International Journal of Retail & Distribution Management

A study on the impact of consumer risk perception and innovativeness on online

shopping in India
Rakhi Thakur, Mala Srivastava,
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IJRDM
43,2
A study on the impact of
consumer risk perception and
innovativeness on online
148 shopping in India
Received 20 June 2013
Revised 28 July 2013 Rakhi Thakur
7 January 2014 S.P. Jain Institute of Management and Research, Mumbai, India, and
27 January 2014
22 May 2014 Mala Srivastava
25 May 2014 Department of Management, Narsee Monjee Institute of Management Studies,
9 June 2014
Accepted 30 June 2014 Mumbai, India
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Abstract
Purpose – The purpose of this paper is to develop and empirically test a conceptual model to establish
how consumer innovativeness can be used as a variable to positively influence online retailing
adoption intention both directly and reducing consumer perceived risk (PR).
Design/methodology/approach – The literature concerning personal innovativeness toward
information technology and major components of PR have been systematically reviewed to develop
a conceptual model. The impact of innovativeness and PR on online shopping adoption intention
has been empirically validated by structural equation modeling using a sample of 433 internet users
in India.
Findings – Results reveals consumer innovativeness as a key construct to improve online retail
adoption intention both directly and by its effective role in reducing consumer risk perception of using
internet channel for making purchase of physical goods.
Originality/value – There is a lack of studies which connect consumer innovativeness and PR in
the online retailing context especially in Indian scenario. The results expand one’s knowledge on this
relationship, propounding interesting empirical evidence of the model among current and potential
online shoppers.
Keywords Innovation, India, Consumers, Risk, Perceived risk, Online retailing
Paper type Research paper

International Journal of Retail &
Distribution Management
Vol. 43 No. 2, 2015
pp. 148-166
© Emerald Group Publishing Limited
0959-0552
DOI 10.1108/IJRDM-06-2013-0128
1. Introduction
Online retailing in India is fast becoming main-stream with increasing number of
retailers offering their merchandize through online channel along with traditional
brick and mortar stores. Indian customer is more than ready to experiment with
shopping from reputed online international portals without any Indian presence.
Pioneered by the likes of Amazon and Dell, more and more companies are setting up
online stores not only in books and electronics but also in specialty categories like
apparel, accessories and high fashion merchandize. The trend is no more limited to
large retailers like Shoppers stop, Landmark, Fabindia, etc. but also there are small
stores exploring this channel to increase their reach. There are new generations of
online retailers which are offering their merchandize exclusively through web with
no physical presence like Fashion and You, Nine2Nine, Myntra, Jabong, etc. In-fact,
the reach of aggregators like Flipkart, Indiaplaza, etc. with no physical presence is
larger than most of the large brick and mortar retailers with web as an additional
distribution channel. Amazon sites seem to be having largest reach despite no
physical presence in India (Figure 1).
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India’s Top Online Retail Sites Asia-Pacific Online Shopping Revenues

% REACH COUNTRY 2007 (US$BN) 2010 (US$BN)
AMAZON SITES 22.5% AUSTRALIA 27.2 37.3
APPLE.COM WORLDWIDE SITES 10.1%
CHINA 297.8 1415.7
FLIPKART.COM 7.8%
ALIBABA.COM CORPORATION 6.9% HONG KONG 5.5 10
HEWLETT PACKARD 6.6% INDIA 70.8 734.3
AMERICANGREETINGS PROPERTY 6.2% JAPAN 168.9 185.3
WARESEEKER.COM 6.1%
SOUTH KOREA 82 114.7
DELL 4.4%
BOOKMYSHOW.COM 4.0% SINGAPORE 4.5 6.6
INDIATIMES SHOPPING 3.6% THAILAND 5.9 20.8

Sources: COMSCORE MEDIA METRIX; FEBRUARY 2009; AUDIENCE: ALL PERSONS 15+ INDIA HOME/WORK
LOCATIONS; HEAVY INTERNET USERS; MASTERCARD WORLDWIDE
innovativeness
and
Consumer risk

