Consumer Resistance to Online Retailing: A Transaction Cost Economics View

Honghui Deng, Ken Peffers, Timo Saarinen, Osmo T.A. Soronen

Research output: Chapter in Book/Report/Conference proceedingChapterScientificpeer-review

Abstract

This article takes a holistic approach, based on transaction cost economics, to explain consumer resistance to Internet-based purchasing or B2C e-commerce. We addressed concerns regarding the application of a premise from new institutional economics to consumer decision making through a framework that distinguishes three processes as constituting electronic transactions: search, exchange, and settlement. This framework and transaction cost economics are then used to model a consumer’s choice between e-commerce and conventional ‘brick and mortar’ retail channels.
The model was tested using data from a consumer survey and statistical methods. The results confirm the main hypothesis of this study: transaction costs do matter in consumers’ choices. Furthermore, transaction cost components can be identified and their relative importance in consumer decision making assessed. In terms of transaction cost economics, ease of verification (asset specificity) is the most important determinant, followed by frequency and uncertainty. The perceived price advantage of electronic markets weighs less in consumers’ channel choice than the ease of verification.
Original languageSimplified Chinese
Title of host publicationChina Management Review
Publication statusPublished - 2016
MoE publication typeA3 Part of a book or another research book

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