Customer Satisfaction and Empowerment as the Prerequisite for Web-Based Electronic Commerce Systems Success

Firms are becoming more reliant on their information systems (IS). Yet IS options have become increasingly complex, and the potential for a firm to invest in its IS is almost open-ended. Few firms systematically attempt to measure the success of such investment, or even know how to do so. The difficulty of determining useful success measures has long been acknowledged, despite general agreement about the importance to success of user satisfaction with the quality of systems and of the information they provide. The extension of IS beyond the boundaries of a single firm, notably with the development of Web-based electronic commerce, has increased the complexity of the context in which success is assessed. The user is no longer simply an employee. Consequently, IS researchers, as well as practitioners, are stressing the need to better understand the factors that contribute to the success or otherwise of Web based electronic commerce systems (WBEC). Because WBEC users may also be a firm’s customers, customer satisfaction and customer loyalty have previously been suggested as key metrics for measuring success of WBEC. However, there appears to be no previous investigation of WBEC success and its antecedents from the perspective of customer empowerment, despite the recent interest in this concept evidenced in the Marketing literature. As well, the role of perceived value in mediating loyalty and satisfaction remains unclear. Three broad research issues were therefore identified at the outset of this study. The first research issue was whether WBEC quality is a prerequisite for WBEC success. The second research issue concerned the impact of customer empowerment on WBEC success. The third research issue concerned the combined impact of WBEC quality and customer empowerment on WBEC success. To investigate these research issues, a mixed method approach was used. An initial systematic literature review established a speculative model of WBEC success. The conceptualisation of quality derived mainly from the existing IS success literature. The conceptualisation of customer empowerment drew on theories of power and empowerment from psychology, economics and sociology, and emphasised the link between a sense of being in control and the sense of empowerment. Relationships were hypothesised between the identified WBEC quality variables (system quality, information quality and service quality), the identified customer empowerment variables (personalisation, interactivity, trust, and pricing flexibility) and WBEC success (as measured by customer satisfaction and customer loyalty). Measurement scales were adapted from published scales where possible and new scales were developed where needed (for personalisation and pricing flexibility). Expert judgment was then sought to help ensure the comprehensiveness of the model and constructs, as well as the validity of the associated instrument. In the final research stage, data were collected using a written survey as part of a free simulation experiment. In this experiment, 57 participants were asked to evaluate six WBEC websites using an instrument designed to measure relationships between WBEC quality variables, customer empowerment variables and WBEC success. A total of 281 usable WBEC site evaluations were obtained. Hypothesised relationships were tested through three phases, using multiple and stepwise regression analysis. The results indicate that customer empowerment in general is important to WBEC success. All customer empowerment variables were found to be positively and significantly related to WBEC satisfaction and loyalty. When combining WBEC quality variables and empowerment variables, the results shows that the variance in WBEC satisfaction is explained by the four customer empowerment variables and two of the WBEC quality variables (information quality and service quality). However, WBEC systems quality had no influence on WBEC satisfaction when empowerment variables were present. The variance in WBEC loyalty is explained by the four customer empowerment variables and one of the WBEC quality variables, but this time the variable is WBEC service quality. Our findings are that customers can be satisfied and loyal even when some aspect of WBEC quality is poor. Yet we show in this study that WBEC quality and customer empowerment constructs are distinct conceptually, and positively affect WBEC satisfaction and loyalty independently. Hence, it appears that in the presence of empowerment variables, the level of WBEC quality variables have a moderated effect on WBEC satisfaction and loyalty. A major condition may be the relative importance of the variables. If WBEC information quality and WBEC system quality are not as important to the customer as empowerment attributes, then WBEC information quality may not significantly affect satisfaction and WBEC system quality may not significantly influence loyalty. The study found that the antecedents of WBEC loyalty and WBEC satisfaction in relation to the combined impact of customer empowerment and WBEC quality on WBEC success are different than in isolation. The impact of interactivity is interesting. It increases customers’ satisfaction by giving them the perception that they are in control. In contrast, their sense of loyalty is supported by communicationlike aspects, such as real time conversations with other customers and the sense of the interaction being with a friendly representative of the firm. From a theoretical perspective, these results indicate that the underlying dimensions of interactivity are varied in relation to their impact on loyalty and satisfaction. A further major finding was that the relationship between WBEC satisfaction and WBEC loyalty is significantly stronger under high levels of perceived value. When the perceived value is low, customers will be more inclined to switch to competing businesses in order to increase perceived value, thus contributing to a decline in loyalty. Even satisfied customers are unlikely to shop at a WBEC site if they feel that they are not getting the best value for their money. The relationship between satisfaction and loyalty may be strongest when customers feel that their current vendor provides higher overall value than that offered by competitors. In summary, a key contribution of this thesis is its development and testing of a simple model that illustrates the importance of WBEC quality and customer empowerment as criteria for WBEC success. In addition, the framework of this WBEC success model enabled the construction of a new instrument which measures quality of WBEC and of different customer empowerment components. This WBEC success instrument is simple, easy to administer and can be used with a variety of WBEC. The original contribution of this study is that it introduces customer empowerment as a key factor in deriving value from WBEC systems, and highlights the relation between customer empowerment and the success of WBEC. These findings have the potential for improving understanding of the relationship between WBEC and customer empowerment. In addition, this study extends the understanding of the phenomenon of customer empowerment itself, and applies this concept in the new environments of the Web.