Online retail in India

Figure 1.
149
perception
 IJRDM India contributes to a sizable proportion of online sales of Asia-Pacific and has huge
43,2 potential for growth owing to a large population in tier-3 and lower cities where
organized retail in brick and mortar form is yet to make stronghold.
Customers have obvious advantage of shopping online as they can get better prices
and convenience of shopping without having to travel to multiple locations.
Aggregators like Flipkart and Indiaplaza work as single window for the purchases
150 of multiple specialty categories for the customer. It also caters to the need of the
customers of finding merchandize not available at the stores in their vicinity like books
from International publications of some international brands available only in niche
stores. Online retail contributes to 1.9 percent of organized retail in India (CRISIL
Research, 2012). However, there is strong evidence from literature that while many
consumers use the internet to search for product information on retailers’ web sites,
only a minority of them make purchases online due to uncertainty regarding the
product shown online (Kim and Forsythe, 2010). Further a deeper analysis of consumer
online spending pattern for physical goods reveals that electronics, lifestyle products
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and books form the majority of online purchase. These products are fairly standardized
and are essentially backed by strong brands and international warranties. This pattern
is an indicator of key role of credibility of the merchandize provider in consumer
decision to shop online.
Previous research has found that customer perceive risk associated with
possible losses from the online transaction is greater than in traditional
environments (Bradley and Stewart, 2002; Mukherjee and Nath, 2003; Wang et al.,
2003). Although studies showed perceived risk (PR) as an important factor that
influences online shopping adoption (Gerrard and Cunningham, 2003; Polatoglu and
Ekin, 2001), only limited work has been carried out to identify risk dimensions in this
context (Littler and Melanthiou, 2006).
Based on study of existing literature, customers’ personal innovativeness enhances
new product adoption (Manning et al., 1995; Midgley and Dowling, 1978; Yi et al., 2006).
With reference to e-retailing, it is expected that personal innovativeness will play a
crucial role in acceptance by customers. While most innovativeness studies focus
on novelty seeking as the reason for consumers to seek new products (Bigné-Alcañiz
et al., 2008), it is commonly forgotten that new products also encompass risk which
enhances resistance to adoption. While there have been some studies which have tried
to integrated both novelty seeking as well as risk aspect of a new innovation (Wells
et al., 2010), the area requires further investigation.
This study tries to integrate these two aspects of innovation acceptance with
specific reference to e-retailing. This paper discusses the impact of PR and personal
innovativeness of customers on intention to use net as a channel for shopping. The
purpose of this research is to identify various components of risk which act as deterrent
to adoption of online retailing. Further, the study investigates the role of personal
innovativeness in customer usage intention as well as its interaction effect with
customer risk perception.
The paper is structured as follows: the first section discusses the formulation of
proposed model based on extensive review of the literature. PR and personal
innovativeness are discussed in relation to their impact on customer online
shopping intention. Next, the methods deployed in the study for data collection
and analysis are discussed. The last section of the paper provides conclusions and
discussion of the findings as well as research limitations and propositions for
future work.
 2. Literature review and hypothesis development Consumer risk
Online shopping intention perception
The construct online shopping intention is derived from the construct behavioral
intention originally developed in Theory of Planned behavior (TPB) and Theory of
and
Reasoned Action (TRA) and subsequently adopted in Technology Adoption Model. innovativeness
Behavioral intention is defined as a person’s intentions to perform various behaviors
(Ajzen and Fishbein, 1977). The TPB suggests that behavioral intention is the most 151
influential predictor of behavior. There are evidences in prior studies that show that
behavioral intention correlates with actual behavior (Engel et al., 1986; Sheppard et al.,
1988; Venkatesh et al., 2003). Therefore, measuring intention to shop online will give
acceptable indication of consumer behavior.
PR. Consumer behavior can be considered as an instance of risk taking and risk
reducing behavior (Bauer, 1960). Researchers have extensively studied and established
that consumers’ perception of risk is central to their evaluation and purchase behaviors
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(Dowling and Staelin, 1994; Dowling, 1986). PR is a construct that measures beliefs
of the uncertainty regarding possible negative consequences (dangers) (Featherman
and Pavlou, 2003). In the domain of consumer behavior, PR has formally been defined
as “a combination of uncertainty plus seriousness of outcome involved” (Bauer, 1960),
and “the expectation of losses associated with purchase and acts as an inhibitor to
purchase behavior” (Peter and Ryan, 1976). In a study on impact of shopper trust on
purchase and patronage intentions in India, the risk was referred as the positive
expectation not being met and the shopper facing probable social, and/or economic loss
(Kaul et al., 2010). Gillett (1976) proposed that while PR is central to purchase evaluation
by consumers, the same varies across methods of purchase with non-traditional
shopping. Purchase through phone, mail-order and internet are perceived as more risky
than traditional brick and mortar purchase (Bobbitt and Dabholkar, 2001; Cox and
Rich, 1964; Spence et al., 1970). Specific to usage of non-traditional purchasing formats,
the risk perceived by customer is not only of the seller but also of the medium which is
an information system. In consumer behavior PR arises from using a product or service,
and in information systems research PR arises when a potential system adopter
perceives possible losses from the usage of an information system.
According to Kim and Forsythe (2010) the perceived online shopping risk for the
