Understanding Key Factors of Users' Intentions to Repurchase and Recommend Digital Items in Social Virtual Worlds

Abstract

Given to the remarkable profitability of digital items in social virtual worlds (SVWs), such as SecondLife, Cyworld, and Habbo Hotel, it has become crucial to understand SVW users' postadoption behaviors toward digital items. This study develops a theoretical framework to examine key antecedents of users' intentions to repurchase and recommend digital items. Data collected from 256 users of digital items were empirically tested against the research model. The analysis results indicate that both user satisfaction and a perceived value play an important role in establishing users' postadoption intentions about digital items. Moreover, the results clearly show what roles perceived usefulness, perceived enjoyment, and perceived fee play in SVW environments.

Introduction

Social virtual worlds (SVWs) refer to computer-based simulated environments, where users can interact with each other through avatars.¹ SVWs have grown dramatically over the last decade, with the advancement of several aspects of information technology, such as networks and virtual reality. Such advancement has led to a significant change in economic activity: trading channels have moved from the traditional uses of money to purchasing digital items with virtual currency.² Digital items refer to online products, which can be employed by users for representation, expression, and communication in the SVW environment.³ For examples, clothes and accessories for avatar, digital wallpapers, and background music are included in digital items. The SVW providers earn revenue by selling digital items to their users. Specifically, Cyworld and Habbo Hotel are examples of profitable SVWs whose core business model involves selling digital items. They support useful applications like social networking and image uploading as well as several enjoyable ones like avatar customization and mini-homepage availability. Users are encouraged to purchase digital items to decorate their mini-rooms, and avatars and install background music.³ A major portion of Cyworld's revenue comes from the sale of digital items, which was estimated to be about US$100 million at 2011. Moreover, the revenue of Habbo Hotel's parent company, Sulake, went up more than 20 percent during 2009, and resulted in sales worth US$78.7 million.⁴ Therefore, understanding users' intentions to purchase and recommend digital items in the SVW environment is an important issue in academia and industry.

Many SVW providers aim to foster and sustain users to support the large investments in their products and services. Recent research on marketing and information systems (IS) has noted that the overall success of an IS product or service depends on postadoption behaviors and not on initial acceptance.^5,6 While initial acceptance may not lead to the desired economic revenue and performance, postadoption behaviors dissuade users from discontinuance and help establish long-term relationships. Previous studies on marketing and IS domains suggest that users' intentions to repurchase and recommend some items through positive word-of-mouth referrals are keys to a company's survival in the highly competitive marketplace of online service.^7,8 Understanding the determinants of users' intentions to repurchase and recommend digital items can help the SVWs increase revenue and profitability from a continued stream, positive word-of-mouth, and an increased average per user revenue. Several researchers suggest that users' postadoption behaviors can be influenced by improving user satisfaction and offering a high level of perceived value.^9,10 Hence, SVW providers that strive for success should focus primarily on user satisfaction and the perceived value. Thus, this study identifies user satisfaction and the perceived value as the key antecedents of SVW users' postadoption behaviors.

A number of studies on marketing and consumer behavior consider instrumental and hedonic motivations as fundamental to understanding consumer purchasing behavior.^11,12 From the utilitarian point of view, consumers are concerned with purchasing items in an efficient and timely manner to achieve their goals with minimum effort. Perceived usefulness refers to the extent to which a user perceives that using a service or product provides benefits in performing certain activities¹³; thus, it implies that purchasing digital items is often a goal-oriented or utilitarian activity. In contrast, hedonic motivation focuses on fun, entertainment, and the more enjoyable aspects of purchasing some items. Perceived enjoyment is the degree to which an activity is perceived to be enjoyable in its own right, apart from any performance consequences.¹⁴ Perceived enjoyment can capture hedonic motivation for buying some items. In the SVW environment, users' perceptions of usefulness and enjoyment may also play an important role in enhancing user satisfaction and the perceived value. SVW users must purchase some digital items, such as avatars' clothes and accessories, to decorate their own avatars. When users regard the cost of digital items as expensive and overpriced, these negative perceptions result in dissatisfaction and low-value perception. Thus, this study investigates the exact role of perceived fee in users' decision-making process in a postadoption stage.

