Proceedings of 26th International Business Research Conference
7 - 8 April 2014, Imperial College, London, UK, ISBN: 978-1-922069-46-7
Consumer Investment in Services: Concept, Measurement &
Empirical Evidence
Pipop Udorn
The concept of investment is based upon the notion that “we must put effort into a venture
before we get rewards from it” (Kelley 1979). In other words, one has to stick around in order
to harvest the benefits from the investments, broadly defined as all types of resources put
into a relationship. Such resources include both monetary as well as non-monetary elements
such as time, emotional energy, and so on. Research has shown that, the higher the
investments, the stronger the likelihood to stay in the relationship (Anderson and Weitz
1992; Ganesan 1994; Rusbult 1980).
The importance of investments tends to increase over time as exchange partners adapt
their behaviors and become familiar with specific procedures or policies or other types of
adaptations (Bharadwaj, Varadarajan, and Fahy 1993; Hallen, Johanson, and SeyedMohamed 1991). As relationships develop, such adaptations make it more costly for the
customers to enter into a different relationship or behave otherwise. The investments
essentially raise the barriers of exit from the current relationship, thus resulting in lower costs
and higher profits for the firm (Anderson and Weitz 1992; Rusbult 1980, 1983).
This study is an effort to further develop the concept and measures of consumer investment
in the business context and use them as a basis for long-term customer profitability analyses
and strategies. Qualitative studies were conducted to refine the concept and develop the
measures. Subsequently, surveys were done in different businesses to test the reliability and
validity of the concept and measures.
Findings from the qualitative studies suggested that consumers aware of the investment they
put into a relationship with a particular firm. Those investments were in the form of
information given and time or other resources spent in the early phase of relationships.
Customers showing strong intention to remain in the same relationship were those enjoyed
the benefits i.e., interests from the investment or those who are afraid of losing such benefits
if they exited from the relationship. Therefore, it is safe to say that it is easier and costs lower
to keep the customers with heavy investments in the relationship.
Results from the survey helped revised the measures and tested their reliability and validity.
Consumer investments correlated positively with desirable behavioral consequences such
as satisfaction, relationship quality, and continuance intention. Consequently,
recommendations were developed for the use of consumer investment as a basis for
segmentation and profitability strategy.
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Pipop Udorn, Department of Marketing, Faculty of Commerce and Accountancy, Thammasat University, 2
Prachan Rd., Bangkok 10200, Thailand. udorn@tu.ac.th, pipop.udorn@gmail.com