internet user is expectation of loss in a given electronic transaction. Researchers
propose that PR related to internet transactions is a key factor that must be understood
and addressed for e-commerce to succeed (Hoffman et al., 1999; Jarvenpaa and Todd,
1996). PR has been found to have a significant influence on the behavioral intentions to
use online banking (Wang et al., 2003), electronic tax filing (Wang et al., 2003), electronic
learning (Ong and Lai, 2004) and online retailing (Liu and Forsythe, 2010; Ruiz-Molina
et al., 2009; Tong, 2010). In a recent cross-cultural study between online retail customers
in Korea and USA, impact of PR on purchase intention was found to be similar
(Kim et al., 2013).
As noted by researchers (Gerrard and Cunningham, 2003; Kim and Forsythe, 2010;
Rampl et al., 2012), different types of perceived shopping risks act as barriers in
performing internet-based transactions and thus influence the choice of shopping
channels by the customers.
Performance risk. Performance risk is concerned with how well the product will
perform relative to expectations. One of the major limitation of e-retailing is customer
cannot try the product before buying it. In many product categories, getting to have a
 IJRDM look and feel of the product before buying it is considered to be essential by the
43,2 customer for making the purchase decision. Consumers’ evaluation of performance risk
is based on their knowledge and cognitive abilities in a certain product domain (Littler
and Melanthiou, 2006). Consumers often find it difficult to trust the online retailers and
worry about the opportunistic behavior from exchange partner (Ruiz-Molina et al.,
2009). Researchers have found strong hesitation among customers to purchase online
152 due to uncertainty regarding the product shown online (Kim and Forsythe, 2010). Further,
internet shoppers worry that they may have a hard time returning or exchanging a
product bought online if it fails to meet their expectations or needs (Tong, 2010).
Time risk. Internet provides a lot of information on the products and services
offered, and a variety of web sites where the web user can carry out transactions.
Despite the fact that internet lowers the cost of acquiring information, consumers also
incur time costs from using online portals, the time of learning how to buy on a certain
e-retailing web site, the time to wait for it to respond and the additional cognitive
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effort expended in this expanded search process (Kunze and Li-Wei, 2007; Littler
and Melanthiou, 2006). Moreover, in the case of internet shopping the time risk may
be related to the time involved in dealing with erroneous transactions. Furthermore,
web site download speed is another factor influencing online shopping adoption.
The use of rich graphics making web pages very heavy and an inefficient host
server can also increase the perceived waste of time risk for current and future users of
online channel. Researchers refer to time risk as perceived wasted time (McGuire et al.,
2010) or disutility of waiting ( Janakiraman et al., 2011). In the context of webpage
downloads, the cost of waiting can even drive people to make the decision to abandon
their wait for a service ( Janakiraman et al., 2011). In a recent study on online banking
service delivery, Demoulin and Djelassi (2013) found that waiting time for service
delivery adversely affects service perception of the service prodder.
All these aspects of e-retailing portals may give shoppers a feel of e-shopping as a
time consuming exercise.
Social risk. Perceived social risk is “the potential loss of status in one’s social group
as a result of adopting a product or service, looking foolish or untrendy” (Featherman
and Pavlou, 2003). On that basis, social risk includes issues such as whether online
shopping will be socially acceptable and others’ positive or negative perceptions
of online channel may affect the usage decision (Zhao et al., 2008). For online shopping,
social risk (i.e. the undesired response to new product usage) may be very
salient because shopping is a social activity in India. People, usually shop in groups
and share their shopping experiences with friends and colleagues (Hirunyawipada
and Paswan, 2006). Therefore, shopping at the right channel with the right social
reputation may be crucial for a lot of consumers. The thought of using online channel
for shopping may cause a concern because some friends would think of the person
being showy.
Social risk regarding online shopping may from this perspective actually be
grounded in the subjective normative concept related to the TPB, self-prestige and
self-expressiveness. Subjective norms refer to “the person’s perception that most people
who are important to him think he should or should not perform the behavior in
question” (Ajzen and Fishbein, 1977). Existing research on technology and innovation
acceptance (Ajzen, 2002; Hasan et al., 1997; Venkatesh and Davis, 2000; Venkatesh et al.,
2003) also indicates influence of social groups and surroundings on individuals to
perform certain activities and thus influence of social group on acceptance of e-retailing
 requires investigation. Bua and Kemp (2013) found social norms influence purchase Consumer risk
intentions in online shopping for music. perception
Security risk. Security risk in online environment refers to the perceptions
about security regarding the means of payment and the mechanism for storing and
and
transmission of information (Kolsaker and Payne, 2002). Further, Flavián and Guinalíu innovativeness
(2006a, b) propose security risk as the technical aspect of ensuring the integrity,
confidentiality, authentication and non-recognition of relationships. Researchers have 153
found that security is a key dimension in studying user attitude toward online services
(Kunze and Li-Wei, 2007; Polatoglu and Ekin, 2001; Suh and Han, 2002). Consumers
associate security risk with loss of money (in cash or through the credit card). Previous
research in countries with different levels of e-commerce adoption shows that perceived
security risk is an important predictor of internet banking adoption. Cheng et al. (2006),
found perceived web security to be a significant determinant of customer’s acceptance
of online shopping. Customers tend to increase purchases only if they perceive that
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credit card number and other sensitive information is safe.

