(JPMNT) Journal of Process Management – New Technologies, International

Vol. 5, No 4, 2017.

THE RELATIONSHIP OF SERVICE QUALITY, WOR D-OF-

MOUTH, AND REPURCHASE INTENTION IN ONLINE
TRANSPORTATION SERVI CES
Leonnard, S.E., M.Comma,*, Feby Thung,b
a
Sekolah Tinggi Manajemen IPMI, Indonesia
b
Bina Nusantara Business School, Indonesia
*E-mail address: [email protected]

Original Scientific Paper

doi:10.5937/jouproman5-15210

Abstract: Sophisticated and ever-evolving areas. In overcoming the problem of traffic

technology enacts many companies use and utilize congestion, motorcycle transportation or in
technology as a mean of delivering innovative and
Indonesia it is well known as ojek can be
creative new services. Technological developments
are widespread in various fields and one of them is an effective solution for the community.
in the field of online transportation. The high Ojek is an informal public transportation
demand for fast and efficient transportation modes because its operation does not have
causes the companies engaged in the sector by permission from the government. Still, it is
providing online transportation services are
considered as an interested transportation
increasing. High competition and large number of
drivers require the companies to focus highly on mean because it is faster, can pass through
providing high quality services to maintain and the jam, and able to reach the areas with
increase the number of consumers. This study aims narrow alleys which are difficult to pass by
to analyze the effect of service quality on word-of- large vehicles such as cars. A new
mouth and repurchase intentions to 80 consumers
breakthrough was raised by young
of online transportation in Indonesia. Partial Least
Square Structural Equation Model (PLS-SEM) was entrepreneurs in Indonesia who are
employed to analyze the data. The results signifies developing new innovations in the
that there is a positive relationship between service provision of online transportation services
quality to word-of-mouth and repurchase intention. by using a motorcyle. At the beginning of
Similarly, word-of mouth significantly influences
the emergence of this online transportation
repurchase intention. Further managerial
implications are discussed. in Indonesia in 2011, there is only one
brand existing that serves the needs of the
Keywords: Service quality, WOM, Repurchase
community. However, along with the
intention, PLS-SEM
increasing number of users and the high
1. Introduction interest of the community towards online
transportation services, the number of
Enterprises in the field of public competing brands with similar services
transportation services today become a increases. The high competition in this
profitable business prospects, especially in online transportation industry requires
the big cities and surrounding areas. online transportation companies to pay
Communities need practical and fast attention, maintain, and improve the
transportation services, because it cannot quality of services so that consumers do
be denied the most critical points of not switch to other brands.
congestion is in Jakarta and surrounding

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Prior studies have analyzed the summarize the results of the analysis and
relationship of service quality, WOM, and provide advice for further study.
repurchase intention to public services, yet
the studies on online transportation 2. Literature review and hypotheses
services are still limited given that the 2.2 Service quality and WOM
service is still considered new in the Service quality is a thorough
transportation industry (Kuo et al., 2009; evaluation by consumers of the services
Zhang et al., 2011; Giovanis et al., 2013; provided by the company (Zeithaml,
Liu & Lee, 2014; Nikookar et al., 2015; 1988). Saha & Theingi (2009) added that
Arifin et al., 2016; Rajaguru, 2016). In this the consumers' evaluation of service
study, we analyze the relationship of these quality is based on whether the service
three variables. High service quality will quality they received was in line with
determine the desire of consumers to consumer expectations before receiving
spread the impression and positive the service. While WOM is the consumer
experience for prospective users of online post-purchase intentions that occur when
transportation services. These positive consumers share their experiences and
impressions and experiences are very impressions when consuming services.
important as technological developments These experiences and impressions can be
lead to very rapid dissemination of both positive and negative experiences and
information through online media and impressions. A positive WOM will lead
social media. Negative of positive WOM consumers to provide recommendations
will ultimately affect the consumer's for consuming similar services to other
decision to keep using the same online potential customers, whereas negative
transportation services or switch to another WOMs may have the opposite effect
brand. (Zeithaml et al., 1996; Evangelho et al.,
In this study, we contribute to the 2005).
body of existing literature by adding a new The relationship between service
perspective of relationship of service quality and WOM has been demonstrated
quality, on word of mouth (WOM) and by the previous empirical literatures
repurchase intention in online (Alexandris et al., 2002; Hutchinson et al.,
transportation services in Indonesia by 2009; Liu & Lee, 2016; Kuo et al., 2009;
employing Structural Equation Modelling Giovanis et al., 2013; Nikookar et al .,
(SEM) Bayesian approach. The rest of this 2015, Rajaguru, 2016). Positive consumer
paper is structured as follows. The second perceptions of service quality will increase
part will review the literature on service the positive WOM. Based on the above
quality, WOM, and repurchase intention analysis, the hypothesis to be tested is as
which became the basis of model building follows:
in this study. The third section will discuss
the research methods. The fourth section H1: There is a positive relationship
will discuss results and managerial between service quality and WOM on
implications of the results of data online transportation services
processing. Finally, the fifth section will

