Consequences of Web-Based Service Quality: Uncovering A Multi-Faceted Chain of Effects

CONSEQUENCES OF WEB-BASED SERVICE QUALITY: UNCOVERING A MULTI-FACETED CHAIN OF EFFECTS
MARTIN FASSNACHT AND IBRAHIM KSE
vidence from traditional service settings shows that service quality is
a major driver of customer satisfaction, trust, and loyalty, which ultimately lead to profitability. Regarding business on the Internet, many argue that trust and loyalty become even more important for long-term success. But does quality play the same influential role in the context of Web-based services, where it is said that price is king and competitors just one click away? In the present study, the authors develop a structural equation model that links Web-based service quality to a broad set of consequences.The model is tested with a large sample drawn from three different Web-based service domains. The results provide insights into the mechanisms leading from Web-based service quality to outcome variables. Specifically, they point to a multifaceted chain of effects, with trust playing a key mediating role.
MARTIN FASSNACHT
is Professor and Holder of the Otto Beisheim Endowed Chair of Marketing as well as Speaker of the Marketing Group at WHU Otto Beisheim School of Management in Vallendar, Germany. He is Marketing Director of the WHU and acts as Scientific Director of the Center for Market-Oriented Corporate Management (CMM); e-mail: martin.fassnacht@whu.edu
IBRAHIM KSE
is Research Consultant and Competence Center Manager for Online Research at Produkt + Markt, a marketing research company based in Wallenhorst, Germany; e-mail: ikoese@produktundmarkt.de
2007 Wiley Periodicals, Inc. and Direct Marketing Educational Foundation, Inc. JOURNAL OF INTERACTIVE MARKETING VOLUME 21 / NUMBER 3 / SUMMER 2007 Published online in Wiley InterScience (www.interscience.wiley.com). DOI: 10.1002/dir.20084
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A considerable amount of research has been conducted on quality in traditional (i.e., people-based) service settings, and various models of how service quality effects consequential customer-related variables have been developed and tested (e.g., Cronin, Brady, & Hult, 2000; Fornell, Johnson, Anderson, Jaesung, & Bryant, 1996). Yet the topic continues to be of high research interest (e.g., Agustin & Singh, 2005; Bell, Auh, & Smalley, 2005). In general, researchers agree that a chain of positive effects runs from service quality through perceived value and customer satisfaction to customer loyalty and, ultimately, customer profitability (Rust, Ambler, Carpenter, Kumar, & Srivastava, 2004). Recently, there is also compelling empirical support for the positive link between favorable customerrelated variables and the long-term financial success of companies (E.W. Anderson, Fornell, & Mazvancheryl, 2004; Gruca & Rego, 2005). The managerial relevance of research on the consequences of service quality has been revitalized by the growing acceptance of Web-based services. Anecdotal evidence suggests that customers on the Internet focus very much on price and have a high propensity to switch because competing providers are just one click away from each other. Therefore, authors like Reichheld and Schefter (2000) have argued that gaining loyalty is even more important when serving customers over the Internet. They emphasize that it is not mere deployment of technology that wins customers over, but offering a superior customer experience, which requires delivering high service quality and, above all, gaining customer trust. They succinctly point out that price does not rule the Web; trust does (Reichheld & Schefter, 2000, p. 107). In a similar vein, Srinivasan, Anderson, and Ponnavolu (2002) note that companies offering their services over the Internet need to fully understand the mechanisms leading from service delivery to customer loyalty. Given that empirical studies on the consequences of service quality have focused on traditional service settings, there is need for specific research within the context of Web-based services. With our study, we aim to contribute to marketing literature in three ways: First, by taking a more complete view on the consequences of Web-based service quality. Compared with existing studies, we investigate a broader set of consequences: Besides perceived
value, satisfaction, and loyalty, we include trust. Researchers as well as managers agree that trust is of higher importance in electronic compared with traditional service environments. Building customer trust is certainly one of the major challenges that providers of Web-based services face. Therefore, the main focus of this study is to examine how quality perceptions will influence trust and how trust, in turn, affects customer loyalty in the given context. In addition, we incorporate two behavioral intention constructs beyond customer loyalty: willingness to pay more and cross-buying. In scientific discourse, both constructs are often connected with loyalty. However, empirical evidence in this respect is relatively scarce. The two constructs are also relevant from a managerial point of view, because willingness to pay more and crossbuying might represent intermediate stages on the route from customer loyalty to profitability. Although the loyaltyprofitability link itself is not investigated in this study, our results will provide insights on how willingness to pay more and cross-buying relate to customer loyalty in particular. Our second aim is to extend previous studies in this context by simultaneously testing direct and indirect effects of Web-based service quality on consequential variables. In doing so, we examine to which extent the effects of Web-based service quality on loyalty, willingness to pay more, and cross-buying are mediated by the other variables in the model. Researchers have often called for a comprehensive analysis of the relationships between service quality and its consequences (e.g., Ostrom & Iacobucci, 1995; Rust & Oliver, 1994), because these relationships may not always be simple and direct (Brady, Knight, Cronin, Hult, & Keillor, 2005). A thorough investigation of the complex interrelationships will prove beneficial for a more complete understanding of the mechanisms that lead from Web-based service quality to favorable relational outcomes. Third, we cover a broader range of Web-based services than in extant research in order to increase the generalizability of our findings. There are only a few studies so far that have examined data from more than one domain (e.g., Montoya-Weiss, Voss, & Grewal, 2003). We draw on data from three different Web-based services, thereby addressing a relevant gap in extant research (Parasuraman, Zeithaml, & Malhotra, 2005). To assure
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the relevance of the sample for the subject matter, we survey actual customers of a service provider. The remainder of the article is organized as follows: In the next section, we conduct a literature review, provide background on the domain of Web-based services and introduce the theoretical basis of the study. Then, we develop the framework and the hypotheses to be tested, followed by a description of the employed research methodology and the presentation of results. The paper concludes with a discussion, where we point to managerial implications of the present study as well as directions for future research.
