Financial risk and its impact on new purchasing behavior in the online retail setting
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GENERAL RESEARCH
Financial risk and its impact on new purchasing behavior in the online retail setting Byron W. Keating & Ali M. Quazi & Anton Kriz
Received: 19 March 2009 / Accepted: 15 September 2009 / Published online: 13 October 2009 # Institute of Information Management, University of St. Gallen 2009
Abstract This paper examines the effect of financial risk on perceptions of service quality and relationship-marketing quality in the online retail environment. Perceptions of financial risk were found to be negatively associated with service quality. In particular, a well-designed and attractive Web site was found to mitigate perceptions of financial risk during early trial-buy purchasing. Relationship-marketing quality was not affected by financial risk. This study adds to an enhanced understanding of how risk perceptions influence assessment of service quality and relationship-marketing quality. While the drivers of service quality and relationshipmarketing quality have been examined extensively in the online setting, a surprising lack of research investigates the role of risk perceptions in the early stage, buy-trial purchasing behavior. This emerging area of research interest is deserving of more attention. Our findings provide valuable normative guidance to researchers interested in the affects of perceived
Responsible editor: Hans-Dieter Zimmermann B. W. Keating (*) School of Information Systems and Technology, University of Wollongong, Northfields Avenue, Wollongong 2522 New South Wales, Australia e-mail: [email protected] A. M. Quazi Faculty of Business & Government, University of Canberra, University Drive, Bruce, ACT 2617, Australia e-mail: [email protected] A. Kriz Newcastle Business School, University of Newcastle, Chittaway Road, Ourimbah, NSW 2258, Australia e-mail: [email protected]
risk (particularly financial risk) on new online shoppers, emphasizing the interdependency between Web site design and risk perceptions. Keywords Financial risk . Online retail . Service quality . Relationship-marketing quality JEL L81—retail and wholesale trade . e-Commerce Many authors have alluded to the transformational nature of the Internet (e.g., Porter 2001; Dutta and Segev 1999; Parasuraman and Zinkhan 2002) and, in particular, to the way that the Internet has revolutionized commerce and business (e.g., Coltman et al. 2001; Hoffman et al. 2004). One of the most significant indicators of this transformation has been the adoption of the online retail channel. For instance, a recent industry report reveals that online retail sales in the United States now exceed $200 billion, with an annual growth rate of 17% (Forrester Research 2008). Though the online channel has matured to represent a real alternative to the traditional “bricks-and-mortar” channel and accounts for more than 10% of retail sales in mature markets such as the United States, the greatest inhibitor to consumer adoption of online shopping is still reported to be perceptions of risk (eMarketer 2007). Despite persistent concerns
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