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2.3 Service quality and repurchase H2: There is a positive relationship

intention between service quality and repurchase
Repurchase intention is one of the intention on online transportation services
consumer post-purchase intentions that
choose to use the services of the same 2.4 WOM and repurchase intention
company (McDougall & Levesque, 2000; The previous empirical literatures
William, 2002). The consumer's decision have shown that a positive WOM will
to repurchase intention depends on the generate consumers to do repurchase
evaluation of the service quality they intention. Consumers who perceive the
received (Kumar, 2002; Zhang et al., 2011; service quality performance exceed their
Liu & Lee, 2016). If the evaluation of expectations will tend to spread the
service quality exceeds consumer experience and positive impression and
expectations, then the consumer will recommend services to other prospective
repurchase the services, otherwise if the customers. These experiences and positive
evaluation of service quality is lower than impressions are not only beneficial to
consumer expectation it will give the other potential customers, but also to
opposite effect. Repurchase intention is a consumers themselves for future
very important factor for online repurchase intentions (Kim et al., 2009;
transportation service companies. The Cantallops & Salvi, 2014; Liu & Lee,
consumer's decision to keep using the 2016). Based on the above analysis, the
same online transportation service will hypothesis to be tested is as follows:
provide assurance to the company for H3: There is a positive relationship
business sustainability and ensure that between WOM and repurchase intention
consumers do not switch to other service pada online transportation services.
providers. Based on the above analysis, the
hypothesis to be tested is as follows: Based on hypotheses above, we build the
conceptual framework of this study, as can
be seen in Figure 1 below.

Service quality Word of Mouth

H1

H2
H3

Switching behavior

Figure 1. Conceptual framework

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3. Methods will remain loyal to this online transportation

service without thinking of other competitors,
3.1 Measures and 7) If there is a shortage of this online
A five-point Likert scale is employed service transportation service, I do not directly
to measure the construct variables, where 1 = switch brands
strongly disagree and 5 = strongly agree. 3.2 Sample and data collection
Service quality indicators are adopted from
SERVQUAL Parasuraman et al. (1988) Data were collected from consumers
consisting of tangible, reliability, who use online transportation services in
responsiveness, assurance, and empathy. Banten Province, Indonesia. A total of 80
While the WOM indicators are adopted from samples was collected using stratified random
Zeithaml et al. (1996) which are the result of sampling method. Data analysis was carried
the question: I will invite my relatives to use out by Partial Least Square Structural
online transportation services and I will share Equation Modeling (PLS SEM).
information about online transportation
services to others through social media. 4. Results
Finally, the indicators of repurchase intention 4.1 Evaluasi model pengukuran
are adopted from Liu & Lee's (2016) model Evaluation of the model indicates that
which are the result of the questions: 1) I the model has sufficient terms of convergent
always use this online transportation service as validity and discriminant validity
a top priority, 2) I will keep using this online (standardized loading > 0.5) (Hair et al.,
transportation service service over others, 3) I 2010). All loading factor dimension values are
always prioritize this online transportation greater than 0.5 thus it can be concluded that
service for future use, 4) I will always use all the manifest variables used to measure
online transportation service even though there constructs variables are valid. The significance
are many other competitors, 5) I will keep
of all loading factor values is measured by all
using this online transportation service CR values > 2.0 (Table 1).
although other brands are more famous, 6) I