2000), making trust a critical link within the chain of effects from Web-based service quality to desired behavioral outcomes. Up to now, few studies have empirically investigated the role of trust within this chain. A large-scale exploratory study on online trust has recently been conducted by Bart, Shankar, Sultan, and Urban (2005). However, their focus has been on examining the differential impact of Web site characteristics on trust across various Web site categories and consumer segments and not on the role of trust within the complex chain of effects triggered by Web-based service quality. Moreover, these studies have largely focused on customer loyalty as the sole behavioral intention construct. Other facets of behavioral intentions and their relationships with customer loyalty have hardly been studied. For instance, loyal customers are also said to be more willing to accept price increases (Zeithaml, Berry, & Parasuraman, 1996). This facet is rarely examined in marketing literature as a whole (Sivakumar & Raj, 1997), although successfully implemented price increases can boost profitability (Marn & Rosiello, 1992). To the best of our knowledge, Srinivasan et al. (2002) are the only authors who have incorporated a price-related outcome variable willingness to pay moreinto a model investigating loyalty in a Web-based service environment. Another facet is increased proneness to buy additional products and services from the same company (cross-buying). Such behavioral intentions indicate that customers have stronger relationships with the respective company (Reinartz & Kumar, 2003). Generally, this facet has received little attention in marketing literature. In the context of Web-based services, it has not been studied so far. In addition, the domain of research has often been confined to e-tailing, that is, the purchase of goods, tickets, etc. via the Internet (e.g., Holloway, Wang, & Parish, 2005; Lynch, Kent, & Srinivasan, 2001). Comparatively little research has been done on other types of Web-based services, for example, pure service offers such as Web hosting and online data storage or paid-content services like video-on-demand, news, and health care portals. A recent article by Harris and Goode (2004) has made an initial step towards a more complete examination of the chain of effects set off by Web-based service
CONCEPTUAL AND THEORETICAL BACKGROUND

Literature Review
As Zeithaml, Parasuraman, and Malhotra (2002, p. 371) note, scant research has identified the consequences of Web site service quality delivery. A growing body of literature offers substantial insights into how the quality of Web-based services can be assessed and what the drivers of favorable quality perceptions are in this domain (e.g., Sweeney & Lapp, 2004; Wolfinbarger & Gilly, 2003). Some of these studies also look at consequences of service quality on the Web (e.g., Parasuraman et al., 2005); still, the focus is rather on the quality measures and their validation than on comprehensive inspection of the chain of effects set off by Web-based service quality. Another emerging stream of literature that is of interest for the present study has been dealing with the drivers of behavioral intentions in online environments, which often include service quality or similar constructs (e.g., Shankar, Smith, & Rangaswamy, 2003; Yen & Gwinner, 2003; Yoon, 2002). However, a closer look at these studies brings various research gaps to light. First, most studies in this literature stream have not given enough consideration to trust. The enormous relevance of trust for relational exchanges in general is well-established (Morgan & Hunt, 1994; Singh & Sirdeshmukh, 2000). In the context of Web-based services, where relationships are built and maintained at distance and without personal interaction, the relevance of trust is further amplified because of the inherent uncertainty (McKnight & Chervany, 2002; Reichheld & Schefter,
CONSEQUENCES OF WEB-BASED SERVICE QUALITY
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quality. Even though the inclusion of trust as a key driver of loyalty alongside well-established antecedents like perceived value and satisfaction is highly commendable, many of the research gaps already mentioned remain. Within their overall framework, Harris and Goode (2004) do not examine behavioral intention constructs other than customer loyalty. In addition, the authors concentrate on selected direct and mediated effects and ignore some important relationships between the constructs studied. For example, they do not include established direct effects such as those of quality on customer loyalty or perceived value on customer satisfaction (Brady et al., 2005). Moreover, they focus their study on e-tailing contexts.
provide online access to various forms of content that customers can retrieve. Examples include fulltext databases, news coverage, or video-on-demand. Supporting services represent the second major category. These Web-based services essentially facilitate the purchase of goods (e.g., online bookstores) or the use of a traditional service (e.g., online ticketing for movie theaters).
Theoretical Background
We draw on the widely acknowledged theory of reasoned action (TRA) as a theoretical basis for our examination of the consequences of Web-based service quality. The TRA has its origin in social psychology (Fishbein & Ajzen, 1975) and is concerned with the determinants of volitional behavior. In marketing literature, the theory has been one of the dominant approaches to modeling consumer behavior (Bagozzi, Baumgartner, & Yi, 1992; Bobbitt & Dabholkar, 2001). According to TRA, an individuals behavior is driven by his or her behavioral intentions, which are in turn jointly determined by attitudes and subjective norms. Both attitudes and subjective norms are theorized to be determined by relevant beliefs and evaluations, which are in turn influenced by external stimuli. It should be noted that there is controversial debate in the literature regarding the status of subjective norms within TRA (see also Bobbitt & Dabholkar, 2001). For instance, researchers have argued that subjective norms usually have weak predictive power within the model (Warshaw, 1980). More recent studies suggest that subjective norms should only be included in particular settings, for example, when the use of a product or service is mandatory (Venkatesh & Davis, 2000). Therefore, applications of TRA often focus on the evaluationattitudeintention behavior relationship. Being general in nature, TRA does not specify which stimuli or evaluations are operative in a given context. Therefore, the theory has been applied across a variety of domains, and there is ample evidence that it is very useful in predicting consumer behavior through utilizing attitudes and behavioral intentions as a mediator (Ryan & Bonfield, 1980). It also provides a relatively simple framework for identifying where and how to target consumers behavioral change attempts (Sheppard, Hartwick, & Warshaw, 1988).
Web-Based Services
Web-based services have received considerable attention in different areas of academic research. A closer look at extant literature reveals that a generally accepted definition has not emerged. Against this backdrop, we find it important to delineate the scope of Web-based services within this study and to specify the domains under examination. We define Web-based services as services delivered via information and communication technology where customers solely interact with a user interface on the World Wide Web (WWW) in order to retrieve desired benefits. It should be noted, however, that we are not concerned with all the various purposes that the WWW may serve in general. Rather, we want to examine commercial Web-based service delivery, where customers directly (e.g., for downloading content) or indirectly (e.g., through products ordered) pay for the service they receive. In fact, the examination of the consequences of quality matters the most for these kinds of Web-based services, because the consequences will ultimately be reflected in the service providers operating revenues. We classify Web-based services into two major categories: The first is stand-alone services, where the Web-based service provided is at the same time the main benefit for customers. They can be subclassified into pure service and content offers. Pure service offers enable customers to perform certain tasks over the WWW, for example, keeping a bank account or sending e-cards. Content offers, as the name implies,
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FRAMEWORK AND HYPOTHESES

Focal Constructs
Quality, Value, Satisfaction, and Loyalty. A wellestablished stream of literature has been studying the relationships between quality, perceived value, customer satisfaction, and customer loyalty (e.g., E.W. Anderson & Sullivan, 1993; S. O. Olsen, 2002). As Cronin et al. (2000) observed, there is convergence of opinion that favorable quality perceptions drive perceived value as well as overall customer satisfaction, which both are in turn determinants of customer loyalty. In other words, perceived value, customer satisfaction, and customer loyalty are major consequences of quality. Zeithaml, Parasuraman, and Malhotra (2000, p. 11) defined Web-based service quality as the extent to which a website facilitates efficient and effective shopping, purchasing, and delivery. Although this describes the construct fairly well, two aspects lead us to diverge from the given definition: First, the definition is somewhat narrow, because it focuses on e-tailing. Second, the authors specify the Web site as the sole reference object of quality, which seems problematic because the Web site is only the front-end of the service. Against this background, we define Webbased service quality as the customers evaluation of the degree to which a Web-based service is able to fulfill relevant needs effectively and efficiently. This definition is also consistent with the notion of the evaluation construct in TRA. In marketing literature, value usually refers to a trade-off between quality and price (Varki & Colgate, 2001). Thus, it concentrates on the priceperformance ratio of a particular product or service, and captures what customers refer to as value-for-money. Therefore, we define perceived value as the customers evaluation of the ratio of service performance received to the price paid (Fornell et al., 1996; Monroe, 2003). Following Anderson, Fornell, and Lehmann (1994), customer satisfaction is framed as the customers overall response to the total purchase and consumption experience with a Web-based service over time. This notion of customer satisfaction goes beyond the mere assessment of performance and represents a more general, attitudinal construct (LaTour & Peat,