Influenced by the imagination-capturing stories of hackers, customers may fear that
an unauthorized party will gain access to their online account and serious financial
implications will follow. In a study in UK on internet banking (White and Nteli, 2004),
it was found that consumers rank the security of bank’s web site as the most important
attribute of service quality. In another study on online retail acceptance, security
concern about credit card details was found to be very significant (Huang and
Oppewal, 2006).
Privacy risk. Research results across many studies indicated that people are
concerned about unwanted disclosure of private information or simply its misuse
by the company collecting it (Kesh et al., 2002; Sathye, 1999). This dimension of risk
included undisclosed capture of information such as consumers’ shopping habits.
Perceived privacy risk is defined as the possibility that online businesses might
use personal information inappropriately hence invading a consumer’s privacy
(Nyshadham, 2000). This dimension of risk included undisclosed capture of information
such as consumers’ shopping habits. Thus, privacy risk is particularly salient for online
retailing. User perceptions of the credibility of security and privacy may affect
e-commerce use intention (Mukherjee and Nath, 2003; Pikkarainen et al., 2004). Aladwani
(2001) found that potential online banking customers ranked internet security and
customers’ privacy as the most important future challenges facing e-commerce service
providers. Customers inevitably reveal sensitive information while conducting online
transactions (Morgan and Hunt, 1994). Thus, it is unlikely for users to accept a system if
they have doubts and anxieties when using it.
To test the above expectation, following hypothesis was proposed:
H1. PR is a multi-dimensional construct and includes performance, time, social,
security and privacy risk.
H2. Consumer PR in online retailing negatively influences online shopping intention.

Personal innovativeness. New information systems represent innovations to the target

customers. Research on individual adoption of technologies therefore drives its roots
from innovation diffusion literature (Karahanna et al., 1999; Moore and Benbasat, 1991;
Rogers, 2003). Further, innovation is also a change in current state of product
and services for the customers and therefore may meet with resistance. Innovation
 IJRDM resistance can be determined as “a preference for existing, familiar products and
43,2 behaviors over novel ones” (Arnould et al., 2004). Thus, innovation resistance can be
considered as a special form of resistance to change (Ram, 1989).
In context of new product adoption process innovation has received considerable
attention from researchers as a personality trait (Hirschman, 1980; Lassar et al., 2005;
Lewis et al., 2003; Midgley and Dowling, 1978). As observed by Hirschman (1980)
154 innovators are novelty seekers and they desire to seek out what is new and different.
Innovators need a smaller cognitive effort to comprehend the new product concept and
have a higher competence to evaluate alternative products and select the superior one.
Literature indicates two main techniques to measure innovativeness: general
innovativeness and innovativeness applied to a specific domain (Aldás-Manzano et al.,
2009). General innovativeness reflects openness and an individual’s search for new
experiences and it is a significant predictor of shopping intention (Craig and Ginter,
1975; Joseph and Vyas, 1984) while domain-specific innovativeness is the individual’s
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tendency to try innovations in products, services or processes in his or her area of

