Understanding consumer online shopping behaviour from the perspective of transaction costs

 
 
 
 

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CHAPTER 3: THEORETICAL BACKGROUND AND RESEARCH FRAMEWORK
3.1 CHAPTER OVERVIEW 
Based upon the theoretical foundations outlined in the Literature Review (Chapter 2), this 
chapter will integrate these foundations and develop a theoretical framework of consumer 
TCs of online shopping. The purpose is to further explain the phenomenon of consumer TCs 
and their online behaviour; that is, it will attempt to answer the questions surrounding online 
consumer behaviour from the perspective of TCs, including: What constitute consumer TCs 
of online shopping? What affects them? What do they affect? What are the key mediator(s)? 
What are the key moderator(s)? What are the differences in these relationships across product 
categories? To this end, this chapter firstly explains the TCT which provides the basic 
principles in this research. Then, it applies TCT to the online shopping environment and 
comprehensively conceptualizes consumer TCs associated with the online transaction process, 
followed by the discussion on antecedents of TCs. Next, the proposed integrative model of 
consumer TCs of online shopping is presented in Figure 3.1 and then discussed generally. 
Following this, a set of empirically testable hypotheses are developed. 
The first group of hypotheses developed in this chapter links a consumer’s characteristics (i.e., 
Internet access availability, perceived Internet expertise, and online buying frequency) to 
his/her perceived TCs associated with purchasing from an online store. Next, the second 
group hypotheses associate the consumer’s perception of the online store and its product 
characteristics (i.e., product quality concern, site design, e-service quality, and reputation of 
online store) with his/her perceived TCs of shopping from the online store. Then, the third 
group hypotheses are related to the effects of the consumer’s perception of online channel 

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characteristics (i.e., perceived convenience, privacy and security concerns, and environmental 
uncertainty) on his/her perceived TCs of online shopping. Following that, hypotheses are 
generated which directly link consumer TCs to the key behavioural consequences (i.e., online 
purchase behaviour and customer loyalty) under inspection. Next, hypotheses are developed 
depicting how customer satisfaction impacts the hypothesized relationship between TCs and 
customer loyalty, which posits an alternative mechanism for the consumer TCs-loyalty 
relationship. The next hypotheses developed in this chapter delineate how the consumer’s 
risk-bearing propensity and perceived enjoyment of online shopping moderate the 
hypothesized relationships between TCs and behavioural consequences. The last hypothesis 
depicts how the hypothesized relationships differ in product category (search product versus 
experience product). Finally, all of the hypotheses will be presented as a review at the end of 
this chapter.