1979; S.O. Olsen, 2002). Recent literature provides empirical evidence that such a cumulative conceptualization is superior to a transaction-specific one with respect to the prediction of behavioral intentions (L.L. Olsen & Johnson, 2003). For the purpose of this study, we define customer loyalty in the sense of brand loyalty, namely as the customers intention to consistently use and recommend a Webbased service in the future. This covers the two aspects of loyalty suggested most often in extant research: the behavioral aspect of reuse or repurchase and the deeply held commitment echoing in the intention to spread positive word of mouth (Chaudhuri & Holbrook, 2001; Dick & Basu, 1994; Zeithaml, Berry, & Parasuraman, 1996). Furthermore, taking an intentions perspective of loyalty rather than considering actual repurchase behavior may avoid confusing spuriously loyals, who only repurchase because of a lack of alternatives, with genuinely loyal customers (Bell et al., 2005; Shankar, Smith, & Rangaswamy, 2003). Trust. McKnight and Chervany (2002) thoroughly analyzed a multitude of trust definitions and found two prevailing streams: One deals with the type of construct trust represents (disposition, attitude, intention etc.), the other with the so-called referent of trust or trustee (e.g., trust in something vs. trust in someone). As far as the type of construct is concerned, we follow the classic view of Luhmann (1979, p. 19), who refers to trust as a particular attitude towards the future. A similar view is held by Whitener, Brodt, Korsgaard, and Werner (1998) and also by Morgan and Hunt (1994), who diverge from the often-cited definition of Moorman, Deshpand, and Zaltman (1993), which includes willingness to rely on the other party as a crucial facet of trust. Specifically, Morgan and Hunt (1994) emphasize that behavioral intentions in the sense of willingness to rely on the other party should be understood as a consequence of trust rather than part of its definition. Trust is rarely discussed without specifying the referent in which trust is placed. This is necessary in order to identify which form of trust prevails. Basically, two forms exist: Structural trust denotes confidence in a system or an institution. In contrast, interpersonal trust means that the referent is another person or interpreted as a social actor like in the case of groups, entire organizations, or even socially relevant concepts
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like brands (e.g., Chaudhuri & Holbrook, 2001; Johnson & Selnes, 2004). In the context of Web-based services, trust in the WWW as a medium would be an example of structural trust. However, trust in a particular Web-based service (i.e., brand trust) is more similar to interpersonal trust, because the brand is viewed as an exchange partner and not as an anonymous system or an institutional arrangement. In consideration of the issues raised so far and our goal of examining evaluations, attitudes, and intentions with respect to a particular service, we define trust as a customers favorable attitude towards a Web-based service that her/his positive expectations regarding this service will be met in the future. These expectations are based on the customers experiences with the Web-based service to date, and could, for example, pertain to performance or security of the service in the future. The definition reflects our adoption of the view that trust is an attitude held by the customer. However, trust is conceptually distinct from expectancy disconfirmation and, hence, customer satisfaction, because it is not merely a response to past usage experiences, but directed at the future. Furthermore, we interpret trust in the sense of brand trust and not as trust in the service provider in general. Broadening the View on Behavioral Intention Constructs. Zeithaml et al. (1996, p. 34) state that when customers . . . increase the volume of their purchases, or agreeably pay a price premium, they are indicating behaviorally that they are bonding with the company. However, most prior work in online settings has not included behavioral intention constructs in addition to customers loyalty to the product/service under investigation. Cross-buying is the construct that has probably received the least attention in this regard, although researchers have suggested that positive relationship outcomes can be expected when customers buy across many categories (Blattberg & Deighton, 1996; Reinartz & Kumar, 2003). In the context of our study, we define cross-buying as the customers intention to purchase other Web-based services from the current service provider in addition to the one she/he already uses. Willingness to pay more (WTPM) has received slightly more attention in marketing research than crossbuying. It is recognized that customers with stronger
ties to a specific offering will also be willing to pay higher prices (Narayandas, 1998). Our definition frames WTPM as the customers intention to accept a higher price for the Web-based service she/he uses. Some authors regard this to be a facet of customer loyalty (e.g., Shankar et al., 2003). We explicitly distinguish this behavioral intention construct from customer loyalty, because it represents a certain way of reacting to an external event (here: price increase), whereas customer loyalty has an active connotation (using and recommending the service). A similar rationale has been presented by Ganesh, Arnold, and Reynolds (2000). The authors differentiate between active and passive loyalty: Active loyalty corresponds to the definition of customer loyalty in our study, whereas WTPM represents a facet of passive loyalty.
Hypotheses Development
The TRA provides a coherent structure for theorybased derivation of hypotheses that correspond to the studied relationships between Web-based service quality and consequential variables. Our rationale is as follows: The characteristics of a particular Webbased service that customers experiencethe graphical design of the user interface, the speed of downloading, or the price paid for a download, for instanceact as external stimuli leading to an evaluation. Web-based service quality and perceived value represent such evaluation constructs. In line with TRA, we posit that they subsequently influence attitudinal constructs like customer satisfaction or trust, which in turn affect behavioral intention constructs (e.g., customer loyalty). This sequence of effects is also strongly supported by existing research on service quality outcomes (Brady et al., 2005). Keeping our second research aim (comprehensive testing of direct and indirect effects) in mind, we additionally suggest that evaluation constructs may also have direct effects on behavioral intentions beyond the indirect (mediated) effects via attitudinal constructs. Figure 1 depicts the proposed framework. In the following, we present the hypotheses to be tested. The literature strongly supports a positive effect of Web-based service quality on customer satisfaction. However, relatively few studies have explored the quality-trust relationship. Extant knowledge on relational benefits suggests that service quality perceptions have a positive impact on relational outcomes like
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Attitudinal Constructs Customer Satisfaction H6a H2a,b Trust H6b,c,d H7a,b,c Behavioral Intention Constructs Customer Loyalty H8a H3a,b,c H4a,b Willingness to Pay More H9 H1 Evaluation Construct Perceived Value H5a,b,c CrossBuying H8b
Evaluation Construct Web-Based Service Quality
Figure 1
A Conceptual Model of the Consequences of Web-Based Service Quality
trust (Yen & Gwinner, 2003). Similarly, Reichheld and Schefter (2000) argue that favorable service quality experiences nurture trust. Therefore, a positive direct effect of quality on trust can be expected. Moreover, there is wide agreement in extant literature that service quality has a positive direct effect on perceived value and customer loyalty (e.g., Cronin et al., 2000). In addition, Zeithaml et al. (1996) show that service quality and WTPM are positively related. To the best of our knowledge, the impact of service quality on cross-buying has not been empirically investigated so far. However, a positive relationship seems plausible, because the more convincing the quality perception regarding the currently used service, the more likely a trial of another service from the same provider. Based on these arguments, we suggest the following: Hypothesis 1: Web-based service quality will have a positive direct effect on perceived value. Hypothesis 2: Web-based service quality will have a positive direct effect on a. customer satisfaction; b. trust. Hypothesis 3: Web-based service quality will have a positive direct effect on
a. customer loyalty; b. willingness to pay more; c. cross-buying. Findings of earlier studies substantiate the assumption that perceived value drives satisfaction (Fornell et al., 1996) as well as trust and customer loyalty (Harris & Goode, 2004). Moreover, perceived value is likely to have a positive impact on WTPM. Likewise, the better the priceperformance ratio for the currently used service, the more likely is a trial of another service from the same provider (cross-buying). Thus: Hypothesis 4: Perceived value will have a positive direct effect on a. customer satisfaction; b. trust. Hypothesis 5: Perceived value will have a positive direct effect on a. customer loyalty; b. willingness to pay more; c. cross-buying.
