THE EFFECTS OF PERCEIVED RISK ON THE WORD-OF-MOUTH COMMUNICATION DYAD

Abstract

This study examined the effects of perceived risk on the sender and the receiver of word-of-mouth (WOM) communication. Regression analysis of 675 questionnaires administered in Taiwan metropolitan areas confirmed that financial risk and performance risk have significant positive effects on WOM's influencing of the receiver's purchase decision, whereas social risk and psychological risk have significant positive effects on the sender's intention of WOM spread. Product familiarity was identified as a moderator of the relationship between expected performance risk and WOM spread. There was a negative relationship between expected performance risk and WOM spread when people were unfamiliar with the product.