interest (Goldsmith and Hofacker, 1991). Domain-specific measures have been found
to be more predictive of the purchase of new items than global innovativeness in
different innovations including fashion innovativeness (Goldsmith et al., 2005), travel
innovativeness (Beldona et al., 2005), technology innovativeness (Agarwal and Prasad,
1998) among others.
Specific to the domain of technology, Agarwal and Prasad (1998) conceptualized
a construct termed personal innovativeness in the domain of IT (PIIT), defined as
“the willingness of an individual to try out any new information technology”.
Later researchers (Blake et al., 2003; Citrin et al., 2000; Laukkanen and Pasanen, 2008;
Liu and Forsythe, 2010) have applied the domain-specific innovativeness in IT (PIIT)
scale to online shopping and have shown a direct and positive influence of this variable
both in the search for online purchase information and the decision to purchase
through this channel. Goldsmith (2000) also evidenced that frequency of online buying
and intent to buy online in the future were predicted by general innovativeness, online
buying-specific innovativeness and role of consumer innovativeness involvement with
the internet. To test the above expectation, following hypothesis was proposed:
H3. Personal innovativeness has a favorable influence on online shopping intention.
Innovators are likely to be more knowledgeable about the internet and online shopping
than consumers who do not purchase goods or services online (Goldsmith, 2002).
Innovators are more willing to adopt new ideas and are able to cope up with financial
risk or a high degree of uncertainty arising from innovation adoption (Lee and
Huddleston, 2006). “Venturesomeness” is the salient value of the innovator (Rogers,
1983). Potential online shoppers exhibit higher levels of venturesomeness, more
favorable attitudes toward change, more frequent internet use and lifestyles less
oriented toward recreational shopping (Siu and Cheng, 2001). Further, research has
shown that an individual with a positive affective belief will downplay the risks
associated with adopting a product or technology and vice versa (Wells et al., 2010).
These findings led to the following hypothesis:
H4. Consumer innovativeness reduces online buying risk perception.
H5. Risk plays mediating role between innovativeness and online shopping
intention.
 The above-mentioned research conducted by researchers in various markets laid the Consumer risk
foundations of our conceptual research model, which is presented in Figure 2. perception
and
3. Methods innovativeness
Research instrument and data collection
This research is primarily concerned with understanding customers’ risk perception
toward e-retailing and personal innovativeness. This research used the survey method 155
to test its hypotheses. Instrument for the study was developed based on scales used in
relevant literature on risk (Doney and Cannon, 1997; Flavián and Guinalíu, 2006a, b;
Janda et al., 2002; Littler and Melanthiou, 2006; Siguaw et al., 1998), innovativeness and
usage intention of technological innovations (Agarwal and Prasad, 1998; Citrin et al.,
2000; Goldsmith and Hofacker, 1991). Items in the scale were slightly modified to fit the
online shopping context. Face validity was tested whereby each item was qualified
by a panel of experts as “clearly representative”, “somewhat representative” or “not
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representative” of the construct of interest (Zaichkowsky, 1985). An item was retained

if a high level of consensus was observed among the experts (Lichtenstein et al., 1990).
Final instrument had 23 self-reported items related to seven research constructs. For all
the measures, a seven-point Likert scale was used, with anchors ranging from “strongly
disagree” (1) to “strongly agree” (7).
Data collection instrument was administered through an online link mailed to
respondents. The respondents were requested to spare a few minutes to provide
categorical responses to items in the tool. Participation in this study was purely
voluntary. A total of 500 survey responses were received, of these, 67 were disqualified
due to data quality issues, leaving a total of 433 valid questionnaires for use in data
analysis. Respondents’ characteristics are summarized in Table I.