Table 1

Reliability test results

Constructs Manifest variables Standardized Critical Ratios Standard error Communalities

loadings (CR)
Service Tangible 0.945 46.452 0.020 0.941
quality Reliability 0.947 45.242 0.021 0.945
Responsiveness 0.773 9.295 0.083 0.755
Assurance 0.916 38.950 0.024 0.915
Emphaty 0.903 37.818 0.024 0.902
WOM WOM 1 0.933 43.533 0.021 0.936
WOM 2 0.927 35.698 0.026 0.925
Repurchase Repurchase
intention intention 1 0.508 4.801 0.106 0.497
Repurchase
intention 2 0.828 18.385 0.045 0.836

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Repurchase
intention 3 0.895 36.191 0.025 0.894
Repurchase
intention 4 0.833 16.733 0.050 0.820
Repurchase
intention 5 0.556 5.215 0.107 0.538
Repurchase
intention 6 0.811 26.717 0.030 0.810
Repurchase
intention 7 0.910 48.045 0.019 0.914

Further evaluation of the composite reliability indicates that cronbach's alpha and D.G rho
(PCA) values are all above 0.7 indicate that the model has sufficient composite reliability. The
Average Variance Extracted (AVE) value of all latent variables > 0.5 indicates that all manifest
variables have good ability to define construct variants (Yamin & Kurniawan, 2011) (Table 2).

Table 2

Composite reliability test results

Constructs Manifest Cronbach’s D.G rho AVE Critical Eigenvalues

variables alpha (PCA) Values
Service Tangible 0.939 0.954 0.808 0.570 2.301
quality Reliability 0.455
Responsiveness 0.043
Assurance 0.031
Emphaty 0.021
WOM WOM 1 0.843 0.928 0.865 0.916 1.585
WOM 2 0.247
Repurchase Repurchase 0.881 0.910 0.605 0.822
intention intention 1 3.436
Repurchase
intention 2 0.968
Repurchase
intention 3 0.574
Repurchase
intention 4 0.290
Repurchase
intention 5 0.226
Repurchase
intention 6 0.142
Repurchase
intention 7 0.116

Further evaluation result in Table 3 indicates that the AVE value in general exceeds the
correlation square value of each construct with the other constructs. This condition proves that the
discriminant validity requirement has been reached (Fornell & Larcker, 1981).

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Table 3

Repurchase
Service quality WOM intention
Tangible 0.945 0.746 0.872
Reliability 0.947 0.791 0.850
Responsiveness 0.773 0.530 0.633
Assurance 0.916 0.842 0.863
Emphaty 0.903 0.793 0.848
WOM 1 0.829 0.933 0.861
WOM 2 0.730 0.927 0.747
Repurchase intention 1 0.446 0.205 0.508
Repurchase intention 2 0.698 0.782 0.828
Repurchase intention 3 0.790 0.839 0.895
Repurchase intention 4 0.799 0.661 0.833
Repurchase intention 5 0.549 0.460 0.556
Repurchase intention 6 0.751 0.653 0.811
Repurchase intention 7 0.858 0.851 0.910
Discriminant validity test results

A further evaluation of the model's is the ability to explain the endogenous constructs
measured by the value of Stone-Geisser Q2 (Geisser, 1975, Stone, 1974). All Q2 values for the
manifest satisfaction, WOM, and repurchase intention variables are above 0.35 indicate the ability of
each manifest variable to explain the endogenous construct is good (Henseler et al., 2009). Finally, the
absolute GoF value of the structural model is 0.758 (high) (Table 4).
Table 4
Goodness of fit indices result

