Understanding consumer online shopping behaviour from the perspective of transaction costs

3.4 IDENTIFYING ANTECEDENTS OF CONSUMER TCS OF ONLINE SHOPPING 
After clarifying that TCT as an integrative theory is capable of adapting to the online 
environment to explain consumers’ online behaviour and conceptualizing consumer TCs 
associated with online shopping, this section will specifically identify antecedent variables of 
consumer TCs of online shopping according to the original TCT dimensions, and group them 
into categories. 
3.4.1 Dimensions of the Online Transaction 
The original TCT provides a great way to identify the dimensions of online transaction. As 
indicated in Section 3.2, the general proposition of TCT is that governance structure (market, 
hybrid, and hierarchy) is the function of the dimensions of the transaction (asset specificity, 
uncertainty and frequency) (Rindfleisch and Heide 1997). That is, the dimensions of the 
transaction affect a firm’s choice of governance structure regarding a transaction. Although 
not explicitly, TCT suggests that the dimensions of the transaction influence the choice of 
governance structure via TCs. For example, the third basic proposition of TCT is that high 
levels of behavioural uncertainty (dimension) push firms to employ vertical integration 
(governance structure) to conduct a transaction. The argument is that high levels of 
behavioural uncertainty increase the costs of measuring the performance of exchange partners; 
when faced with high costs in assessing the performance of its exchange partners, a firm will 
seek to minimize its TCs through vertical integration. It implies that the dimensions of a 
transaction have direct effects on TCs, which in turn affect a firm’s choice of governance 

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structure. Thus, this study posits that the dimensions of a transaction affect TCs, such as the 
search cost or monitoring cost, etc. and in turn TCs affect a firm’s choice of governance 
structure.
By adapting this proposition to consumer exchange, it can be further argued that the 
dimensions of the transaction affect consumers’ choice of shopping channel through their 
perceived TCs. By the same token, in the context of online shopping, the same rationale can 
be applied, in which the dimensions of the online transaction affect a consumer’s online 
behaviour through their perceived TCs associated with online shopping. As such, the original 
dimensions (uncertainty, asset specificity and frequency) of a transaction provide the 
theoretical underpinning for identifying the dimensions of an online transaction in online 
context. By adapting the original dimensions to the online context, it is expected that the 
dimensions of the online transaction consisting of uncertainty, asset specificity and frequency 
would affect consumer TCs of online shopping, which in turn would affect consumers’ online 
behaviour.
In the original TCT, uncertainty refers to the uncertain environments in which the 
circumstances surrounding a transaction cannot be specified 
ex ante 
(i.e., environmental 
uncertainty) and performance cannot be easily evaluated 
ex post 
(i.e., behavioural uncertainty) 
(Rindfleisch and Heide 1997). Asset specificity is defined as kind of non-redeployable 
physical and human investments that are specialized and unique to a task (Williamson 1979). 
Frequency is used to measure the frequency with which transactions recur (Williamson 1985). 
Although the three dimensions are good predictors of transaction, in online context they are 
too broad to specifically explain the details of online transactions, especially considering the 

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unique characteristics, such as physical separation between online vendors and buyers, 
quality uncertainty and distrust issues.
Furthermore, scant academic research is available on delineating a theoretically derived set of 
the uncertainty and asset specificity predictors in online context from the individual 
consumer’s perspective, and these issues merit further investigation into the epistemic 
structure of the dimensions of online transaction. In this sense, it becomes evident that 
researchers need to be aware of the specific aspects of the dimensions of online transaction. 
In an attempt to shed light on this issue, this study intends to disaggregate each dimension 
into specific aspects and explain the effect of each aspect on consumer TCs. Such outcomes 
may represent specific aspects of online transaction consumers are concerning about and can 
help online stores better understand their customers, and better identify their needs and solve 
their concerns. 
Based on the original TCT, uncertainty causes problems due to bounded rationality, 
opportunism and information asymmetries. It has two sub-dimensions, including behavioural 
uncertainty and environmental uncertainty. In online shopping, behavioural uncertainty arises 
from the inherent difficulties faced by buyers in ascertaining the actual performance of online 
stores or their adherence to contractual agreements (Williamson 1985) while environmental 
uncertainty reflects the difficulty in ascertaining the external environment in light of changes 
of shopping circumstances (John and Weitz 1988). The uncertainty people perceived plays an 
important role in their transactions, especially in an online environment (Yeh
 et al.
2012b). 
From a consumer’s point of view, the obvious drawback of online transactions is that they 
involve more uncertainties than their physical counterparts. The uncertainties may arise from 
different aspects, such as online customer service, the products themselves or the online 

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transaction environment (Teo and Yu 2005). Specifically, behavioural uncertainty may be 
derived from uncertainties of privacy and security issues, product quality, service quality, site 
design, inconvenience and reputation, while environmental uncertainty may come from 
online environmental uncertainty, such as regulatory change. From the perspective of 
consumers, when they shop online, some concerns emerge, such as worries of how secure the 
online environment is, how personal data will be used, whether or not the online store’s 
products, service quality and reputation can be trusted, whether or not the online store is well-
organized and offers a user friendly interface, whether or not the online shopping can provide 
convenient services and save time for customers, whether or not the existing laws and 
regulations are adequate for the protection of consumers’ interests. These concerns are 
particularly common for consumers and would cause an increase in their perceived TCs of 
online shopping because they would have to spend more time and effort checking, monitoring 
the behaviours of the online store and adapting to general online environments due to the 
concerns over product quality, e-service quality, site design and reputation, as well as the 
general online environment’s privacy and security issue, inconvenience and environmental 
uncertainty. 
Similarly, as for the asset specificity in TCT, it includes physical asset specificity and human 
asset specificity. In the context of online shopping, physical asset specificity refers to 
investment in special equipment and conditions to get access to the Interne such as personal 
computers and modems for the purpose of online purchasing, and human asset specificity 
refers to investment in time and effort to accumulate online purchasing experience (White