Academic journal article Journal of Electronic Commerce Research

Does Subsidy Work? an Investigation of Post-Adoption Switching on Car-Hailing Apps

Academic journal article Journal of Electronic Commerce Research

Does Subsidy Work? an Investigation of Post-Adoption Switching on Car-Hailing Apps

Article excerpt


The ride hailing industry was fundamentally changed by the wide spread of mobile information technology and the proliferation of sharing economy, since the popularity of car-hailing apps has grown exponentially [Hamari et al. 2015]. In addition to the form of mobile electronic commerce, one interesting issue of the mobile taxi apps is the car sharing behavior enabled by the platform. Compared with old-style ride hailing, car-hailing apps provides unique car taking experiences (i.e., online-to-offline payments, convenient and comfortable service, social interactions), and have attracted a large number of registered users.

Especially in 2015, two giants (Didi and Uber) in Chinese mobile ride hailing industry proposed several ways to attract users, of which subsidy serves as one of the most efficient method. The two companies have spent billions in their battle for market share, which certainly have proved a boon to Chinese consumers. Generous subsidies, sometimes amounting to several times the price of the fare, meant that car hailing services were cheaper than an oldstyle taxi. However, recently in this year, the subsidy for the two giants keeps decreasing, which result from the government regulations and the companies' operation strategies. The two giants in China merged together in August, 2016 [Kalanick 2016]. Whether the Chinese consumers are willing to continuously use the car-hailing apps with lower subsidy have become an interesting issue to investigate. In other word, this paper set out to investigate users' switching intention (switching to old-style ride hailing) and actual behavior in the context of lower subsidy for Chinese car-hailing apps.

Despite the importance of understanding post adoption user intention in the information system (IS) discipline [Limayem et al. 2007; Ko 2013; Zhou 2013], very little is known about the effect of price perception on the users' post-adoption intention, especially in the context of sharing economy enabled car-hailing platforms. Some studies, however, indicated the role of price perception on post-purchase evaluation, but do not provide a theoretical justification for the cognitive process of perceived price on continuous usage intention [Voss et al. 1998; Liao & Cheung 2001]. Furthermore, some studies incorporate price and value into their research model from the value perspective [Kim et al. 2007], but the relationships between intention and actual behavior is still lack of research. There are gaps in our understanding of the behavioral mechanisms underlying continuous intention and behaviors to the mobile platforms.

Therefore, in our study, we proposed and empirically analyzed a conceptual framework that considered price tolerance from value perspective in the sharing economy enabled car-hailing environment. Since our study is based on the context of sharing economy, we specifically identified three types of value that might mediate the influence of price tolerance on switch intention. Moreover, we drew on post adoption literatures to posit the mechanisms from switch intention to behavior. Knowledge of the relationships will provide more practical clues for operators and managers to improve their business strategies.

2.Literature Review

2.1. Understanding User Switching

Generally, users' post-adoption intention in IS research has been conceptualized into three aspects, the continuous usage intention, the discontinuous intention and the switching intention, corresponding to users' loyalty, complaint and switch respectively. As the most frequently investigated construct, users' continuous intention refers to subjective probability that the users will continue to use or purchase the same product [Zhou 2013; Chiu et al. 2014]. As the reverse action, user resistance in IS post-adoption research normally associate with cost and benefits that constitute users' cognitive perception on whether to discontinuous use [Zhang et al. …

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