The purpose of this study is to first investigate empirically the nature of the relationships between the perceived value, user satisfaction, and postadoption behaviors in the SVW environment. Although the perceived value is a significant predictor of user satisfaction and postadoption behaviors, research on the perceived value as related to customer satisfaction and behavioral intention has not been given much attention in the SVW environment. Thus, we hypothesize that user satisfaction and the perceived value and satisfaction are key factors to enhance users' intentions to repurchase and recommend digital items. Second, this study advances a theoretical framework that clarifies the role of users' perceptions of usefulness, enjoyment, and fee in their decision-making process toward digital items.

The rest of the article is structured as follows. The theoretical research model and hypotheses are presented in the Literature Review and Hypotheses section. In Research Methodology section, research methodology is described. The results of the empirical test are presented in the Research Results section. In Discussion and Implications section, we discuss the findings, and provide some theoretical and practical implications, and identify the limitations of this study.

Literature Review and Hypotheses

Figure 1 illustrates the proposed research model for examining the postadoption phenomenon in the context of SVWs. This study considers repurchasing intention and recommendation intention as critical postadoption behaviors. Repurchasing intention means user's intention to repurchase digital items, and recommendation intention is defined as user's positive word-of-mouth about them.

FIG. 1.

Research model.

User satisfaction

User satisfaction is an ex-post evaluation based on user experience with a target service or product.^15,16 It is captured as a negative feeling, indifference, or a positive feeling by comparing the perceived performances of a service or product with their expectations.^15,16 According to the expectation–confirmation model (ECM), users tend to be satisfied if perceived performances meet or exceed their expectations.⁵ Dissatisfied users are more likely to spread negative word-of-mouth and convey a lower level of repurchasing intention than satisfied users would.¹⁷ Numerous studies on marketing and IS have verified the salient role of user satisfaction in enhancing postadoption behaviors, such as continuance intention and positive word-of-mouth.^6,7,9 In the context of SVWs, user satisfaction is expected to be a significant factor in improving the level of users' repurchasing and recommendation intentions.

H1a: User satisfaction positively influences user's repurchasing intention.

H1b: User satisfaction positively influences user's recommendation intention.

Perceived value

The perceived value refers to the economic value reflecting the benefits and sacrifices involved in the use of a service or product.¹⁸ Some consumer behavior studies have noted that user satisfaction is an affective response that captures any discrepancy in performance and expectation, while the perceived monetary value is a cognition-based response that captures any discrepancy in benefits and sacrifices.¹⁹ Generally, SVWs include a virtual currency to purchase digital items. In Cyworld, users are encouraged to exchange 100 Korean won (US$0.10) into one unit of virtual currency called dotori. For example, buying background music costs 5 dotori, and purchasing a mini-room costs about 20 dotori. Since users in SVWs need to exchange real money for the virtual currency to perform virtual activities like decorating mini-rooms and avatars, the perceived value plays a significant role in the judgments and decision-making processes and judgments in the SVW environment.²⁰ The greater the perceived value users associate with the purchase of digital, the more likely they will have a high level of positive word-of-mouth and repurchasing intention. Hence, this leads to the following hypothesis:

H2a: The perceived value positively influences user's repurchasing intention.

H2b: The perceived value positively influences user's recommendation intention.

User satisfaction, in turn, is hypothesized to be influenced by the perceived value. Some research in marketing and consumer behavior has noted that user satisfaction is an affective and evaluative response that captures any performance and expectation discrepancies, while the perceived monetary value is a cognition-based response that captures any benefits and sacrifices discrepancies.^11,12 In essence, the perceived value reflects the net utility derived from using IS services and user satisfaction is defined as an overall positive or negative feeling about the net value of IS services. Several studies on consumer behavior and marketing have identified that cognitive thought processes trigger affective responses.^11,12,21 Thus, it is expected that the perceived value would affect user satisfaction in the SVWs environment.

