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The Boosting Effect of E-WOM on Macro-level Consumption: A Cross-Industry Empirical Analysis in Japan

Author

Listed:
  • Shinichi Yamaguchi

    (International University of Japan)

  • Hirohide Sakaguchi

    (Keio University)

  • Kotaro Iyanaga

    (International University of Japan)

Abstract

In this study, we carry out an empirical analysis on how electronic word-of-mouth (hereinafter “e-WOM”) marketing on e-WOM websites and electronic-commerce websites on the Internet boosts consumption on a macro-level. In our analysis, we conduct a model analysis of consumer behavior using data composed of more than 30,000 questionnaire surveys and quantitatively find the elasticity coefficient of the boost to consumption by performing a two-step GMM (generalized method of moments), which uses instrumental variables. The results of the analysis show e-WOM significantly increased expenditures in six fields: computers, electrical appliances, etc.; music; hobbies; clothing, accessories, etc.; beauty products, etc.; and goods for everyday life, etc. Furthermore, there was no field that had a significantly negative value. These results showed that, in the majority of the target fields, e-WOM had not only the effect of winning customers from the competition, but also the effect of boosting consumption on a macro-level. In addition, even from people’s subjective evaluations, there were many in all the generational groups who said that e-WOM boosted expenditures.

Suggested Citation

  • Shinichi Yamaguchi & Hirohide Sakaguchi & Kotaro Iyanaga, 2018. "The Boosting Effect of E-WOM on Macro-level Consumption: A Cross-Industry Empirical Analysis in Japan," The Review of Socionetwork Strategies, Springer, vol. 12(2), pages 167-181, December.
    • Handle: RePEc:spr:trosos:v:12:y:2018:i:2:d:10.1007_s12626-018-0027-4
    DOI: 10.1007/s12626-018-0027-4
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    References listed on IDEAS

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    3. Jeffrey M Wooldridge, 2010. "Econometric Analysis of Cross Section and Panel Data," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262232588, April.
    4. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-838, May.
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