Analysis of Tie Strength and Purchase Decision Involvement towards Word-of-Mouth Influence in Service Business

The increase in services must be handled, the high cost of services has the potential to shake off economic growth, according to an economic theory called Baumol’s disease. Therefore, services have to become more efficient and productive. A handling service business that mostly intangible are dissimilar from the product-based business. In service word of mouth (WOM) is important. This research would investigate the interaction and direct effects of tie strength which is an interpersonal force between sender and receiver of WOM and the receiver’s service purchase decision involvement which is an intrapersonal force on WOM influence. A secondary aim is to investigate how a distinctive conceptualization of perceived risk affects service purchase decision involvement. A conceptual model incorporating these constructs and associated hypotheses is developed and tested. This research is quantitative research conducted to explore the objective of the study. The researcher conducts a questionnaire to collect data. The purposeful sampling conducted on this research. PLS-SEM Analysis is used in this research for the data analysis. The result indicates tie strength and involvement positively affected WOM influence. However, the moderation effect whereby, tie strength was found to diminish the effect of involvement on WOM influence. The other finding is perceived risk has a highly significant effect on involvement. Also, the relationship between WOM influence and the purchase decision is positively significant. Keywords: Service, WOM Influence, Purchase Decision, Perceived Risk, Involvement, Tie Strength

The cost growth of government revisited

What accounts for the growing cost of government in the US? [Berry, William D., and David Lowery. 1984. “The Growing Cost of Government: A Test of Two Explanations.”Social Science Quarterly65 (3): 735–749] tested two explanations for why the costs of goods and services in the public sector have increased faster than these costs in the private sector in the US: “Baumol's Disease” [Baumol, William J. 1967. “Macroeconomics of Unbalanced Growth: The Anatomy of Urban Crisis.”The American Economic Review57 (3): 415–426], which focuses on the need for government to match wage increases in the more productive private sector, and [Buchanan, James M., and Gordon Tullock. 1977. “The Expanding Public Sector: Wagner Squared.”Public Choice31 (1): 147–150] Bureau Voting explanation, which focuses on the voting power of government employees. Berry and Lowery (1984) tested these two explanations using data for the 1947–1979 period and found strong support for the former but little support for the latter. Decades later, a much longer time-series is now available for empirical analysis. Additionally, the character of both public- and private-sector production and the voting power of public employees have changed in ways that may influence the empirical veracity of the two explanations. For these reasons, we extend the original analysis through 2010 to assess whether Baumol's Disease and Bureau Voting continue to have relevance for understanding government cost growth. We find that Baumol's Disease continues to be the better explanation despite changes in both sectors, although public sector wages are now more closely tied to general private rather than manufacturing wages, suggesting that growing production costs may be serving as an increasingly relevant downward pressure on the scope of real government activity.