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

Shinichi Yamaguchi (), Hirohide Sakaguchi () and Kotaro Iyanaga ()
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Shinichi Yamaguchi: International University of Japan
Hirohide Sakaguchi: Keio University
Kotaro Iyanaga: International University of Japan

The Review of Socionetwork Strategies, 2018, vol. 12, issue 2, 167-181

Abstract: 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.

Keywords: e-WOM; Online review; Econometrics; Stimulative effect on consumption; Economic effect; Word-of-mouth websites (search for similar items in EconPapers)
Date: 2018
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DOI: 10.1007/s12626-018-0027-4

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