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Prior research suggests that customer satisfaction is an important determinant of customer loyalty (Fornell et al., 1996) and willingness to pay (E. W. Anderson, 1996). TRA reinforces the claim that attitudes affect behavioral intentions. Given that we view trust as an attitudinal construct like customer satisfaction, the same line of reasoning applies regarding its role as an antecedent to the three behavioral intention constructs. Furthermore, we model trust as being affected by customer satisfaction for a logical reason: It is true that both constructs are based on experiences, but unlike customer satisfaction, trust possesses a clear connotation to the future. Within an ongoing relationship, it can therefore be viewed as consequential to customer satisfaction. The according hypotheses are the following: Hypothesis 6: Customer satisfaction will have a positive direct effect on a. trust; b. customer loyalty; c. willingness to pay more; d. cross-buying. Hypothesis 7: Trust will have a positive direct effect on a. customer loyalty; b. willingness to pay more; c. cross-buying. In addition, we propose that certain effects exist between the three behavioral intention constructs (see Figure 1). Specifically, we argue that, in a logical sequence of effects, customer loyalty will drive WTPM (Srinivasan et al., 2002). Our reasoning is in accordance with results of Narayandas (1998), who found that behavioral intentions are interdependent and should be hierarchically ordered. To visualize this, the author uses the image of a ladder, where aspects of customer loyalty (i.e., intentions to repurchase and recommend) are positioned on the lower rungs. WTPM builds on these intentions and is thus found on the middle rungs of the ladder, suggesting that it may be viewed as consequential to customer loyalty. WTPM, in turn, positively affects cross-buying. Our rationale is that customers who are willing to accept
a higher price for the service currently used are also more likely to spend additional money on other webbased services. Finally, we also take into account that customer loyalty might have a direct effect on crossbuying beyond the indirect effect via WTPM. The according hypotheses are the following: Hypothesis 8: Customer loyalty will have a positive direct effect on a. willingness to pay more; b. cross-buying. Hypothesis 9: Willingness to pay more will have a positive direct effect on cross-buying. Subsequently, we test the developed hypotheses simultaneously in a structural equation model. Researchers have noted that such an approach should be preferred over a procedure of only testing the effects of one variable at a time (Cronin et al., 2000; Varki & Colgate, 2001). A piecemeal procedure can lead to false conclusions regarding the importance of individual variables, because not all hypothesized effects are considered concurrently. In addition, the simultaneous testing in a structural equation model offers the possibility to examine in how far relationships between certain variables are mediated by other variables in the model. In recent literature on this topic, it is argued that a significant indirect effect between variables within a structural equation model provides evidence for the existence of a mediating effect (Iacobucci & Duhachek, 2004; Shrout & Bolger, 2002).
METHOD
Sample
Three different Web-based services were chosen for sampling, one from each of the three major categories outlined above: a service for creation and maintenance of personal homepages (pure service offer), a sports coverage service (content offer), and an online shop for electronic equipment (supporting service). We believe that these services represent suitable domains, because they cover a wide range of applications. Moreover, they are of commercial importance: Sports coverage is among the fastest growing paid-content categories on the Internet (Gray, 2005). Likewise, electronic equipment continues to be a
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popular online shopping category (Rush, 2004). And with an ever-increasing number of personal homepages on the Internet, it is not farfetched to conclude that corresponding services are of commercial relevance. One of the major Internet service providers in the German market is offering all three Web-based services. The company has a broad range of offerings from providing Internet access to a variety of paid services and paid content. According to results presented by Graumann & Neinert (2005), Germany is by far the largest e-commerce market in Western Europe, as 30% of total Western European e-commerce revenues are generated there. Western Europe, in turn, accounts for 31% of the worldwide e-commerce volume. Unlike previous research that has often resorted to convenience or self-selection samples (e.g., Srinivasan et al., 2002; Yen & Gwinner, 2003), data were obtained from actual customers of the three chosen Web-based services by means of self-administered online questionnaires. Each respondent has been a customer of one of these Web-based services and only evaluated the service that she/he has used. As both the homepage and the sports coverage service operate on a subscription basis, random samples were drawn from the pool of customers with a subscription time of at least 6 months to ensure that they were sufficiently acquainted with the service. As far as the online shop is concerned, a random sample was drawn from the pool of customers who had purchased within the two months preceding the study. In doing so, we wanted to ensure that respondents have at least one usage experience, which they may easily recall. As an incentive, participants of each of these three samples were included in a separate prize drawing. For the homepage service, the sports coverage service, and the online shop, we obtained 349, 345, and 305 usable responses, respectively. This equals a response rate of 15.4%, 15.3%, and 24.2%. The age distribution of the three samples largely resembles that of the general population of German Internet users as covered by Nielsen NetRatings, the global standard of Internet audience analysis. In each of the three samples, only the group of adolescents and young adults (age 25 years) is underrepresented in comparison to the results from Nielsen NetRatings (IAB, 2004). This is not surprising, because, generally speaking, people in this age group (especially the adolescents) are not
yet financially able to use paid content or shop online on a regular basis.
Measure Development
Potential items for measurement of the constructs were largely adapted from existing scales. However, we also considered insights from in-depth interviews with four product managers from different divisions of the service provider we cooperated with. Ten experts (researchers or practitioners who are familiar with the subject matter) judged the initial set of items for content validity. Following the procedure recommended by J. C. Anderson and Gerbing (1991), the experts completed an item-sort task: They were given the construct definitions along with the set of initial items in random order. Then they were asked to assign each item to the construct that it represents best in their opinion. This procedure resulted in the exclusion of a few potential items and the refinement of the wording for items retained. Table 1 contains the resulting pool of items. Regarding the exogenous construct Web-based service quality, we adapted an existing validated scale for measuring overall service quality (Brady & Cronin, 2001; Dabholkar, Shepherd, & Thorpe, 2000). Adaptations of existing measures from extant literature have also been used for customer satisfaction (Fornell, 1992; L. L. Olsen & Johnson, 2003), perceived value (Varki & Colgate, 2001), customer loyalty and WTPM (Zeithaml et al., 1996). Regarding the items for trust, we only partly followed the literature (Gefen & Straub, 2003), because the measures employed in previous studies often fail to discriminate between trust and the related but distinct construct of trustworthiness. For lack of existing measures with regard to cross-buying, we developed three items suitable for the context of our study, that is, covering customers intentions to purchase additional Webbased services from the three categories under investigation. Our rationale was that the service provider we cooperated with is well-known among German Internet users, and markets its Web-based services actively. Respondents, being customers of the service provider, have been aware of the fact that the company does not only offer the one service they use, but a range of services in each of the three categories paidservice, paid-content, and online shopping.
