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ABSTRACT Word-of-mouth can be a powerful tool for and against marketing a brand. The
effect of personality can have a significant effect on an individuals word-of-mouth behaviour.
One of the most popular personality constructs is the locus of control. This research studied the
influence of the locus of control on consumer word-of-mouth communications. The results showed
that individuals who scored high on their internal locus of control were more likely to engage in
word-of-mouth communication with their out-groups. In addition, individuals who scored high on
their external locus of control were more likely to engage in word-of-mouth communication with
their in-group. Out-groups are defined as people with a weaker ties relationship, while in-groups
are defined as people with a stronger ties relationship (i.e. close friends and family). These
findings would help marketers in directing their promotional programmes more effectively.
KEY WORDS: Word-of-mouth, locus of control, in-group, out-group
Introduction
There has been a considerable amount of documentation (see Katz and Lazarfeld,
1955) on the power of word-of-mouth since the 1960s. Word-of-mouth is generally
more credible than any salesperson and has the advantage of rapid diffusion and a
broad reach. It has been widely reported to be many times more influential than
information from newspapers and magazines, personal selling and radio advertising
(Katz and Lazarfeld, 1955; Herr et al., 1991). Despite the importance and influence
of word-of-mouth it has remained one of the most neglected marketing areas
(Silverman, 2001). In fact many companies are still struggling to develop effective
marketing programmes that encourage consumer word-of-mouth communication
(Gremler et al., 2001). According to Mangold et al. (1999) only a small percentage of
word-of-mouth communications were stimulated by active corporate promotional
efforts. To date relatively few companies have tried to harness the full potential of
Correspondence Address: Desmond Lam, Faculty of Business Administration, University of Macau,
Av. Padre Tomas Pereira S. J., Taipa, China. Fax: +853 838320; Tel.: +853 397 4880. Email:
DesmondL@umac.mo
1352-7266 Print/1466-4445 Online/05/03021514 # 2005 Taylor & Francis Group Ltd
DOI: 10.1080/1352726042000333180
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Generally, word-of-mouth communication can be defined as an oral, person-toperson communication between a receiver and a communicator whom the receiver
perceives as non-commercial regarding a brand, product or service (Arndt, 1967). It
is a group phenomenon, an exchange of thoughts or ideas among two or more
individuals (Bone, 1992). Word-of-mouth activity has been shown to influence
a variety of buyer conditions, including awareness, expectations, perceptions,
attitudes, behavioural intentions and behaviours (Reingen, 1987). According to a
study conducted by Herr et al. (1991), face-to-face word-of-mouth communication
was much more persuasive than printed advertising. It is the most important source
of influence in the purchase of household goods and food products (Katz and
Lazarsfeld, 1955). Because consumers generally cannot process all of the information that is available to them for purchase decisions, they often engage in simple
guides for simplifying their information-seeking and decision-making processes.
Word-of-mouth communication helps to reduce the amount of information that
must be processed in order to make a decision (Duhan et al., 1997).
Sundram et al. (1998) found that consumers engaged in word-of-mouth communications for altruistic, product involvement and self-enhancement reasons. For example, a
consumer may make a product recommendation to a friend out of goodwill and a desire
to help or because of their positive product consumption experience with the product.
On the other hand, he or she may also complain (negative word-of-mouth) to other
consumers if he or she is dissatisfied with their consumption experience with a product
or company. Others may engage in positive word-of-mouth communications in order to
show their expertise in a certain product area such as computers and fashion or negative
word-of-mouth communications in order to project their social status and power.
Gatignon and Robertson (1986) cited decision support, decision justification, social
status and social power as the main factors that motivated word-of-mouth
communications. The need for information and a relief of decision anxiety motivated
word-of-mouth seeking. Another study performed by Mangold et al. (1999) found the
three key factors most likely to stimulate word-of-mouth communications were a
strongly felt need on the part of the word-of-mouth receiver, coincidental communication between word-of-mouth communicator and receiver relating to a broader subject
and a high level of satisfaction or dissatisfaction with the product on the part of
the word-of-mouth communicator. This study attempts to investigate individuals
general word-of-mouth communication, which may include both positive and negative information about products or brands and examine it in the context of both
word-of-mouth giving and seeking.