4. Data analysis
The methodology concerning measures employed and data analysis follows two steps.
The first step is to confirm the factor structure of measurement items and to establish

Time Performance Social Security Privacy

H1

Perceived
Risk
H2 Shopping
Intention

H4
Figure 2.
Conceptual model
H3 with hypothesized
Innovativeness relationship
 IJRDM Characteristics Sample (%)
43,2
Gender
Male 69
Female 31
Age
20-30 66
156 31-40 27
41 and above 7
Occupation
Financial services 32
Manufacturing sector 18
IT/ITES/Telecom 16
Professional (doctors/ lawyers, etc.) 16
Table I. Other service 8
Descriptive statistics Self-employed 2
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of respondents’ Others 8
characteristics Note: n ¼ 433

model reliability, validity and fit. The second step investigated the relationship
between various constructs and tested the proposed hypothesis.

Model validity, reliability and fit

To assess measurement reliability and validity of the final measurement model,
confirmatory factor analysis was carried out for all the latent constructs. The fit indices
( χ2/df ¼ 2.58, RMSEA ¼ 0.06, CFI ¼ 0.94, GFI ¼ 0.91, NFI ¼ 0.91) suggest that the
proposed model represents a good fit to the data in Table II (Bentler, 1990). The factor
loadings of four indicator items (SCR1, SCR2, PR1, PR4 and PI2) were marginaly below
the threshold value of 0.7 (Fornell and Larcker, 1981), however, based on support from
available literature and researcher’s call the same were retained for further analysis.
The instrument demonstrates evidence of both convergent (significant critical ratios,
average variance extracted W 0.50 in all occasions) and discriminant (AVE/(Corr2) is
greater than or equal to unity in all occasions) validity (Fornell and Larcker, 1981).

Hypothesis testing
The second step in analysis involved testing of the structural model and corresponding
hypothesized theoretical relationships. The structural model is depicted in Figure 3.
The empirical estimates for the main effects model are shown in Table III.
Based on the fit indices ( χ2/df ¼ 4.3; GFI ¼ 0.897; AGFI ¼ 0.892; NFI ¼ 0.86;
RFI ¼ 0.84; RMSEA ¼ 0.06) depicted in Table III, there is a reasonable fit between
model and observed data (Bentler, 1990). Figure 3 depicts the path coefficients for the
model testing.
These results clearly support H1 that PR is explained through the five dimensions
namely, performance risk, time risk, social risk, security risk and privacy risk.
Further, results evidence the key role of consumer innovativeness in the adoption of
online retailing. As expected, this characteristic of the user not only directly increases
the probability of becoming a user of online retailing (H3: b ¼ 0.21; p o 0.01), but it also
reduces his/her risk perception of using this channel (H4: b ¼ −0.62, p o 0.01).
This study proposed risk to be a mediator of the relationship between innovativeness
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Component Item Factor loading SEa CRa AVEb Convergent validityc Corr2d Discriminant validitye Construct reliabilityf
Performance risk PR3 0.794 0.098 14.043
PR2 0.783 0.098 13.901
PR1 0.657 0.089 12.008
PR4 0.67 0.53 Yes 0.38 Yes 0.82
Security risk SC3 0.885 0.062 18.55
SC2 0.71 0.067 14.748
SC1 0.719 0.062 14.957
SC4 0.759 0.60 Yes 0.38 Yes 0.85
Privacy risk PV3 0.925
PV2 0.764 0.045 17.961
PV1 0.715 0.05 16.53 0.65 Yes 0.22 Yes 0.85
Time risk TR3 0.737
TR2 0.884 0.068 17.921
TR1 0.851 0.07 17.352 0.68 Yes 0.22 Yes 0.87
Social risk SR4 0.759
SR3 0.646 0.085 10.209
SR2 0.622 0.085 10.001 0.46 Yes 0.22 Yes 0.72
Innovativeness PI4 0.8
PI2 0.637 0.071 11.95
PI1 0.715 0.065 13.151 0.52 Yes 0.22 Yes 0.76
Shopping intention BI3 0.84
BI2 0.871 0.044 22.65
BI1 0.911 0.045 24.195 0.76 Yes 0.22 Yes 0.91
χ2 (209) ¼ 540.38, RMSEA ¼ 0.06, CFI ¼ 0.94, GFI ¼ 0.91, NFI ¼ 0.91
Notes: aThe initial parameter was set to 1.0 for model estimation purposes; therefore, no SEs or CR values are provided; b(ΣStd. loadings2)/(ΣStd. loadings2)
+Σεj; cconvergent validity (AVE W0.50); dcorr2, highest correlation between the examined factor and the rest of factors, ediscriminant validity ¼ AVE/(Corr2)
W1; fΣ(Std. loadings)2/(Std. loadings)2+Σεj

reliability and
convergent validity
Validations of the
innovativeness
and
Consumer risk