H2c: The perceived value positively influences user satisfaction.

Antecedents of user satisfaction and perceived value

Perceived usefulness

Perceived usefulness refers to the extent to which a user perceives that using a service or a product provides benefits in performing certain activities.¹³ According to the IS motivation theory, extrinsic motivation can be captured by perceived usefulness; thus, most IS theoretical models, such as the technology acceptance model and the ECM, measure user perception of usefulness as the performance of an activity to achieve a specific goal.¹⁴ If users consider an IS service or product to be useful, they tend to have an extrinsic motivation to use or purchase it. Users must perceive that digital items perform well and achieve a certain goal, such as customization of their own avatar and mini-room to repurchase digital items and spread positive word-of-mouth about them. Based on prior beneficial experiences with digital items, users are likely to form a high level of user satisfaction and perceived value.

H3a: Perceived usefulness positively influences user satisfaction.

H3b: Perceived usefulness positively influences the perceived value.

Perceived enjoyment

Perceived enjoyment is the degree to which an activity is perceived to be enjoyable in its own right, apart from any performance consequences.¹⁴ According to the IS motivation theory, intrinsic motivation can be produced by perceived enjoyment, and a great deal of IS studies confirm a significant effect of intrinsic motivation in enhancing the level of user satisfaction and postadoption behaviors.^6,11 In a recent IS environment, entertainment services currently represent a significant portion of the revenue for innovative services and products like Apple's iPad and the digital items in SVWs. Creating a fun and enjoyable experience may foster a favorable behavioral intention toward continued usage of such multifunctional IS. IS technology can be used to meet various user needs, and research on innovative IS identifies user perception of enjoyment as the key element of IS success. In the SVWs environment, the pleasurable experience of using the digital items evokes favorable feelings, which, in turn, lead to enhanced user satisfaction and the perceived value.

H4a: Perceived enjoyment positively influences user satisfaction.

H4b: Perceived enjoyment positively influences the perceived value.

Perceived fee

A perceived fee refers to the amount of economic outlay that must be sacrificed when involved in using a service.²² Previous studies have explored the role of perceived fee in user behaviors in the context of several IS.²³ To the extent that higher fee perceptions are significantly related to a lower satisfaction and value perceptions, the perceived price is negatively associated with user satisfaction and the perceived value. In the context of SVWs, if users want to personalize their own mini-homepage, they could buy a number of digital items, such as homepage skins, background music, and virtual appliances, to decorate. When users consider the price of the digital items as expensive, their negative perceptions result in dissatisfaction, low-value perception, and negative word-of-mouth. This implies that the user's perception of the price of digital items plays an important role in the users' decision-making process.

H5a: The perceived fee negatively influences user satisfaction.

H5b: The perceived fee negatively influences the perceived value.

Research Methodology

Instrument development

This study employed a survey to test the research model. The survey measurements for the constructs in this study were taken from previously validated literature on IS and marketing domain. The instruments were rephrased to suit the target context of digital items. Before implementing the survey, the instruments were reviewed by three IS and marketing researchers to ensure content validity and reliability within the target context. These researchers checked problems with wording clarity, format, and question ambiguity. After several modifications of the items based on the comments from these researchers, a pilot test was conducted on 25 university students. Each item corresponding to the constructs was measured on a seven-point Likert-type scale that ranged from 1 (strongly disagree) to 7 (strongly agree). All of the questionnaires were proven to have the acceptable level of reliability and validity in terms of composite reliability (CR), average variance extracted (AVE), and Chronbach's alpha. The questionnaire items are reported in Appendix A.

Subjects and data collection

A self-administrated questionnaire was distributed to university students in South Korea. University students were selected because the young generation is regarded as the most technically savvy demographic group. According to a recent survey on IS usage, young adults are significant users of the innovative services. Several professors were asked to gather data from students in their classes. Small gifts were given to the respondents to encourage them to participate more seriously. We distributed about 320 questionnaires and obtained 292 responses (response rate: 91 percent). Among them, 12 responses were discarded because they were incomplete, leaving a final sample of 280. Table 1 summarizes the descriptive statistics of the final respondents.