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TABLE 1
Item Statistics and Measurement Model Results (Confirmatory Factor Analysis, N 999)
CONSTRUCT CONSTRUCT Web-Based Service Quality Please rate the overall quality of XYZ: Excellent poor Superior inferior High quality low quality Perceived Value How would you rate XYZs value for money? Very good very bad Customer Satisfaction All in all, I am very satisfied with XYZ. XYZ meets my expectations entirely. Trust I have a high degree of trust in XYZ. I am assured that my personal data are safe at XYZ. I am confident that XYZ will continue to meet my expectations regarding . . . in the future. Customer Loyalty I will definitely continue to use XYZ. I will recommend XYZ to friends/relatives/colleagues. I will stick to XYZ, even if friends/relatives/colleagues recommend other . . . I intend to use XYZ more often in the future.a I will advise friends/relatives/colleagues to at least give XYZ a trial. Willingness To Pay More For the benefits received from XYZ, I would also pay a somewhat higher price [online shop: prices]. I will continue using XYZ if its price increases slightly [online shop: if its prices increase slightly]. Cross-Buyingb I will try other paid-service offers from [Company] in the future. I will try other paid-content offers from [Company] in the future. I will try other shopping offers from [Company] in the future. 0.74 0.78 0.77 26.35 27.90 26.98 0.81 0.91 0.94 0.89 0.88 0.79 0.94 0.87 0.90 0.79 0.88 0.81 0.89 35.43 37.59 35.74 32.28 26.47 38.67 34.24 36.32 32.75 34.98 32.77 35.98 .84 0.92 0.91 0.83 0.91 0.89 0.86 0.88 30.21 30.92 30.94 0.91 LOADING t-VALUE RELIABILITY
AVERAGE VARIANCE EXTRACTED
0.77
0.83 0.84
0.76
0.74
0.72
0.58
Note: XYZ replaces the particular service. All items translated from German. For Web-Based Service Quality and Perceived Value, we used five-point semantic differential items. The remaining items were all scored on a five-point Likert scale. All items were recoded consistently prior to analysis, with 1 marking the lower and 5 marking the higher end of each scale. Three consecutive full stops (. . .) indicate that an item was adapted to the particular service to avoid ambiguities for respondents. Loadings are standardized.
a b
Item dropped due to high error variance and modification index on initial confirmatory factor analysis. Prefacing phrases ensured that additional Web-based services were meant which the respondents have not yet used.
It should be noted that, due to strict data protection laws effective in our case, we were unable to access actual purchase data, which might have been used to get a richer picture of customer loyalty and crossbuying. However, previous studies have repeatedly
shown that behavioral intention measures are strongly related to actual behavior (e.g., Bolton, Kannan, & Bramlett, 2000; Sheppard et al., 1988). Researchers have pointed out as well that measures of customer mind set such as attitudes and intentions remain
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crucial for the guidance of marketing decisions, because they give insight into the underlying mechanisms leading to changes in financial performance measures like sales, price premium, or profits (Ailawadi, Lehmann, & Neslin, 2003; Rust et al., 2004). Therefore, we believe that, despite the recent surge in drawing on purely behavioral data to assess loyalty, the sole use of intention measures is also warranted. A separate online questionnaire was developed for each of the three Web-based services. Marginal differences resulted from adjustment of items and prefacing phrases to the respective setting. With regard to potential common method bias, we took precautions recommended in the methodological literature that were applicable in our case (Lindell & Whitney, 2001; Podsakoff, MacKenzie, Lee, & Podsakoff, 2003). For instance, we used a different scale format for the measures of Web-based service quality and perceived value compared to the other measures (see Table 1). Furthermore, we integrated two reverse scored marker items into each questionnaire to detect acquiescence bias due to respondents tendency to agree with items regardless of content. All three questionnaires were then submitted to a pretest to ensure clarity of wording, each with five potential respondents out of the sample population. Minor modifications in prefacing phrases resulted from the pretest.
in the sense of Little and Rubin (1987). In such a case, the methodological literature (e.g., Schafer & Graham, 2002) as well as a recent simulation study with marketing data (Lemieux & McAlister, 2005) strongly suggest that missing data should be imputed. To obtain the best point estimate for missing values, we followed the recommendations in the literature and utilized the EM-algorithm for imputation. In our further analysis, we could not detect problems with nonresponse bias following the procedure suggested by J. S. Armstrong and Overton (1977) or common method bias using Harmans single factor test (Podsakoff et al., 2003). Preliminary data screening also showed that the distribution of the items used within our study did not fulfill the condition of multivariate normality. Tests of both multivariate skewness and kurtosis conducted with the PRELIS program included in LISREL were significant at p 0.01. Fornell (1992) noted that skewed distributions are the rule in customer satisfaction data; still, many researchers do not give enough consideration to this issue. However, it is critical for the use of maximum likelihood estimation in confirmatory factor analysis (CFA) and structural equation models, which we will employ. In all of the subsequent analyses, we take this issue into account by using an option in LISREL that allows a robust maximum likelihood estimation of standard errors and chi-square values under non-normality by means of asymptotic covariance matrices (Jreskog, Srbom, du Troit, & du Troit, 2001; Satorra & Bentler, 1994). As one of our goals is to increase the generalizability of our findings across different Web-based service domains, conducting our analyses with an aggregated sample would be preferable. To this end, we tested all multi-item constructs for configurational and metric invariance across the three samples (Steenkamp & Baumgartner, 1998). The results of the configurational invariance model were satisfactory (SatorraBentler Scaled Chi-Square 1043.18, df 426, NNFI 0.97, CFI 0.97, RMSEA 0.066). Thus, we conclude that the constructs exhibit configurational invariance across the three samples. Next, full metric invariance was tested. There was, however, a significant increase in chi-square indicating that full metric invariance was not given (Satorra-Bentler Scaled Chi-Square Difference36 df 135.96, p 0.001). We followed the procedure described by Steenkamp
RESULTS
Measurement Model
Before assessing the psychometric properties of the measures, we first screened the obtained data for potential bias due to nonrandomly missing values, common measurement method, or nonresponse. With the exception of the three items for Web-based service quality, all measures contained missing values, with proportions ranging from 4.2% to 17.1%. The analysis conducted using SPSS revealed that the missing values in each sample were not missing completely at random in the Little and Rubin (1987) sense. This means that the cases containing missing values can not be assumed a random subset of all cases. Hence, the default procedures of pairwise and listwise deletion of cases with missing values would introduce significant bias. At the same time, we observed no systematic pattern of missing data. Thus, we conclude that data are missing at random