The frequency and intensity of word-of-mouth communications may also depend
on the situation, type of products and markets, social network, individual
personality, availability of a physical infrastructure and culture of individuals
(Buttle, 1998). In terms of social network consumers in general interact with people
that are associated with them with varying degrees of tie strength, ranging
from strong (e.g. family and close friends or in-groups) to weak (e.g. acquaintances
or out-groups). According to Triandis (1995), in-groups are
groups of individuals about whose welfare a person is concerned, with whom
that person is willing to cooperate without demanding equitable returns, and
separation from whom leads to anxiety (p. XX).
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believe they are dominated by external forces such as fate, luck or powerful others,
factors that are beyond their control.
Demographically there are some differences between internals and externals as
documented by previous studies. According to previous research internals tended to
be more educated (Lachman and Leff, 1989) and have higher household incomes
(Rotter, 1969; Hoffman et al., 2003) than externals. In addition, men and those in
senior positions were found to be more internal than females and those in junior
positions, respectively (Smith et al., 1997).
Hoffman et al. (2003) stated that internals are more action oriented than externals.
In line with this statement, the research of Brockhaus (1975) found internals to be
more oriented towards activities and more likely to possess entrepreneurial qualities
such as risk taking. Internals tend to initiate new activities and undertake efforts or
actions in order to manage events around them actively and, hence, are more action
oriented. At work internals often perform beyond their basic job requirements such
as by actively taking initiatives for controlling outcomes (Spector, 1982; Blau, 1993).
Internals are likely to take up more risk in businesses (Miller et al., 1982; Howell and
Avolio, 1993) and engage in a greater degree of information search than externals
(Srinivasan and Tikoo, 1992), which they use for making their decisions (Lefcourt,
1982). Internals risk-taking aptitude in businesses and corporate settings generally
reflect their beliefs in controlling the outcomes of their lives and events around them.
This risk-taking nature of the internals in controlling outcomes can affect how they
communicate with others. Generally, communication among people often involves
taking some risks such as the risk of information transmitted uncontrollably and the
social risk of a negative remark made by the sender. Given the activity-oriented and
risk-taking characteristics of internals, one may naturally expect internals to seek out
and engage actively in word-of-mouth communication with people around them.
This behaviour is in essence manifested by internals desire to take initiatives in
controlling their lives despite the possibility of any associated risks. Therefore, it
seems unlikely that internals will engage solely in active communication with their ingroups. Based on their nature and craving for information, they may be more likely
to engage in communication with their out-groups than the externals. Hence, the
following hypotheses were formulated for this study.
H 1:
Individuals who score high on their internal locus of control are more likely
to engage in word-of-mouth communications with their out-groups compared to individuals who score low on their internal locus of control.
H 2:
Individuals who score high on their internal locus of control are less likely to
engage in word-of-mouth communications with their in-groups compared
to individuals who score low on their internal locus of control.
Externals, on the other hand, often engage in avoidance behaviour (Janssen and
Carton, 1999) such as withdrawal (Storms and Spector, 1987). According to Steinfatt
(1987) externals also have greater needs for affiliation. As such they are more likely
to engage in companionship and entertainment behaviour compared to internals
(Flaherty et al., 1998). Externals often feel a lack of personal control and believe
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their actions do not necessarily lead to their desired results. As such they are likely to
fall back on their in-group members, who provide a sense of safe companionship
and certainty. Due to their avoidance attitudes and needs for relationship, externals
may be more likely to engage in word-of-mouth communication with their ingroups. At the same time, aggravated by their risk-avoiding nature, externals would
feel uncomfortable with the unfamiliar and unknown associated with their out-group
members. Thus, they may also be less likely to engage in word-of-mouth
communication with their out-groups. Hence, the following two hypotheses were
formulated.
H3: Individuals who score high on their external locus of control are more
likely to engage in word-of-mouth communications with their in-groups
compared to individuals who score low on their external locus of control.
H4: Individuals who score high on their external locus of control are less likely to
engage in word-of-mouth communications with their out-groups compared
to individuals who score low on their external locus of control.
Research Methodology
Sample and Data Collection
In order to test the hypotheses, a set of 200 questionnaires was distributed to a
convenience sample consisting of business undergraduates at a university in Perth,
Australia. Incomplete data reduced this sample to 197. The age of the respondents
ranged from 18 to 34 years old, with a median age of 21 years. Approximately 20%
of the respondents were working adults studying their first degree and 43% of the
respondents were male.