Table 1.

Sample Demographics

Demographics	Item	Frequency	Percentage
Gender	Male	150	58.6
	Female	106	41.4
Age	<20	18	7.0
	20–25	178	69.5
	26–30	44	17.2
	>30	16	6.3
Usage period of SVW	<3 months	1	0.4
	3–6 months	5	2.0
	6 months–1 year	5	2.0
	1–2 years	29	11.3
	>2 years	216	84.4

SVW, social virtual world.

Research Results

We analyzed the research model using partial least squares (PLS) via the PLS Graph version 3.0. PLS is well suited for formative factors, high-order constructs, and complex models. Moreover, it places minimal restrictions on residual distributions and sample size compared to other structural equation models, such as LISREL and AMOS.²⁴

Measurement model

This study tested the convergent validity, reliability, and discriminant validity of data.²⁵ First, convergent validity can be established if item loadings are 0.60 or higher.²⁶ The lowest loading of this study was 0.61, satisfying convergent validity. Second, the CR and the AVE values were calculated to test reliability. The reliability was acceptable if the CR value was 0.70 or higher and the AVE value was 0.50 or higher.²⁶ As shown in Table 2, all factors met both criteria for acceptable reliability. Third, to check discriminant validity, the shared variances between factors were compared with the AVE values of the individual factors.²⁶ The diagonal in Table 2 contains the square root of the AVE values. All AVE values were greater than the off-diagonal elements in the corresponding rows and columns, satisfying discriminant validity. Lastly, to overcome the concern of common method bias in self-reported survey research, this study evaluates the variances of the indicator of seven constructs.²⁷ The results in Table 3 show that the average substantively explained variance of the constructs' indicators is 0.800, whereas the average method based variance is 0.011. The ratio of substantive variance to method variance is 69.65:1. Given the small magnitude and insignificance of method variance, common method bias is unlikely to be a serious concern in this study.

Table 2.

Scale Reliabilities and Correlation Matrix

	1	2	3	4	5	6	8	CR	AVE
1. Repurchase intention	0.89							0.94	0.79
2. Recommendation intention	0.49	0.71						0.76	0.51
3. User satisfaction	0.64	0.45	0.92					0.94	0.85
4. Perceived value	0.48	0.45	0.45	0.88				0.93	0.77
5. Perceived usefulness	0.44	0.34	0.43	0.39	0.81			0.88	0.64
6. Perceived enjoyment	0.52	0.32	0.51	0.30	0.61	0.93		0.96	0.87
7. Perceived fee	−0.41	−0.40	−0.36	−0.80	−0.33	−0.18	0.93	0.93	0.86

Diagonal elements are the square root of AVE.

CR, composite reliability; AVE, average variance extracted.

Table 3.

Common Method Bias Analysis

Construct	Indicator	Substantive factor loading (R1)	R1²	Method factor loading (R2)	R2²
Repurchasing intention	REP1	0.937^***	0.878	−0.023	0.001
	REP2	0.655^***	0.429	0.191^**	0.036
	REP3	0.928^***	0.861	−0.041	0.002
	REP4	1.020^***	1.040	−0.106^**	0.011
Recommendation intention	REC1	0.917^***	0.841	0.060	0.004
	REC2	0.912^***	0.832	0.060	0.004
User satisfaction	USA1	0.932^***	0.869	−0.035	0.001
	USA2	0.973^***	0.947	−0.048	0.002
	USA3	0.858^***	0.736	0.082	0.007
Perceived value	PEV1	0.962^***	0.925	−0.093^*	0.009
	PEV2	0.878^***	0.771	0.028	0.001
	PEV3	0.817^***	0.667	0.047	0.002
	PEV4	0.839^***	0.704	0.022	0.000
Perceived usefulness	PUS1	1.012^***	1.024	−0.254^***	0.065
	PUS2	0.966^***	0.933	−0.134^*	0.018
	PUS3	0.645^***	0.416	0.151^*	0.023
	PUS4	0.567^***	0.321	0.269^***	0.072
Perceived enjoyment	PEN1	0.949^***	0.901	−0.026	0.001
	PEN2	0.984^***	0.968	−0.035	0.001
	PEN3	0.909^***	0.826	0.020	0.000
	PEN4	0.891^***	0.794	0.042	0.002
Perceived fee	PFE1	0.952^***	0.906	0.040	0.002
	PFE2	0.906^***	0.821	−0.039	0.002
Average		0.887	0.800	0.008	0.011

p<0.05; ^**p<0.01; ^***p<0.001.

