Understanding consumer online shopping behaviour from the perspective of transaction costs


The Mediating Role of Customer Satisfaction



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6.2.3 The Mediating Role of Customer Satisfaction 
To assess the reason why consumer TCs are advocated as crucial factors for consumer’s 
choice of an online vendor, this study posits an alternative mechanism for the TCs – customer 
loyalty relationship whereby customer satisfaction mediates the impact of the TCs on loyalty. 


305
Specifically, consumer TCs are hypothesized to negatively influence satisfaction (H4c) and 
satisfaction is hypothesized to positively affect loyalty (H5).
6.2.3.1 TCs—satisfaction 
The results support H4c that TCs decrease customer satisfaction (
β
= -.875, p < .001). These 
results suggest that high TCs incurred by a consumer during his/her transaction with an 
online vendor can decrease his/her satisfaction with the online vendor. If a consumer spends a 
lot of time and effort on pre-transaction activities (e.g., searching for suitable products), 
contemporaneous transaction activities (e.g., evaluating products and making a payment), and 
post-transaction activities (e.g., adapting to unexpected changes), he/she would not be 
satisfied with such a transaction experience at the online store. This finding is consistent with 
the prior research by Kim and Li (2009b) who assert that consumers’ perception of TCs of 
online shopping is believed to lower the level of their satisfaction with online shopping (Kim 
and Li, 2009).
Despite that a few studies have affirmed the significance of TCs in explaining initial purchase 
or purchase intention in an online business setting (Liang and Huang 1998, Teo
 et al.
2004, 
Teo and Yu 2005), little academic attention has been devoted to examining the role TCs play 
in the post-purchase phase, such as forming customer satisfaction. This study fills this void in 
the literature by underlining the significant role of TCs in determining customer satisfaction 
and confirming the negative effects TCs have on customer satisfaction.
6.2.3.2 Satisfaction---loyalty 
The result also establishes that a customer’s satisfaction has a significantly positive effect on 
his/her loyalty towards the online vendor/store (
β
= .334, p < .001). As argued by Reichheld 


306
and Sasser (1990) and Oliver (1999), satisfied customers appear to be willing to repeat 
patronizing the service provider and also to recommend the provider to other customers. 
While the foregoing relationship has been examined by researchers in traditional shopping 
settings, the current study validates this relationship in an online B2C setting in a developing 
country. Moreover, the result is in line with the findings of the survey undertaken by Cheung 
and Lee (2005) in which 80 per cent of highly satisfied online consumers would shop again 
within two months, and 90 percent would recommend online vendors to others. However, 87 
per cent of dissatisfied customers would permanently leave their online vendors without any 
complaints.
 
6.3.3.3 Partially mediation 
The conceptual model in this study highlights the mediating role of customer satisfaction in 
the effect of TCs on loyalty. Prior studies have investigate the relationship between consumer 
TCs and satisfaction (Kim and Li 2009b), the relationship between service quality and 
satisfaction (Rust and Oliver 1994, Spreng and Mackoy 1996), and the linkage between 
satisfaction and loyalty (Sahadev and Purani 2008, Flint
 et al.
2011). Extant studies, however, 
have either ignored or not formally tested the mediating role of customer satisfaction in the 
relationship between TCs and loyalty, or they have not explained this role thoroughly (Kim 
and Li 2009b). By invoking the well-investigated attitudinal framework, cognition 

affect 

behavioural intention or behaviour (Ajzen and Fishbein 1980), this study provides a 
theoretical justification for the mediating role of customer satisfaction by viewing consumer 
TCs as cognition, customer satisfaction as affect, and customer loyalty as behaviour (or a 
disposition to behave favourably towards an online vendor). The results support the 
contention that customer satisfaction partially mediates the effect of TCs on loyalty, because 
the direct effect of TCs on loyalty (
β
= -.240, p < .001) as well as the mediated effect through 


307
consumer satisfaction (
β
TCs-satisfaction
= -.749, p < .001; 
β
satisfaction-loyalty 
= .647, p < .001) both 
achieve significance. It appears that online shoppers are influenced by both their satisfaction 
and perceived TCs of purchasing from an online store when considering whether to purchase 
from the online store again or recommend the online store to other consumers.
The results show that though consumer TCs have a direct and negative effect on customer 
loyalty, part of the effect is conditional on the ability to reduce customer satisfaction. With 
customer satisfaction, TCs perceived by online shoppers may become less influential on 
loyalty. This finding is in line with the proposition that high TCs lessen the strength of the 
long-term orientation or commitment to a relationship by reducing the satisfaction with an 
exchange relationship as documented by Kim and Li (2009b). The relationships among TCs, 
customer satisfaction and loyalty found in this study are similar to the findings of Woodruff 
and Gardial (1996); that is, satisfaction partially mediates between transaction values 
(opposite to TCs) and loyalty. The present study advances the TCT and online marketing 
research by explicating the partial mediating role of customer satisfaction in the relationship 
between TCs and post-purchase behaviour (e.g., loyalty in this study) and positioning their 
interrelationship within the uncertain online environments in a developing country. 
The results also reveal that TCs are still the dominant determinant of loyalty (
β
= -.563) (refer 
to Figure 5.3). Although consumer satisfaction has a significant effect on loyalty, this 
influence is weaker compared with the direct effect of TCs (
β
satisfaction
= .334 versus 
β
TCs
= -
.563). These results indicate that consumers’ evaluations of TCs appear to carry greater 
weight in consumers’ decisions to patronize the vendor or recommend them to other 
customers, though consumers find it preferable to maintain long-term relationships with an 
online vendor who attempts to make them satisfy with the online shopping experience.


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