Table II.
157

measurements −
perception
 IJRDM a1
43,2 e1
1
SCR1 1
1
e2 SCR2 SOC
1
1
e3 SCR3
158 e4
1
PR1 a2
1 1
e5 PR2
1 PERF a6
e6 PR3 1
1
1
e7 PR4
a3 a7
1 RISK
e8 SEC1
1
1
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1
e9 SEC2 1
SEC 1 BI3 e23
1 INTENTION
e10 SEC3 1 1
BI2 e22
1
e11 SEC4 1
BI1 e21
1 a4
e12 PV1 1
1
1
e13 PV2 PRIV
1
1
e14 PV3

1 a5
e15 TR1
1
1
e16 TR2
1 TIME
1
e17 TR3
INNOV
1

PI1 PI2 PI3

Figure 3.
1 1 1
Hypotheses testing
and path analysis e18 e19 e20

Hypothesis path Standardized path coefficients CR Interpretation

H2 Risk→Intention −0.739** −8.06 Supported
H3 Innov→Intention 0.21** 3.12 Supported
H4 Innov→Risk −0.62** −9.27 Supported
H1 Risk→Soc 0.411** 6.301 Supported
Risk→Perf 0.412** 6.466
Risk→Sec 0.325** 5.561
Risk→Priv 0.265** 4.729
Table III. Risk→Time 0.941**
Hypothesis testing Notes: χ2/df ¼ 4.3; GFI ¼ 0.897; AGFI ¼ 0.892; NFI ¼ 0:86; RFI ¼ 0.84; RMSEA ¼ 0.06. **p o0.01
 and online shopping intention (Figure 2). In order to test this mediating role of risk, Consumer risk
Sobel test was conducted (MacKinnon et al., 1995). The Sobel test statistic for testing perception
risk’s mediation was 5.513 and is significant at p o 0.0001. Thus these results validate
the partial mediation role played by risk in relationship between innovativeness
and
and shopping intention (H5). This risk perception reduction is not neutral, as we have innovativeness
found a negative significant influence of this variable on the adoption of internet as a
shopping channel (H2: b ¼ −0.739, p o 0.01). 159
5. Discussion, implications and conclusion
This paper provides new insights about consumer innovativeness traits as a useful
predictor of online shopping adoption. The main contribution of this research lies in
providing a model that integrates the influence of consumer innovativeness traits and
the perceived adoption risks on e-retailing acceptance.
The direct and positive influence of innovativeness toward e-retailing acceptance
intention corroborates similar results obtained in prior studies on new technology
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products (Hirunyawipada and Paswan, 2006; Im et al., 2003) and online shopping
(Liu and Forsythe, 2010; Rampl et al., 2012). This result has relevant managerial
implications. As Midgley and Dowling (1978) pointed out three decades ago, it is widely
accepted that innovators, as early adopters, are more likely to be opinion leaders and
the messages these innovators transmit to others initiate the interpersonally influenced
adoption process of light users or non-users. So, providing means to allow these early
online clients to spread their word-of-mouth can help online shopping diffusion to these
two prospect segments.
This result also highlights that online retailers need to be able to do more than just
identify innovators. They should target some of their advertising campaigns to the
segment of more innovative users. As Moore and Benbasat (1991) suggests innovators
provide companies with great feedback early in the design cycle and begin building a
supporter who will influence buyers. If the bulk of non-shopper internet users need
word-of-mouth promotion before they will adopt online shopping, innovators can
initiate this dialogue. Online retailers should identify and incentivize these innovators
to spread positive word-of-mouth and give referrals to potential shoppers. Written and
video testimony of innovators could be put on the web site to attract potential shoppers.
Stressing the novelty of the e-retailing channel in advertising and providing exclusive
access to certain products and services or at more convenient prices might be useful
tools in reaching the innovators segment.
Results of the research also demonstrate that PR is a key inhibitor of internet
shopping use. This result allows practitioners to focus their efforts on attacking the
risk dimensions attending to their level of importance.
The results show that time risk weighs heavily on overall risk perception of online
shopping channel. It is expected that time loss on account of slow response time to open
images or shopping carts checkout causes immediate user fatigue on the net. Travel tickets
and books constitute the largest categories of online purchases in India (Ernst & Young,
2012) which are reasonably standardized products and the customers essentially seek price
comparison and fast transaction from online channel. Time pressed users for whom saving
time is the major incentive for shopping online, the time loss aspect needs to be managed
very well. E-retailers need to make sure their web sites are light with easy navigation.
Further portals should be tested for response speed on low bandwidth connection.
Performance risk too weighs heavy on the overall PR. This also explains the online
shopping pattern where customers are shopping for safer and warranty backed
 IJRDM product categories like airline tickets, books and electronics while apparel and