Questionnaire
Altogether there were 20 items in this study. The word-of-mouth communication
construct was operationalized using eight items, with four items each for the ingroup and out-group word-of-mouth communications, respectively. For exploratory
purposes the original items comprised two items each for word-of-mouth seeking
and giving, each with an attitudinal and a behavioural component. These items were
pre-tested for validity during the preliminary study on a focus group of 15
individuals (mostly undergraduates and postgraduates) prior to the main survey. A
few of the items were reworded for clarity through feedback. Very importantly, the
focus group participants did not find any differences between the seeking, giving,
attitude and behaviour items beyond the in-group/out-group partition. As such the
original items were retained for the main survey.
Nine items on the locus of control were chosen from Levensons (1974) original
scale. Three of these items measured the internal locus of control, while the others
measured the external (i.e. powerful others and chance) locus of control (see the
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Appendix). All of the above items were measured on a five-point Likert scale ranging
from 1 representing strongly disagree to 5 representing strongly agree. Three
additional items were questions about age, gender, nationality and the number of
years spent in Australia.
Data Analysis and Results
A factor analysis with principal components extraction and varimax rotation was
performed on the eight items that were used for measuring word-of-mouth
communications. The process only yielded two factors successfully: in-group
word-of-mouth communication and out-group word-of-mouth communication.
This result was in accordance with the focus group findings, where the participants
did not find significant differences between the various word-of-mouth items beyond
the in-group/out-group partition. In essence, the respondents to the survey did not
find significant differences in items for either category (i.e. in-group word-of-mouth
communication and out-group word-of-mouth communication).
Another factor analysis on the nine items for the locus of control discovered two
factors instead of the expected three dimensions: internal, powerful others and
chance (Levenson, 1974). These factors were renamed the internal locus of control
and the external locus of control. An item reliability test was also conducted, yielding
satisfactory Cronbachs a coefficient values for all factors (see Table 1). According to
Nunnally (1967), reliabilities in the range of 0.50.6 are satisfactory in the early
stages of research. Hence, the coefficients obtained were deemed sufficient given the
exploratory nature of this study. Finally, all variables were created by weighted
summation based upon their respective rotated factor loading scores. The results of
the factor and reliability analysis are shown in Table 1 along with their items.
A preliminary analysis of the sample using paired-sample t-tests found that the
mean internal locus of control score (M53.74) of the respondents was significantly
(t517.94, df5193 and p,0.001) higher than their mean external locus of control
score (M52.44). This was consistent with previous research on higher education
students, who tended to have higher internal locus of control scores (Rotter, 1966).
Moreover, there was a significant negative correlation (R520.208 and p,0.01)
between the internal locus of control and the external locus of control.
Next, a multi-regression analysis was conducted with in-group and out-group
word-of-mouth communications as the dependent variables and the internal as well
as external loci of control as the predictors. Referring to Table 2, the results showed a
significant relationship between the internal locus of control and out-group word-ofmouth communications (p,0.001). At the same time, the external locus of control
appeared to predict the in-group word-of-mouth communications (p,0.001). Given
the findings, is it possible that simple demographics could explain the results more
readily than the locus of control variables? To test for the effects of demographics,
age and number of years in Australia were added as predicted variables in a second
multi-regression model (see Table 2). The results showed that, despite adding these
two variables, the overall predictive abilities of the locus of control variables
remained strong (p,0.001).
The results in Table 3 showed that the higher the internal locus of control,
the higher the out-group word-of-mouth communications (R250.280). Contrary to
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Word-of-mouth
In-group
Out-group
Cronbachs a
Items
0.697
0.699
Locus of control
Internal locus of control
0.612
0.717
Rotated factor
loading
Eigenvalue
0.667
2.199
0.726
2.199
0.707
2.199
0.737
2.199
0.779
2.132
0.775
2.132
0.643
2.132
0.650
2.132
0.630
0.781
0.481
0.646
0.561
0.484
2.356
2.356
2.356
1.518
1.518
1.518
0.798
1.518
0.761
1.518
Variables
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In-group word-of-mouth
Out-group word-of-mouth
0.054
0.374**
0.125
0.259**
20.019
0.060
Table 3. The effects of locus of control and other predictors on word-of-mouth dependent
variables
Dependent variable
Predictor variable
Internal locus of control
External locus of control
Age
Years in Australia
Model adjusted R2
In-group word-of-mouth
Out-group word-of-mouth
0.082
0.352**
20.092
20.172*
0.135
0.280**
0.000
20.147
20.078
0.065
expectation, the relationship between the internal locus of control and in-group
word-of-mouth communications was positive, although the strength was not
statistically significant (p.0.05). Hence, hypothesis 1 is supported but hypothesis
2 is not. In addition, the study found that the higher the external locus of control, the
higher the in-group word-of-mouth communications (R250.352 and p,0.001).
