Understanding the consumer's online merchant selection process: The roles of product involvement, perceived risk, and trust expectation

https://doi.org/10.1016/j.ijinfomgt.2015.01.003Get rights and content

Highlights

  • Consumer’s trust expectation is a predictor of intention to buy from an e-tailer.

  • Situational involvement has positive impact on all components of perceived risk.

  • Only product performance risk is positively related to consumer’s trust expectation.

  • Situational involvement is positively related to consumer’s trust expectation.

Abstract

This article provides, through a survey of 295 college students, an empirical analysis of the effects of situational involvement, perceived risk and trust expectation on the consumer's choice of an online merchant. We conceptualized perceived risk as a multi-component construct, and examined the relationships between the individual risk components and the other variables in the model under consideration. First and foremost, the results indicated that consumer's trust expectation in an online merchant is a predictor of the consumer's choice between an e-tailer and an e-marketplace. It was further revealed that situational involvement positively affected all the five types of perceived risk, whereas only product performance risk was positively related to consumer's trust expectation. It may be inferred that the stronger product performance risk perception, the higher trust a consumer expects in an online merchant to engage in a transaction. The findings have important practical implications for developing e-commerce strategies not only for digital storefronts but also for online marketplaces that can help manage consumer's trust expectation and ultimately increase potential sales by mitigating related perceived risks involved in an online purchase. The study concludes by providing some interesting avenues for future research.

Introduction

Consumers differ in the way they make purchases. An audiophile may make a bold (yet serious) decision to buy a top-of-the-line home theater system, but may not be interested in replacing his old and dilapidated car. By contrast, an automobile enthusiast may not mind spending tens of thousands of dollars on a new Jaguar convertible, but may care little about his or her outdated component system. In this regard, product involvement, which refers to the extent to which a consumer perceives a product to be important (Zaichkowsky, 1985), can help explain such differences between individuals in terms of their purchase intentions.

Product involvement is an important factor that has considerable influence on consumers’ purchase decisions, and has thus attracted considerable attention from consumer behavior researchers. High-involvement consumers tend to actively gather and disseminate information on products or services that they are interested in, whereas low-involvement consumers do not. Product involvement has been found to have considerable influence on other types of consumer responses, such as word-of-mouth communication (Bloch & Richins, 1983). Thus, product involvement is seen as a key motivator influencing purchase decisions (Richins & Bloch, 1986).

There exist studies that focus on the effects of product involvement and perceived risk on consumer responses that either precede or follow the purchase decision stage; for example, information search and evaluation activity (Browne & Kaldenberg, 1997), information processing (Bian & Moutinho, 2008), and information dissemination (Bloch & Richins, 1983). However, little research has been devoted to examining the role of these factors in the consumer's decision on a merchant. In this regard, this study was motivated by the need to understand how a consumer selects an online merchant to buy from, given product involvement and perceived risk.

How a consumer decides on a merchant in electronic commerce is an important issue to investigate. It can provide useful insights into ways of attracting potential online customers by allowing us to understand what merchants consumers choose and what merchants they avoid. Thus, outcomes of such research would ultimately provide implications for developing strategies for increasing the revenue of a merchant. Once what to buy has been determined, who to buy from becomes the next question that must be answered by a prospective consumer. The decision on a merchant is in large part driven by purchase intention that is influenced by numerous factors such as value, brands, trust, among others (Hong & Cho, 2011). Past research on consumer behavior has focused on purchase intention as a primary predictor of a consumer's “buy vs. not buy” decision. However, this research takes a unique approach to conceptualizing the construct by measuring purchase intention as the preference for an e-tailer (or a digital storefront) vs. e-marketplace. In the paper, we posit that a consumer's choice of an online merchant between an e-tailer and an e-marketplace depends indirectly on the amount of risk perceived by a consumer, and directly on the level of trust expected of an online merchant, with regards to a given online purchase. For example, will a consumer seriously considering the purchase of an expensive Gucci bag perceive huge risk associated with online buying, and thus prefer a digital storefront to an online marketplace to mitigate perceived risk? Will a consumer require greater trust in an online merchant when the perceived risk of online buying is high, and thus choose an e-tailer instead of an e-marketplace? Past research has not addressed these research questions, and the present study is one step toward closing that gap.