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and Baumgartner (1998) to test for partial metric invariance. This model exhibited no significant difference in fit compared with the configurational invariance model (Satorra-Bentler Scaled Chi-Square Difference22 df 31.99, p 0.078, RMSEA 0.065; NNFI 0.97; CFI 0.97). This strongly suggests that partial metric invariance is supported and allows us to aggregate all responses to one sample with 999 observations, forming the basis for subsequent analyses. To assess the adequacy of our multi-item measures, we followed standard procedures employed in marketing research (Gerbing & Anderson, 1988; Ping, 2004). First, we examined item-to-total correlations and coefficient alpha for each multi-item measure. Item-to-total correlations were consistently high and coefficient alpha values ranged from 0.80 to 0.91, demonstrating high internal consistency for each scale. We then used CFA to assess the unidimensionality of multi-item measures (one at a time). In the case of customer loyalty, the CFA suggested deletion of one item (see Note (a) in Table 1). The resultant indicators were then collectively subjected to a CFA that also included the single-item measure for perceived value. The methodological literature recommends fixing the error variance of a single-item measure to a nonzero value in order to adjust for a specific amount of measurement error (Hayduk, 1996). Following these recommendations as well as prior research incorporating perceived value in a similar way (e.g., Varki & Colgate, 2001), we fix the error variance of the single-item measure to 0.15. Table 1 summarizes the results of the CFA. The measurement model suggests close fit to the data (Satorra-Bentler Scaled Chi-square 267.94, df 112, NNFI 0.99, CFI 0.99, RMSEA 0.037, and Standardized Root Mean Square Residual [SRMR] 0.025). Consistently high and significant factor loadings as well as satisfactory values of average variance extracted (AVE) for all constructs provide strong evidence for convergent validity (Bagozzi & Yi, 1988). As the rigorous discriminant validity criterion proposed by Fornell and Larcker (1981) is met for all constructs, we conclude that they are distinct. This is also supported by the results of chi-square difference tests between the measurement model and models, in which we constrained correlations between the constructs to unity (one at a time).
In every case, the constrained model produced an increase in the chi-square statistic that was significant at p 0.01. Finally, composite reliabilities of the constructs ranging from 0.81 to 0.92 indicate that our measures are reliable.
Hypotheses Testing
We use structural equation modeling in LISREL 8.54 to test the hypothesized relationships concurrently in one model. Thereby, Web-based service quality is specified as exogenous variable, whereas the other constructs represent endogenous variables. The model exhibits close fit to the data (Satorra-Bentler Scaled Chi-Square 250.99, df 111, NNFI 0.99, CFI 0.99, RMSEA 0.036, and SRMR 0.025). Results of the analysis are displayed in Table 2. Overall, 14 out of 21 hypotheses have been supported. Examining the hypotheses pertaining to direct effects of Web-based service quality (H13), we find that all are supported except one: Web-based service quality has substantial direct effects on perceived value (g 0.63, p 0.01) and customer satisfaction (g 0.58, p 0.01), thus corroborating H1 and H2a. The direct effects on customer loyalty (g 0.08), WTPM (g 0.14), and cross-buying (g 0.15) lend support to H3a-c, but they are only small to moderate in size. At least in the case of customer loyalty, this is different from findings in most prior research; however, we will also have to consider the indirect effects of Web-based service quality on this construct. Also differing from results of prior studies, there is no significant direct effect of Web-based service quality on trust (H2b). Again, we will have to inspect the indirect relationships between these two constructs before a meaningful interpretation of this finding is possible. Looking at the direct effects triggered by perceived value (H45), we find that four out of five hypotheses are supported. Customer satisfaction (b 0.19, p 0.01) and trust (b 0.12, p 0.01) are both affected by perceived value to a moderate degree, which substantiates H4a and H4b. Furthermore, H5a and H5b are supported, because perceived value has a direct positive effect on both customer loyalty (b 0.15, p 0.01) and WTPM (b 0.24, p 0.01), with the latter effect being comparatively high. This could be rooted in the fact that perceived value and WTPM are both
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TABLE 2
Structural Equation Modeling Results for Hypotheses (N = 999)
HYPOTHESIZED EFFECT H1: Web-Based Service Quality Perceived Value H2a: Web-Based Service Quality Customer Satisfaction H2b: Web-Based Service Quality Trust H3a: Web-Based Service Quality Customer Loyalty H3b: Web-Based Service Quality Willingness to Pay More H3c: Web-Based Service Quality Cross-Buying H4a: Perceived Value Customer Satisfaction H4b: Perceived Value Trust H5a: Perceived Value Customer Loyalty H5b: Perceived Value Willingness to Pay More H5c: Perceived Value Cross-Buying H6a: Customer Satisfaction Trust H6b: Customer Satisfaction Customer Loyalty H6c: Customer Satisfaction Willingness to Pay More H6d: Customer Satisfaction Cross-Buying H7a: Trust Customer Loyalty H7b: Trust Willingness to Pay More H7c: Trust Cross-Buying H8a: Customer Loyalty Willingness to Pay More H8b: Customer Loyalty Cross-Buying H9: Willingness to Pay More Cross-Buying
STANDARDIZED COEFFICIENT 0.63 0.58 0.05 0.08 0.14 0.15 0.19 0.12 0.15 0.24 0.11 0.76 0.24 0.11 0.09 0.47 0.19 0.15 0.54 0.05 0.50
t-VALUE 16.29 12.68 1.28 1.93 2.35 2.62 4.01 3.22 3.98 4.46 1.98 16.17 3.69 1.24 1.06. 7.39 2.13 1.60 7.78 0.65 9.83
p-VALUE <0.01 <0.01 n.s. <0.05 <0.01 <0.01 <0.01 <0.01 <0.01 <0.01 <0.05 <0.01 <0.01 n.s n.s. <0.01 <0.05 n.s. <0.01 n.s. <0.01
CONCLUSION Supported Supported Not Supported Supported Supported Supported Supported Supported Supported Supported Not Supported Supported Supported Not Supported Not Supported Supported Not Supported Not Supported Supported Not Supported Supported
Note: All effects are hypothesized to be positive. Significance tests are one-tailed (n.s. = not significant).
price-related constructs. The test of H5c produces a surprising result: a significant negative effect of perceived value on cross-buying (b 0.11, p 0.05). As we hypothesized a positive effect, H5c is not supported. We find mixed support for the hypothesized direct effects emanating from customer satisfaction. While the results show a very strong effect on trust (b 0.76, p 0.01) and a moderate effect on customer loyaltywhich bears out H6a and H6bthe effects on WTPM and cross-buying remain insignificant (H6c and H6d). The test of H7a lends support for the direct effect of trust on customer loyalty (b 0.47, p 0.01), which is quite substantial. There is also a significant direct effect of trust on WTPM (b 0.19, p 0.05), yet it is negative. Hence, H7b cannot be
supported. The direct effect of trust on cross-buying (H7c) remains insignificant. Finally, the results regarding H89 corroborate the above-mentioned idea of a specific chain of effects between the behavioral intention constructs: customer loyalty drives WTPM (H8a, b 0.54, p 0.01), which in turn has a quite substantial effect on crossbuying (H9, b 0.50, p 0.01). However, a direct effect of customer loyalty on cross-buying over and above WTPM (H8b) is not supported. Although the amount of variance explained differs for the six endogenous variables, the models overall predictive ability appears to be good. The R-square values for the endogenous variables are: perceived value 0.40, customer satisfaction 0.51,
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trust 0.77, customer loyalty 0.71, WTPM 0.35 and cross-buying 0.34.