However, there was no significant relationship between the external locus of control
and out-group word-of-mouth communications (p.0.05). Hence, hypothesis 3 is
supported but hypothesis 4 is not. Interestingly, the number of years spent in
Australia had an effect on the in-group word-of-mouth communications. Generally,
the shorter the duration of stay in Australia, the higher the in-group word-of-mouth
communications. Perhaps uncertainty associated with being in a less familiar
environment (i.e. measured by the number of years spent) promoted or encouraged
more in-group communication and sharing.
Discussion and Implications
The major finding in this study was that word-of-mouth communication was
influenced by an individuals locus of control. The study found that individuals with
a high internal locus of control were more likely to engage in word-of-mouth
communications with their out-groups. Conversely, individuals with a high external
locus of control were more likely to engage in word-of-mouth communications with
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their in-groups. Previous research has found that externals are more risk averse and
desire companionship, while internals are more action oriented and engage in more
information search. These characteristics of internals and externals appeared to have
a significant influence on the individuals (i.e. in-group versus out-group) with which
they shared product or brand information.
The findings are interesting and insightful. The results from this study have
enhanced our existing knowledge of consumer behaviour. It provides valid support
for the use of the locus of control as the means for market segmentation. As
mentioned earlier, previous research on the locus of control has found externals to be
less educated, have a low income, tend to be women and hold lower corporate
positions, whereas internals, on the other hand, have a higher income, are more
educated, tend to be men and hold higher corporate positions. Inferring from the
current findings, the former groups of individuals (i.e. externals) may be more likely
to engage in product or brand word-of-mouth communications with their close
friends and families (i.e. in-groups) while the latter groups of individuals (i.e.
internals) may be more likely to engage in communication with people other
than their in-groups (i.e. out-groups). The knowledge of the locus of control
characteristics of these groups of individuals may become highly valuable for
companies, potentially enabling alternative promotional strategies. For example,
when directly targeting less educated or lower income consumers, marketers may
find a new product diffusion process slower and less effective because these groups of
consumers tend not to engage in product word-of-mouth communication beyond
their in-groups. As such markets may have to choose to create awareness of their
new products by promoting through the families of these market segments. On the
other hand, when targeting more educated or higher income consumers, less
promotional efforts may be needed in order to reach the desired awareness since
their groups of consumers tend to engage in substantial word-of-mouth communication beyond their in-groups. For companies who can successfully identify,
estimate or measure the locus of control characteristics of their target markets,
targeted word-of-mouth marketing can be incorporated into their marketing
campaign as a highly viable promotion tool.
Both word-of-mouth communications and mass media influence the diffusion of
innovation. Knowing the potential impacts of the locus of control may also enable
multinational companies to understand their global markets better and take that into
account when planning their marketing strategies. Quite interestingly, a number of
research studies on the locus of control have found that Americans often score
higher on their internal locus of control, whereas non-Americans such as Asians
tended to score higher on their external locus of control (Chiu, 1986; Lee and
Dengerink, 1992). Ralston and Gustafson (1993) conducted a study on the
differences in managerial values between subjects from the USA, Hong Kong and
the Peoples Republic of China. They found that the subjects from the Peoples
Republic of China and Hong Kong scored higher on their external locus of control
than the USA subjects. Since the external locus of control relates positively to ingroup word-of-mouth communication, one may then infer that in-group word-ofmouth communication may be more proliferate in Asian societies than in Western
societies. Past research has consistently found that personal sources play an
influential role in affecting purchases. Opinion leaders in particular are often
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Appendix
Word-of-mouth Items (In-group)
1.
2.
3.
4.
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I share information about new brands and products with people other than
my close friends or family.
I seek out the advice of people other than my close friends or family
regarding which brand to buy.
I like to seek information and advice of people other than my close friends
or family before making a purchase decision.