Understanding consumer online shopping behaviour from the perspective of transaction costs

3.6.4 Risk-Bearing Propensity and Perceived Enjoyment as Moderating Variables 
Apart from TCs, certain personal traits of a consumer such as risk-bearing propensity 
(Byramjee and Korgaonkar 2004) and the perception of enjoyment of online shopping (Al-
Maghrabi and Dennis 2011, Domina
 et al.
2012) also affect online behaviour. An individual’s 
ability to handle risk classifies him/her as either risk-taking or risk-averse (Kahneman and 
Tversky 1979), which accordingly determines the individual’s higher or lower level of 
confidence in purchasing online, and his/her affinity to purchase from certain online store 
(Kim
 et al.
2008, Aghekyan-Simonian
 et al.
2012). Further, the degree of enjoyment (high or 
low) in online shopping also tends to affect a consumer behaviour in ration to online 
purchasing and loyalty development (Ha and Stoel 2009).
Teo and Yu (2005) argue that the specific consequences of consumer TCs are determined by 
individual consumer’s personality traits such as risk attitude, perception of the level of 
enjoyment, innovation attitude, etc. However, little is currently known about the cumulative 
effects of TCs and personal traits when integrated together to determine online consumer 
behaviour (Belanche
 et al.
2012b). Therefore, in an attempt to shed some light on this issue, 
this study empirically tests the interactive effects of TCs, risk-bearing propensity and 
perceived enjoyment of online shopping on online purchase behaviour and customer loyalty. 

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These empirical verifications attempt to expose the underlying reasons for consumers’ online 
purchase behaviour and loyal behaviour.
Balasubramanian et al. (2005) use a few interesting vignettes to explain consumers’ online 
behaviour and their channel choices. In lieu of a lack of prior research pertaining to the 
interactive effects being investigated in this study and due to the nuance of the posited 
relationships, the researcher borrows ideas from these vignettes and further builds scenarios 
which can help to develop the hypothesized interactive relationships that are examined in the 
study.
3.6.4.1 Consumer’s Risk-Bearing Propensity 
Individuals differ in their risk-bearing attitude. Some are risk-taking while others are risk-
averse (Kahneman and Tversky 1979). Risk-takers are generally more enterprising and 
growth-orientated. They are the promotion-focused type who can better deal with 
uncertainties when trying to reach out for potential gains and positive outcomes (Dohmen
 et 
al.
2011). Thus, they are the type who depart from the status quo by taking the risk in 
anticipation of benefits. Risk-averse individuals, on the other hand, are more prevention-
focused and try to keep away from uncertainties in their environment (Li and Huang 2009). 
Their psyche leads them to maintain the status quo to minimize potential losses and negative 
outcomes (Dohmen
 et al.
2011). 
Lee and Cuningham (2001) identify consumers’ inherent risk-tendency and their perceptions 
of risk as major factors when selecting a service provider. Burnhan et al. (2003) argue that 
social, financial and psychological elements of risk may induce risk aversion in the buyer, 
and serve as a considerable impediment to switching behaviour. Applied to online shopping, 

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consumers’ risk-averse attitude may function as an important deterrent to online vendor 
switching. Sholtz (2001) explains that consumers’ differing risk-bearing propensity 
determines the extent of trust they place in the transaction environment. Helmut (1993) 
proposes that in spite of the risks arisen from the information asymmetry and uncertainty, 
consumers’ inherent tendency towards risk-bearing would ultimately influence how well they 
adjust to the transaction environment and their behaviour therein.
Consider a scenario where a consumer at the grocery store checks the apples before 
purchasing them. He experiences this need for self-affirmation in order to convince himself 
of a comfortable and confident purchase. A deeper reflection of his behaviour may reveal that 
his inherent trait is the risk-averse type. The low risk-bearing propensity induces him to 
carefully inspect merchandise before purchase in order to avoid post-purchase regret, and that 
would drive him to shop through only brick-and-mortar stores where he could touch and feel 
the offerings before buying them. Thus, in this case, the individual’s risk-bearing propensity 
tends to emerge as the pivotal variable in determining preference of shopping medium. 
Transposing this logical deduction into an online setting the researcher argues that risk-averse 
individuals would be so afraid of the uncertainties and risks associated with online shopping 
that they would not purchase from online stores or simply reduce the amount of items 
purchased online. Risk-averse consumers who have very limited risk tolerance feel threatened 
by ambiguous or unknown situations and tend to exhibit strong uncertainty avoidance 
behaviour (Curley
 et al.
1986, Baker and Carson 2011). They are very concerned about the 
uncertainties and risks and are eager to get rid of the instabilities in online environments (Yeh