics; Intention; Actual behavior; Online customer review;
    All these keywords.

    JEL classification:

    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • M31 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Marketing

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