Hypothesis testing

The analysis was conducted to test the hypothesized relationships. The bootstrap resampling method (200 resamples) was used for the analysis to determine the significance of the path coefficients. The analysis results are represented in Figure 2.

FIG. 2.

Analysis results.

Discussion and Implications

Summary of results

The research framework asserts that users' intentions to repurchase and recommend digital items are determined by user satisfaction and the perceived value. This study confirms the salience of user satisfaction in the user's postadoption behaviors toward digital items. Satisfied users of digital items are more likely to elevate the level of repurchasing and positive word-of-mouth intentions. The perceived value also serves as the key antecedent in establishing users' postadoption behaviors toward digital items. This implies that a greater perceived value of digital items may increase the rate of repurchase and positive word-of-mouth. The findings of this study indicate that user satisfaction and the perceived value are crucial factors that develop postadoption behaviors, accounting for 45.6 percent and 27.9 percent of the variance of repurchasing intention and recommendation intention, respectively. The perceived value plays a key role in enhancing the level of user satisfaction.

This study explores the antecedents of user satisfaction and the perceived value toward digital items. However, in contrast to the expectations, the results indicate that user's perception of usefulness does not influence user satisfaction and the perceived value. This may be because most users purchase digital items to get hedonic-oriented goals, such as decorating mini-rooms and installing background music. For example, a suit of clothes for avatars in a SVW is not expected to perform the functions of real clothes. Perceived enjoyment is identified as the key antecedents of user satisfaction as well as the perceived value. In line with the results of previous work,³ digital items are rather hedonic than utilitarian. The analysis results show that user's perception of fee negatively affects a cognition-based response, whereas it does not significantly influence an affective response. This means that the perceived fee indirectly influences user satisfaction through the perceived value (indirect effect: β=0.18). In the context of SVWs, users with a higher perception of enjoyment and with a lower concern of monetary fees about digital items increase their cognitive evaluations, resulting in elevated user satisfaction. This, in turn, leads to increase repurchasing intention and spread positive word-of-mouth. The analysis results clarified the role of perceived usefulness, perceived enjoyment, and perceived fee in users' postadoption decisions about using digital items.

Limitations and future research

First, this study conducted a cross-sectional survey method or data collection. Therefore, this study may not fully capture the dynamics of user continuance decision processes about digital items as these dynamics change with time. Further research can use a longitudinal survey method or data collection. Another limitation of this study is that the data were collected from students, who represent only a portion of Cyworld users. Even if young adults are considered as good proxies for general Cyworld users, further study is necessary to retest the hypotheses using data from a more general population of Cyworld users. Finally, this study used only a single famous SVW, Cyworld, rather than multiple SVWs in the data collection. Future research should include different SVWs, such as Habbo Hotel, to reinforce the validity and comparability of the results.

Theoretical implications

The findings of this study have several theoretical implications. First, this study provides an in-depth understanding of users' decision-making process toward digital items. The theoretical framework posits user satisfaction and the perceived value as the key determinants of establishing users' repurchasing intentions and recommendation intentions about digital items. These results indicate that user's postadoption behaviors of digital items are guided by affective evaluation as well as by cognitive evaluation. The analysis results support that the cognitive and affective evaluations act as independent predictors of continuance behaviors of digital items. Specifically, the repurchasing intention of digital items is largely explained by user satisfaction, implying that an affective evaluation is a more prevalent factor of forming repurchasing behaviors compared to a cognitive evaluation. This study examines that user satisfaction mediates the effect of perceived value on SVW users' postadoption behaviors. In line with previous works,^11,12 the analysis results indicate that user satisfaction is a mediating variable in linking the perceived value and postadoption behaviors.