43,2 fashion merchandize forms miniscule part of online shopping basket. Online retailers
should deal with product performance risk by providing multi-dimensional detailed
visual representation of the products. Retailers could also offer limited period return
or exchange policies to online shoppers that can encourage adoption by reducing
performance risk.
160 Results show that consumers do care about the responses from significant members
of their societal network for shopping online (social risk). Being a collective society,
customers in India are concerned about disturbing their image by adopting a method
which is not in sync with the immediate social group. Marketers and decision makers
could project their actual online shoppers into a role model for rational, cost and time
efficient, practical and well-informed consumer in their advertising campaigns
addressed to prospects. Converting online shoppers to an ideal image of consumers
aware of the benefits of convenience and control that this channel provides could make
for the social risk for non-users.
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The other two components of PR that is security risk and privacy risk weigh
relatively lower as compared to time, performance and social risk. Regarding security
risk, the internet user’s lack of trust in the system of payment on the web may hinder
the consolidation of online shopping adoption. Most e-retailers have incorporated
common technologies to secure online transactions (128-bit RSA encryption, digital
certificates, firewalls). The results of this study show significant but relatively smaller
role of security risk in overall PR. This result is not in sync with existing literature
where researchers have found security risk as a major component of risk perception in
online transactions (Cheng et al., 2006; Flavián and Guinalíu, 2006b; Püschel et al., 2010;
Shih, 2004). A plausible explanation for the same could lie in the way customers make
payments for online shopping in India. Cash on delivery is the most commonly used
method of payment whereby in around 80 percent of the cases, customers do not make
payment online for their purchases (Ernst & Young, 2012). This is due to the fact that
customers in India do not trust online channel to share their personal banking details
and the actual payment is made in cash at the time of delivery of goods. Further, with
respect to privacy risk, probably customers are not that pertrubed by getting spams
and unsolicited promotional communication by third parties.
As a final conclusion and in line with Lassar et al. (2005) this study found that, in
trying to understand who does and does not shop online, retailers who offer e-retailing
services need to recognize and appreciate the importance of internet-specific consumer
innovation levels and characteristics. This task is crucial as it has been found
that innovativeness influences e-retailing adoption positively. However, accessing this
segment is not an easy task because as Im et al. (2003) pointed out, socio-demographic
variables cannot be used to identify innovative predispositions of consumers due to the
non-significant relationship they found between innovativeness and personal
characteristics. Making operational a segmentation based on innovativeness reveals
as an important future research direction.

6. Limitations and scope for future research

Future research should consider the role of other credibility dimensions like reputation
of the specific retailers and post-purchase experiences resulting like fulfillment time,
transport packaging, customer service and handling of returns. It is highly likely that
post-purchase experiences with the online retailer are also influential in customers’
intention to repeat purchases and recommend potential customers.
 Our limited sample of 433 shoppers warrants caution in generalizing the results Consumer risk
of this study. First, it did not allow us to test for differences among the category- and perception
product-specific risk perception of consumers. Additionally, the study was conducted
among urban customer base that may bias the results. Finally, this investigation did
and
not consider potential multi-channel effects of retailers: we did not differentiate innovativeness
between retailers having brick and mortar presence along with online presence vis-à-vis
pure-play online retailers which may affect risk perception. 161
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About the authors

Rakhi Thakur is an Assistant Professor at the S.P. Jain Institute of Management and Research.
Assistant Professor Rakhi Thakur is the corresponding author and can be contacted at:
rakhi.thakur@spjimr.org
Mala Srivastava is a Professor and a Program Chairperson MBA-Core at the Narsee Monjee
Institute of Management Studies. She specializes in marketing strategy, consumer behavior and
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