Examination of Indirect Effects

A closer examination of our model, especially with regard to indirect effects, gives further insights into the relationships studied. First, it is interesting to note that Web-based service quality neither has a significant direct effect on trust nor substantial direct effects on behavioral intentions. However, there are significant indirect effects, which strongly suggest that a considerable amount of its impact is mediated by other variables (Shrout & Bolger, 2002). The most demonstrative example is the indirect effect of Webbased service quality on trust. This effect has three components: The indirect effect via perceived value (Web-based service quality S perceived value S trust), the indirect effect via customer satisfaction (Webbased service quality S customer satisfaction S trust), as well as the indirect effect via perceived value and customer satisfaction (Web-based service quality S perceived value S customer satisfaction S trust). LISREL computes these indirect effects and provides the corresponding t-values. In sum, the indirect effect of Web-based service quality on trust amounts to 0.61 ( p 0.01). This compensates for the insignificant direct effect and shows that its impact on trust is completely mediated by perceived value and customer satisfaction. In total, there is a large and significant relationship between Web-based service quality and trust. Moreover, there is a large indirect effect of Web-based service quality on customer loyalty (0.57, p 0.01) as well as moderate indirect effects on WTPM (0.30, p 0.01) and crossbuying (0.22, p 0.01). These are cases of partial mediation, where both the direct and indirect effect are significant. Looking at the relationship between customer satisfaction and customer loyalty, we find another instance of a substantial indirect effect (0.36, p 0.01) that is actually bigger than the corresponding direct effect (0.24). The mediating variable in this case is trust, which underlines its importance for building loyalty. Overall, indirect effects account for a large portion of total effects within the model. Furthermore, an indirect effect offers a reasonable explanation for a counterintuitive result obtained in the preceding section: the negative direct effect of trust on WTPM. As there is no substantive rationale
to justify this significantly negative effect, we had reason for assuming that it may be a so-called suppressor effect (Cohen & Cohen, 1983; Shrout & Bolger, 2002). The methodological literature discusses suppressor effects as a possible explanation of inconsistencies within a model, where one variable has a direct as well as an indirect effect on another variable. In our case, this seems to be present within the relationship of trust and WTPM. Our results show that there is no significant total effect of trust on WTPM. The indirect effect of trust on WTPM via customer loyalty amounts to 0.25 (p 0.01). This indirect effect is obviously too large given the nonsignificant total effect in the data. Consequently, the direct effect has to act as a counterbalance and therefore becomes negative in order to decrease the total effect to a value that is consistent with the data and that allows the model to converge. Overall, scrutinizing the indirect effects clarifies the surprising and, in part, counterintuitive results obtained from hypotheses testing. Thus, indirect effects are of great help in getting a more complete understanding of the complex interrelationships between Web-based service quality and its consequences. Moreover, they remind us that insignificant or surprisingly small direct effects should not be instantly equated with a non-existing or weak relationship. In particular, the examination of indirect effects highlights the pivotal role of trust within our model. To further support the notion of trust as the key mediating variable, we additionally compared our model with an alternative specification excluding trust. A chi-square difference test shows that the model excluding trust has a significantly worse fit to the data compared with our model (Satorra-Bentler Scaled Chi-Square Difference35 df 70.49, p 0.01).
DISCUSSION
First, our results underscore the importance of quality in the context of Web-based services. Overall, Web-based service quality has a markedly positive effect on favorable attitudes (customer satisfaction, trust) as well as on desired behavioral intentions (customer loyalty, WTPM, cross-buying). However, this impact is often mediated by other variables: For instance, the impact on trust is completely mediated by perceived value and customer satisfaction. This is
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an important insight, because, in part, previous studies have reported mixed results concerning the direct effect of Web-based service quality on trust (e.g., Harris & Goode, 2004). The complete mediation of the effect by customer satisfaction might be an explanation for this. Typically, these studies have not accounted for such a mediating effect. Similarly, the effect of Web-based service quality on behavioral intentions is mainly transmitted through customer satisfaction and trust, most notably in the case of customer loyalty. From a theoretical perspective, these findings are consistent with TRA, because attitudinal constructs largely mediate the effects of evaluations on behavioral intentions. This provides evidence for the predictive utility of TRA in the current context. According to our results, perceived value is strongly affected by Web-based service quality, but only has small to moderate effects on satisfaction, trust, loyalty, and WTPM. Customer satisfaction is also strongly affected by Web-based service quality, but to a considerably lesser extent by perceived value, which is in line with Fornell et al. (1996), who find that customer satisfaction is more quality-driven than value- or pricedriven. However, unlike perceived value, satisfaction has a substantial positive effect on another variable in the model: trust. The results indicate that the positive impact of customer satisfaction on customer loyalty is largely mediated by trust. A supplementary analysis on the relationship between the two attitudinal constructs confirms that trust is indeed consequential to customer satisfaction and not vice versa. Trust, in turn, is the major influencing factor of customer loyalty, which indicates that customers first have to build trust in a Web-based service before developing loyalty towards it. Thereby, we provide empirical support for the contention that trust assumes a pivotal role in the context of Web-based services. Marketing researchers have repeatedly observed that relying solely on customer satisfaction may be misleading, because satisfied customers also often switch (Jones & Sasser, 1995; Mittal & Lassar, 1998). Our findings provide a possible explanation insofar as gaining customers trust may be the key to fully reap the benefits of high customer satisfaction. Furthermore, our findings suggest that trust has no significant effect on WTPM and cross-buying. This leads to the conclusion that trust in a particular Webbased service (i.e., brand trust) will not play a major
role in customers decisions to accept or not accept a price increase for this service. Moreover, it does not seem to influence intentions to cross-buy. This suggests that in a Web-based service context, trust may not be automatically transferred to other offerings of the service provider. In addition, our results suggest that customer loyalty has a substantial positive effect on WTPM. Researchers have tended to consider WTPM a part of customer loyalty. However, we provide conceptual as well as empirical support for the view that WTPM might be consequential to customer loyalty. Finally, WTPM is the only variable in the model that has a strong impact on cross-buying. Consequently, it largely mediates the effects of other variables on cross-buying. This lends support to our assumption that customers who are willing to pay more for the service currently used will also be more prone to spend money on additional Web-based services. These results offer insights into the conceptual domain of customers behavioral intentions, how they possibly interact, and eventually influence behavior. In summary, a consideration of the largest coefficients within the final model indicates a particular chain of effects triggered by Web-based service quality: Experiencing a high level of service quality will lead to higher customer satisfaction, while the price perception (represented by perceived value) only plays a minor role in this context. The more satisfied customers are, the more they will build trust in the Web-based service, which drives loyalty. Greater loyalty, in turn, leads to a higher willingness to accept a price increase, and, as a consequence, to customers being more likely to use additional Web-based services. In short, the following chain of effects seems to exist: Web-based service quality S customer satisfaction S trust S customer loyalty S WTPM S cross-buying.
