Understanding consumer online shopping behaviour from the perspective of transaction costs


Date 02 / 04 / 2015  v ABSTRACT



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Date
02 / 04 / 2015 


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ABSTRACT 
Most prior empirical online shopping research studied consumer purchase behaviour 
and post-purchase behaviour from the perceived benefit/value perspective. However, 
few efforts have attempted to employ the cost concept to analyse consumers’ online 
behaviour. Researchers in psychology, marketing, and organizational behaviour have 
applied the transaction cost (TC) construct to study how the TCs influence the 
managers’ decision-making process at the organizational level. At the individual 
consumer level, TC consideration has become increasingly important in affecting the 
way consumers choose shopping channel and vendors in their daily lives. 
Nevertheless, little research attention has been devoted to understanding how the 
individual consumers’ online purchase and post-purchase behaviours are affected by 
their perceived TCs. This study therefore represents a point of departure in that it 
brings in TCs to explain online behaviour at the individual online shopper level. By 
extending TCs from traditional shopping to online shopping, this study develops an 
integrative model of consumer TCs associated with shopping at an online store, based 
on which hypotheses regarding the salient antecedents and consequences of consumer 
TCs were developed. 
The research was undertaken in China, in which the economy, particularly the online 
shopping industry, has been increasing rapidly. China has also a unique cultural and 
institutional setting when compared to other countries although existing research 
based on China is limited. This research is therefore expected to shed light on 
consumer TCs of online shopping within the Chinese context. Data for the study was 
collected using an on-street survey conducted on a face-to-face basis in one 
economically developed city and one economically less-developed city randomly 


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selected from the pool of coastal cities and inland cities of China, respectively. 
Hypotheses were tested using structural equation modelling (AMOS 20.0) and 
multiple group analysis.
Results of the study indicate that consumer TCs consisting of pre-, contemporaneous-, 
and post-TCs are derived from three major aspects, namely consumer-related 
characteristics, online store- and product-related characteristics, and online channel-
related characteristics. The consumer-related characteristics, including Internet access 
availability, perceived Internet expertise, and online buying frequency, are found to 
negatively affect consumer TCs. The online store- and product- related characteristics, 
consisting of e-service quality and reputation of online store, can significantly lower 
consumer TCs. In the last category of online channel-related characteristics, the 
results confirm that privacy and security concerns increase consumer TCs whereas 
perceived convenience largely reduces consumer TCs. As for the consequences of 
consumer TCs, online purchase behaviour and customer loyalty are found to be 
directly affected by TCs.
Further, the results reveal that though TCs have direct and negative effects on 
customer loyalty, part of their effects is conditional on their ability to reduce customer 
satisfaction. That is, though lower TCs in online purchasing activities could help gain 
customer loyalty, such relationship is subject to the mediating effects of customer 
satisfaction in online shopping. Additionally, results of the study imply that as 
consumers’ inherent attributes, consumer’s risk-bearing propensity confounds the 
effects of TCs on customer loyalty, and perceived enjoyment of online shopping 
moderates the effect of TCs on online purchase behaviour. Finally, the results suggest 


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that the different product categories affect TCs itself as well as the effects of the 
antecedents on TCs. Product categories further influence the relationships between 
TCs and subsequent online behaviour.
This study advances the consumer behaviour literature by taking a new perspective of 
TC mechanisms in online consumers’ decision-making. It offers deeper theoretical 
and empirical insights into online purchase and post-purchase behaviour by 
explicating the role of TCs at the individual consumer level and exploring a 
comprehensive set of antecedents of TCs. This study also has important practical 
implications. From the consumer’s perspective, this research brings benefits to 
individual consumers by informing them about the advantages of online shopping 
which can reduce their time and cognitive effort expended on shopping and 
consequently lower their TCs of online shopping. In addition, the research findings 
provide online vendors with a deeper understanding on the allocation of resources and 
capabilities in achieving minimum consumer TCs and inducing favourable 
behavioural outcomes. 


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