The motivation theory classifies motivations into utilitarian and hedonic motivations. Utilitarian motivation refers to the performance of an activity to achieve a specific goal, while hedonic motivation refers to the perceptions of pleasure from performing a behavior. This study confirms the exact role of utilitarian and hedonic motivations in establishing user satisfaction and the perceived value toward digital items. Hedonic motivation has a significant effect on establishing users' intentions to repurchase and recommend digital items, while the effect of utilitarian motivation on them is not significant. Specifically, the instrumental aspect of digital items is not important in the users' decision-making processes about digital items. In line with these findings, hedonic motivation is regarded as a more salient factor to be used to enhance users' repurchasing and recommendation intentions in IS postadoption stages than extrinsic motivation is. This study also investigates the effect of perceived fee on user satisfaction and the perceived value of digital items. The perceived fee has a critical barrier that decreases the likelihood of the user's repurchasing and recommendation intentions.

Practical implications

In terms of practice contributions, there are some significant implications in the findings for SVW providers. SVW providers should take note of the role of user satisfaction and the perceived value in user's repurchasing and recommendation decisions. Actually, as microtransactions like selling digital items make up a large part of the revenue model in the SVW business, SVW providers should encourage members of SVWs to purchase digital items, such as clothes and accessories, for avatars and background music. Since a higher perceived value can lead to a higher user satisfaction, SVW providers should pay more attention to the perceived value derived from the use of digital items. Specifically, the perceived value is the user's overall assessment of the utility of digital items based on perceptions of what is received and what is given. SVW providers make users feel that purchasing digital items is more valuable than the actual cost. Among the benefits of buying digital items, providers pay attention to fun and enjoyment experienced by SVW users during digital item consumption. Designing various and unique digital items is a good example of elevation of an enjoyable user experience. From the sacrifice perspective, SVW providers need to understand the significant role of a monetary fee on the users' decision-making process toward digital item purchase. Since a number of users are concerned about the high price of digital items, SVW providers try to develop pricing strategies with emotional excitement for users buying digital items. They can attract SVW users with aggressive marketing strategies, such as free gifts, discounts, and special promotions.

Footnotes

Acknowledgment

This work was supported by a special research grant from Seoul Women's University (2012).

Author Disclosure Statement

No competing financial interests exist.

Appendix

Appendix A.

List of Model Constructs and Items

Repurchasing Intention ⁷

REP1: I intend to continue repurchasing digital items.

REP2: I plan to continue repurchasing digital items.

REP3: I expect to continue repurchasing digital items.

REP4: If I could, I would like to continue repurchasing digital items.

Recommendation Intention ⁷

REC1: I plan to recommend the use of digital items to other people.

REC2: I intend to encourage friends and relatives to use digital items.

User Satisfaction ⁷

USA1: I am satisfied with my decision to use digital items.

USA2: My choice to use digital items was a wise one.

USA3: My experience with using digital items was very satisfactory.

Perceived Value ¹⁹

PEV1: Compared to the fee, the use of digital items is worthwhile to me

PEV2: Compared to the fee, the use of digital items offers value for money.

PEV3: Compared to the fee, the quality of digital items is good.

PEV4: Overall, the use of digital items delivers me a good value.

Perceived Usefulness ¹³

PUS1: Using digital items helps me decorate mini-homepages more quickly.

PUS2: Using digital items enhances my decoration effectiveness.

PUS3: Using digital items makes it easy to do my task.

PUS4: Overall, using digital items is useful.

Perceived Enjoyment ¹⁴

PEN1: Using digital items is enjoyable.

PEN2: Using digital items is pleasurable.

PEN3: I have fun with using digital items.

PEN4: I find using digital items to be interesting.

Perceived Fee ¹⁸

PFE 1: The fee that I have to pay for the use of digital items is reasonable (reversed).

PFE 2: I am pleased with the fee that I have to pay for the use of digital items (reversed).

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