UNDERSTANDING CONSUMER ONLINE SHOPPING …

1 I UNDERSTANDING CONSUMER ONLINE SHOPPING BEHAVIOUR FROM THE PERSPECTIVE OF TRANSACTION COSTS By Lingling Gao, Computer Science (SCNU), (UTAS) Submitted in fulfilment of the requirements for the degree of Doctor of Philosophy University of Tasmania (April, 2015) ii DECLARATION I declare that this thesis contains no material which has been accepted for a degree or diploma by the University or any other institution, except by way of background information and duly acknowledged in the thesis, and to the best of my knowledge and belief no material previously published or written by another person except where due acknowledgement is made in the text of the thesis, nor does the thesis contain any material that infringes copyright. Date 02 / 04 / 2015 iii AUTHORITY OF ACCESS This thesis may be made available for loan. Copying and communication of any part of this thesis is prohibited for two years from the date this statement was signed; after that time limited copying and communication is permitted in accordance with the Copyright Act 1968.

2 Date 0 2 / 04 / 2015 iv STATEMENT OF ETHICAL CONDUCT The research associated with this thesis abides by the international and Australian codes on human and animal experimentation, the guidelines by the Australian Government's Office of the Gene Technology Regulator and the rulings of the Safety, Ethics and Institutional Biosafety Committees of the University. Date 02 / 04 / 2015 v 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.

3 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.

4 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 vi selected from the pool of coastal cities and inland cities of China, respectively. Hypotheses were tested using structural equation modelling (AMOS ) 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.

5 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.

6 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 vii 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.

7 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. viii ACKNOWLEDGEMENT I would like to express my heartfelt gratitude to my supervisors, Dr Fan Liang, Dr Rob Hecker and Dr Tommy Wang, for their guidance, encouragement, enthusiasm, and support throughout all the stages of completing this dissertation.

8 Their encouragement and invaluable wisdom made it for me possible to the zenith of my doctoral accomplishment. I would like to thank the faculty members, colleagues, and friends from the Tasmanian School of Business and Economics at UTAS for their help, assistance, and support throughout the data collection and the data analysis processes. I extend my profound thanks to Dr Debra Grace who generously gave of her time to answer my endless questions about complex structural equation modelling techniques. I also want to give great thanks to three of my colleagues who helped with translation and back-translation. Special thanks go to many Chinese professors who provided significant help for the data collection process in China. Especially, I wish to express my sincerest thanks to Dr. Hongwei Wang and Dr. Jing Fu who provided full support to the survey carried out in China.

9 Last, but not least, I want to express my love and appreciation to my beloved husband, Xuesong Bai and my lovely daughter, Emma. Without their support, encouragement and sacrifice, my graduate work and this thesis would not have been possible. Special thanks also go to my parents who raised and taught me and always give me encouragement. Words cannot describe my immense gratitude for their endless ix support, patience and UNDERSTANDING during the pursuit of my educational goals. This thesis is especially dedicated to them. x PEER-REVIEWED PUBLICATIONS OF THE AUTHOR Journal publications: Gao. L, Bai, X. & Parker, A. 2015. UNDERSTANDING sustained participation in virtual travel communities from the perspectives of IS success model and flow theory, Journal of Hospitality and Tourism Research (Forthcoming). Gao. L & Bai, X.

10 2014. ONLINE CONSUMER behaviour and its relationship to website atmospheric induced flow: Insights into ONLINE travel agencies in China. Journal of Retailing and CONSUMER Services, 21 (4): 653-665. Gao, L. & Bai, An empirical study on continuance intention of mobile social networking services: Integrating the IS success model, network externalities and flow theory. Asia Pacific Journal of Marketing and Logistics, 26 (2): 168-189. Gao, L. & Bai, X. 2014. A unified perspective on the factors influencing acceptance of internet of things technology. Asia Pacific Journal of Marketing and Logistics, 26 (2): 211-231. Conference publications and presentations: Gao, L. & Bai, X. 2013. UNDERSTANDING website atmospherics-induced flow of ONLINE SHOPPING for tourism products and services. Proceedings of the 2013 Australian and New Zealand Academy of Management Conference, Hobart, Australia.