GoF GoF Standard Critical ratio Lower bound Upper bound

(Bootsrap) error (95 %) (95%)
Absolute 0.750 0.750 0.026 28.530 0.700 0.798
Relative 0.953 0.939 0.015 64.721 0.905 0.966
Outer
model 0.999 0.994 0.001 669.336 0.990 0.996
Inner
model 0.954 0.944 0.015 64.725 0.909 0.970

4.2 Structural model evaluation (hypothesis 2). WOM also significantly

affects repurchase intention with a
The test results of 80 consumers of coefficient of 0.334, R2 = 0.867
online transportation services indicate the (hypothesis 3). All hypotheses are
value of Pr > F 0.000 which means there is significant at alpha 0.05. The result in
at least one construct that affects the Table 5 indicates that service quality has
model. Service quality significantly the greatest influence on repurchase
influences WOM with a coefficient of intention (0.913) generated through the
0.840 and R2 = 0.705 (hypothesis 1) and indirect influence of word-of-mouth
affects repurchase intention with a construct (0.280).
coefficient of 0.633, R2 = 0.867

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This means that the spread of the consumer in the future (Kim et al., 2009).
positive impression and experience by The total effect of service quality on word-
consumers who have been using online of-mouth is 0.840. Finally, the total word-
transportation services will provide a of-mouth effect on repurchase intention is
significant impact on a desire to reuse the 0.334.
transportation services by the same
Table 5

Direct, indirect, and total effects

Direct effect Indirect effect Total effect

Service quality WOM 0.840 - 0.840
Service quality Repurchase intention 0.633 0. 280 0.913
WOM Repurchase intention 0.334 - 0.334

Repurchase 1
W= 0.102
Tangible
Repurchase W= 0.221
Repurchase 2
W= 0.284 R2= 0.867 intention W= 0.242
Reliability W= 0.292 Reg= 0.633
W= 0.182 Repurchase 3
W= 0.155
W= 0.216
Responsiveness
Service Repurchase 4
W= 0.349 quality R2= 0.867 W= 0.208
Assurance Reg= 0.840 Reg= 0.334
W= 0.313 R2= 0.705 Repurchase 5

Emphaty WOM
W= 0.268 Repurchase 6

W= 0.583 W= 0.535
Repurchase 7

WOM 1 WOM 2

Figure 2. Results of proposed model from PLS-SEM by using XLSTAT

6. Discussions Kuo et al. (2009), Giovanis et al. (2013),

Nikookar et al. (2015), and Rajaguru (2016).
6.1 Theoretical implications High service quality in online transportation
Results of data processing by using services will increase consumer desire to
SEM PLS indicated that all tested hypotheses spread positive impressions and experiences
were proved and significant at alpha 0.05. This and recommend those services to others.
means that all hypotheses tested in this study Service quality also positively affects
support prior empirical literatures. Service repurchase intention. This result is consistent
quality significantly affects word-of-mouth. with previous research conducted by Kumar
This result supports Alexandris et al. (2002), (2002), Zhang et al. (2011), and Liu & Lee
Hutchinson et al. (2009), Liu & Lee (2016), (2016).

