Formation and effect of Social Interactions in Online Brand Community: an Empirical Investigation

Online brand communities, enabled by social media technology, are being utilized by companies to improve marketing and sales. However, little is known about how to encourage customer interactions in an online brand community and whether the interactions can affect purchase behavior. To address these research questions, we explore factors that influence the formation of social interactions in an online brand community and assess the impact of different types of social interactions on customer purchase behavior, resulting in a set of theoretical hypotheses about social interactions for ecommerce. We test our hypotheses using a data set that includes customer social interactions and purchases in an online brand community. Our results show that homophily in certain customer characteristics (e.g,. member age, location, deal sensitivity) positively impacts the formation of social interaction while homophily in other customer characteristics (e.g,. share premium products) does not. We also find that social interactions with people who have purchased strongly influence customer purchase behavior. Furthermore, the effect of such social interactions is strengthened by geographical proximity. We discuss theoretical implications of our results and also offer practical guidelines for managers on how to manage customer relationships in online brand communities.