The purpose of this paper is to understand the process by which a consumer chooses an online merchant by exploring the effects of product involvement, perceived risk, and consumer's trust expectation. This research will consider one category of product involvement known as ‘situational involvement’ that encompasses a heightened level of product importance for a specific purchase situation. We will examine this concept in greater detail subsequently in Theoretical Background. To accomplish the research purpose, we have conducted an empirical study to examine the relationships among situational product involvement, various types of perceived risk, trust expectation, and the intention to buy from an e-tailer (i.e. the preference for an e-tailer over an e-marketplace). We introduced in this paper a new construct called ‘trust expectation’ which refers to the extent to which a consumer expects a potential merchant to be trustworthy with regards to a given online purchase; this construct will be described in detail subsequently in Sections 3.1 The ‘trust expectation’ concept, 4.2 Measures. In our research model, trust expectation is conceptualized both as an antecedent to the intention to buy from an e-tailer and as a consequent of situational involvement and of perceived risks. The rest of this paper is organized as follows: Section 2 provides a literature review, focusing on the concepts relevant to the study, and Section 3 discusses the research model and hypotheses. Section 4 presents an empirical analysis, and Section 5 discusses implications, and some avenues for future research. The present research contributes to the existing body of knowledge by helping understand the factors influencing a consumer's online merchant selection decision in the context of electronic commerce, and by suggesting strategies that enable a digital storefront and an e-marketplace to adequately manage consumer's trust expectation and ultimately increase potential sales.

Section snippets

Product involvement

Despite some differences, previous studies’ definitions of product involvement have generally focused on the relevance of a product. Product involvement has been defined as a consumer's perception of the relevance or importance of a product class, based on his or her inherent needs, values, and interests (De Wulf, Odekerken-Schröder, & Iacobucci, 2001; Zaichkowsky, 1985), and it reflects the internal motivational state of the consumer, encompassing some arousal, interest, or drive induced by

The ‘trust expectation’ concept

The consumer behavior literature in general suggests that the consumer purchase decision process is comprised of five stages, including need recognition, search for alternatives, evaluation of alternatives, choice/purchase making, and post-purchase evaluation (Engel et al., 1978, Hawkins and Mothersbaugh, 2012). The choice/purchase making phase in the model is concerned with buying product value, and there are four decisions made in this phase of a consumer's decision process; namely, (1)

Procedure and the sample

A preliminary survey with 25 college students was conducted to identify high-involvement and low-involvement product classes and to ensure that the survey instrument is functional. We took the sample from an undergraduate management information systems class taught at a major university in Korea by inviting the students in the class to take the survey on a voluntary basis. Each participant was first asked whether he or she has ever shopped online, and invited to answer a questionnaire, only if

Reliability of the measurement model

SPSS 17.0 was used for internal consistency, and the reliability of the measurement items was tested using Cronbach's alpha. In social science, the reliability of a measure is supported if Cronbach's alpha is 0.7 or higher (Nunnally, 1978). The results indicate that the lowest α coefficient was 0.834; the highest α coefficient was 0.957; and all the coefficients exceeded 0.8, demonstrating sufficient reliability for all the variables. Table 4 shows Cronbach's α results for the measures.

Validity of the measurement model

Validity

Implications

In this study, we focused on examining the effects of situational involvement, different types of perceived risk, and trust expectation on consumers’ choice of an online merchant. For this, we constructed a research model with a set of constructs, including (1) situational involvement, (2) five components of perceived risk, (3) trust expectation, and (4) the intention to buy from an e-tailer. We conducted an empirical analysis, using survey data.

The findings of the present study have important

Ilyoo B. Hong is presently professor of management information systems at Chung-Ang University, Seoul, Korea. He earned his PhD degree in MIS from the University of Arizona, his MS in Business from the University of Illinois at Urbana-Champaign, and his BS in Management from Indiana University. He was a visiting scholar at the UCLA Anderson School of Management. Ilyoo Hong has published in such journals as Decision Sciences, Information & Management, and International Journal of Information

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    Ilyoo B. Hong is presently professor of management information systems at Chung-Ang University, Seoul, Korea. He earned his PhD degree in MIS from the University of Arizona, his MS in Business from the University of Illinois at Urbana-Champaign, and his BS in Management from Indiana University. He was a visiting scholar at the UCLA Anderson School of Management. Ilyoo Hong has published in such journals as Decision Sciences, Information & Management, and International Journal of Information Management, among others. He also presented academic papers at numerous international conferences, including HICSS. His research interests include building online consumer trust, measuring the quality and impact of web-based information systems, and information disclosure in social networking sites.

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