Managerial Implications
Our findings have important implications for managerial practice. First, the quality of Web-based services is more important for satisfying and forging bonds with customers than perceived value. The additional consideration of the price paid does not markedly influence customer satisfaction and desired behavioral intentions. Consequently, practitioners should concentrate on consistent delivery of high
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Web-based service quality in order to make customers come back and buy again, thereby generating the earnings that are essential for long-term success. This makes superior quality a primary source of competitive advantage for providers of Web-based services. Findings of recent studies on the conceptualization and measurement of service quality on the Web can assist managers in their efforts to monitor and improve the quality of their offerings (e.g., Parasuraman, Zeithaml, & Malhotra, 2005). Furthermore, it is essential that providers manage to gain customers trust. Otherwise, they might not be able to fully reap the benefits of superior Web-based service quality and highly satisfied customers. A recent study by Schlosser, White, & Lloyd (2006) discusses different ways of signaling trust online. However, gaining trust does not only comprise investments in Web site design or technological and organizational arrangements to secure transactions and protect customers personal data. It is also very important for service providers to be a fair and reliable exchange partner. For instance, Web-based services should provide customers with a consistent usage experience and not overstrain them, all the more in a dynamic environment such as the Internet where technology and its applications rapidly evolve. Moreover, communication should be targeted and credible in order to avoid customer resistance. Open communication may nurture trust: If important changes are imminent (a price increase, for example), then customers should be well informed in a timely manner and learn why something changes. Internet technologies have made it much easier for firms to collect various data on their customers. However, as the Amazon.com case of price testing has shown, managers should be very careful in using technologies like those for buyer identification or Internet-enabled price segmentation (Grewal, Hardesty, & Iyer, 2004). Although such technologies may be easy to implement, they can easily result in customer disapproval and have disastrous effects on trust. In addition, managers should consider our findings when planning cross-selling activities. First, there is a positive effect of the service quality currently received on the intention to try additional Web-based services in the future. In other words, a segment of customers with high quality perceptions regarding one Web-based service may also be a promising target
group for other existing offers or even newly introduced services. Second, customers willingness to pay more plays a crucial role in determining the intention to cross-buy. Tracking this variable continually might, however, be more difficult compared to quality perceptions or customer satisfaction levels. If data on this behavioral intention exist, then managers should pay close attention to it in their cross-selling efforts. Likewise, if a service provider has recently adapted its pricing structure and a certain segment of customers had to accept a slight price increase, it could be worthwhile to direct cross-selling activities to this segment. The uncovered chain of effects points to another important issue for marketing managers: the need to take a more comprehensive approach in their efforts to monitor and manage the contribution of marketing to the bottom line. In evaluating the outcomes of various actions and processes undertaken to manage customer relationships (e.g., improvements in service quality), managers need to move beyond the assessment of customers satisfaction levels or their intentions to re-buy. Our results indicate that price-related outcomes such as WTPM or customers intentions to cross-buy build on customer loyalty and thus represent advancement within an ongoing relationship. Whereas a quality initiative may not show much improvement in terms of customers repurchase intentions, it might have a more pronounced effect on WTPM or cross-buying, suggesting that customers have actually strengthened their bonds with the company. Consequently, these outcomes should also be considered as part of the metrics linking marketing actions and economic performance. Finally, the practitioner can use the model and the employed scales to conduct an extensive assessment of the consequences of Web-based service quality. Since both model and scales have been tested using a multiservice sample, they seem to be well suited for service providers who intend to make comparisons across different kinds of Web-based services.
Limitations and Further Research

Although the adapted measure of overall service quality performed well in our study, it would have been preferable to capture Web-based service quality in a more detailed fashion, for example by referring to
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established service quality dimensions such as the five SERVQUAL dimensions. Therefore, we think that extending our model by measuring relevant dimensions of Web-based service quality might represent a promising area for further research. While our study includes data from three different Web-based services, the findings certainly need to be reassessed in other relevant areas such as online banking or music downloads. In addition, our study has been limited to one country. Lynch, Kent, and Srinivasan (2001) observed differences in the degree of effects across different countries. Against this backdrop, an investigation in various cultural contexts could be worthwhile. Apart from the WWW, there is of course the possibility to transfer the uncovered chain of effects to other service settings such as mobile communication. Moreover, the inclusion of two additional outcome variables (WTPM and cross-buying) as well as the comprehensive inspection of direct and indirect effects might be useful in getting a better understanding of the relationship between quality and profitability in a wide range of service settings. In our study, we were not able to link the surveybased measures to actual behavior or profitability of the respondents due to data protection laws. Therefore, extending our research to examine effects on actual loyalty and profitability is an especially promising direction for future research. Similarly, extending our research to a longitudinal setting would provide additional insights, for instance, by examining whether certain effects increase or decrease over time. Another possibility for further research would be to go beyond the linear mechanisms investigated in the present study and examine more complex mechanisms such as curvilinear effects (Agustin & Singh, 2005). Another direction for further research might be to advance the concept of trust, since our findings indicate that it plays a crucial role in the given context. Prior studies suggest multifaceted conceptualizations with dimensions like benevolence or integrity. Thus, conceptualizing trust as a multidimensional construct may also be warranted. To examine this issue further, researchers could derive possible dimensions based on the interdisciplinary trust literature and test their conceptualization with data from Web-based services.
Finally, the analysis of moderating effects could be a promising avenue for further research. Researchers have repeatedly pointed out that it is important to investigate moderating effects in consumer studies (Dabholkar & Bagozzi, 2002). The impact of, for example, consumer traits or contextual factors might be considered over and above direct effects to provide a more complete view of the examined relationships. Thus, future studies should include such variables to find out more about their potential moderating effects.
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CONSEQUENCES OF WEB-BASED SERVICE QUALITY: UNCOVERING A MULTI-FACETED CHAIN OF EFFECTS

MARTIN FASSNACHT AND IBRAHIM KSE

vidence from traditional service settings shows that service quality is

Journal of Interactive Marketing

JOURNAL OF INTERACTIVE MARKETING

Journal of Interactive Marketing

CONCEPTUAL AND THEORETICAL BACKGROUND