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If the services provided by online are assurance and empathy. This result is in
transportation services exceed consumer accordance with Liu & Lee (2016). Assurance
expectations, then they will reuse the is the knowledge, attitude and behavior of
transportation services in the future. Finally, drivers of online transportation services and
word-of-mouth also exhibits a positive their ability to gain consumer trust. While
influence on repurchase intention (Kim et al., empathy is caring and individual attention
2009; Cantallops & Salvi, 2014; Liu & Lee, given by the driver to the consumers. The
2016) which means consumers who spread importance of these two indicators implies to
positive impressions and experiences about the managers that these two indicators are
services and companies have an opportunity more important to consumers than the physical
great for re-using online transport services in appearance of the motorcycles, facilities and
the future. Each manifest variable of tangible, the drivers. Therefore, managers need to
reliability, responsiveness, assurance, and provide training to drivers so that they hold
empathy have significantly influence the knowledge, care, attention, and good, friendly,
service quality with coefficients of 0.284, and polite attitudes to the consumers. This turn
0.292, 0.216, 0.349, and 0.313 respectively. outs very important because the company does
This result is consistent with Parasuraman et not interact and see directly when
al. (1998). Manifest variables of WOM 1 and transportation services are used by consumers.
WOM 2 also significantly influence WOM The ability of drivers to master these two
with coefficient of 0.583 and 0.535 indicators will greatly determine the level of
respectively. This result is in accordance with customer satisfaction and the positive word-of-
Zeithaml et al. (1996). Finally, all manifest mouth level. The word-of-mouth is one of the
variables of repurchase intention also great tools for a company's marketing strategy
significantly influence the repurchase intention initiated by the consumer itself. Companies do
with coefficients of 0.102, 0.221, 0.242, 0.182, not need to spend on promotional costs, but
0.155, 0.208, and 0.268 respectively. This can automatically increase sales of services
result supports Liu & Lee (2016) as well. and increase the number of customers.
According to Liu & Lee (2016), companies
6.2 Managerial implications need to do special research on word-of-mouth
levels and utilize it as an effective tool for
The high influence of service quality
on repurchase intention is provided by corporate marketing strategies.
mediating variable of word-of-mouth. This 7. Limitations and future studies
means that the higher service quality received
by consumers will be the higher the spread of This study basically analyzes at the
positive information about the company and influence of mediating variable of word-of-
this will give an impact on the higher mouth variable on repurchase intention of
consumer desire to re-use the same services online transportation services. The addition of
(Cantallops & Salvi, 2014). The challenge for other variables for further studies is highly
managers is not only to focus on how to gain recommended. In addition, SERVQUAL
new customers, but also to ensure that their old dimensions adopted in this study have some
customers are using the same services. This shortcomings (Brady & Cronin, 2001). The
can only be undertaken through maintaining use of other dimensions of service quality for
and improving the high quality of services. advanced studies is also suggested to observe
at the different effects of each service level.
Furthermore, the manifest variables
that have the most influence on service quality

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Appendix A

Table A.1

Variables selected for the model analysis

Dimensions Attributes
Tangible The physical condition of the motorcyle is in a good condition
The condition of the driver is neat
The condition of the driver is healthy
The physical condition of the facilities is in a good condition
The physical condition of the facilities is complete
The facilities provided are vary
The facilities provided are safe
The facilities provided are comfortable
The physical condition of the facilities is clean
The physical condition of the motorcycle is clean
The physical condition of the driver is clean
The facilities provided are complete
Reliability The driver capability can be trusted
The driver drives me to the destination
The driver focuses in driving to the destination
The driver comes according to my location
The driver drives me according to the location I am heading
The driver controls the direction of my location
The driver is very reliable in finding the fastest direction to take me to the
destination
Responsiveness The driver is responsive to my call
I do not wait long for pick-up
The arrival of the driver at the pick-up location is very fast
The driver is very initiative and reliable driving me to the destination
without asking a lot of questions
Assurance The driver gives me a standard SNI helmet
The driver drives carefully
The driver is relaxed in driving the motorcycle
Emphaty The driver wants to help bring my stuff
Online transportation service understands my needs and provides a variety
of services to suit my needs
Word-of-mouth I will invite my relatives to use online transportation services
I will share information about online transportation services to others
through social media.
Repurchase intention I always use this online transportation service as a top priority
I will keep using this online transportation service service over others
I always prioritize this online transportation service for future use
I will always use online transportation service even though there are many
other competitors
I will keep using this online transportation service although other brands
are more famous
I will remain loyal to this online transportation service without thinking of
other competitors
If there is a shortage of this online service transportation service, I do not
directly switch brands

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