The Mediating Role of Consumer Trust in An Online Merchant in Predicting Purchase Intention

International Journal of Information Management 33 (2013) 927939
Contents lists available at ScienceDirect
International Journal of Information Management

journal homepage: www.elsevier.com/locate/ijinfomgt
The mediating role of consumer trust in an online merchant in

predicting purchase intention
Ilyoo B. Hong , Hoon S. Cha
College of Business and Economics, Chung-Ang University, Bubhakkwan Bldg., Rm. 1404, 221 Heuksuk-dong, Dongjak-ku, Seoul 156-756, Republic of Korea
a r t i c l e
i n f o
Article history:
Available online 26 September 2013
Keywords:
Online shopping
e-Commerce
Perceived risk
Trust
Purchase intention
a b s t r a c t
It is widely known in related literature that trust in a merchant reduces the perceived risk of an online
transaction. However, there are theoretical reasons to postulate that the perceived risk acts as a barrier
to consumer trust. Furthermore, existing studies suggest that trust is an important predictor of purchase
intention. Thus, this research aims at investigating the mediating role of consumer trust in an online merchant in the relationships between components of perceived risk and purchase intention: (1) examining
the total effect without mediation, and (2) examining the mediation effect. When we probed the total
effect, the ndings revealed that performance, psychological, nancial, and online payment risks have a
signicant negative inuence on purchase intention. On the other hand, an examination of the mediation
effect indicated that trust in an online merchant completely mediates the effect of performance risk, but
partially mediates that of the psychological risk. Given the mixture of unmediated as well as mediated
effect of perceived risks on purchase intention, the paper concludes that efforts, made by online merchants, to lessen certain types of risk will rst improve consumer trust, and then ultimately, increase
consumers intention to buy online.
2013 Elsevier Ltd. All rights reserved.
1. Introduction
Internet-based commerce has undergone explosive growth over
the past decade as consumers today nd it more economical as
well as more convenient to shop online. Nevertheless, the shift in
the common mode of shopping from ofine to online commerce
has caused consumers to have worries over issues, such as private
information leakage, online fraud, discrepancy in product quality and grade, unsuccessful delivery, and so forth. Unfortunately,
there has been a steady increase in the number of incidents that
cause consumers to have such worries; for example, the Internet Crime Complaint Center reports that it has received 303,809
Internet fraud complaints in 2010, up from 95,064 complaints in
2003 (Center, 2011a). Meanwhile, the number of privacy breaches
reported in the U.S. has increased from 157 in 2005 to 662 in 2010
(Center, 2011b). Therefore, todays consumers feel unsafe about
making purchases online. The concerns that consumers have over
online buying are collectively termed as consumers perceived risk.
Numerous studies have been conducted to examine the role of
perceived risk as a chief barrier to online purchases and to understand the theoretical relationships among perceived risk, trust, and
purchase intentions. However, most studies (for example, Cheung
Corresponding author. Tel.: +82 2 820 5549; fax: +82 2 813 8910.
E-mail address: ihong@cau.ac.kr (I.B. Hong).
0268-4012/$ see front matter 2013 Elsevier Ltd. All rights reserved.
http://dx.doi.org/10.1016/j.ijinfomgt.2013.08.007
& Lee, 2001; Corbitt, Thanasankit, & Yi, 2003; Flavian, Guinaliu,
& Gurrea, 2005; Gefen, 2002; Gefen, Karahanna, & Straub, 2003;
Jarvenpaa, Tractinsky, & Vitale, 2000; Pavlou, 2003; Salam, Iyer,
Palvia, & Singh, 2005) focus on empirically investigating the effects
of trust on perceived risk with little attention devoted to the effects
of perceived risk on trust. While the inuence of trust on perceived
risk is worth studying, the inuence in the opposite direction is
equally important, enabling insights into the potential of perceived
risk as an inhibitor of trust. For example, a consumer who perceives
huge risk concerning an online transaction is likely to foresee a
great potential of loss and thus, places little trust in the merchant.
According to Pavlou (2003), the primary source of the perceived risk
is either the technological uncertainty of the Internet environment
or the behavioral uncertainty of the transaction partner. Due to such
types of uncertainty, the increase in worries over the perceived risk
may negatively affect trust. For example, if a consumer who sends
sensitive transaction data over the Internet is concerned that his
or her private information may leak out due to a lack of security,
trust may decrease (Olivero & Lunt, 2004). By the same token, if
the consumer feels that the online merchant has the potential to
prot by behaving in an opportunistic manner by taking advantage
of the remote, impersonal nature of online commerce, then it is
unlikely that the merchant will be trusted. That is, the more likely
it is for a danger to occur, the lesser is the trust and the greater is
the need to control the transaction (Olivero & Lunt, 2004). Thus,
the related studies as a whole indicate that while some researchers
noted the inuence of the overall perceived risk on the trust level,
928
I.B. Hong, H.S. Cha / International Journal of Information Management 33 (2013) 927939
not much attention has been given to the effects of different types
of perceived risk. Meanwhile, the related literature suggests that
consumer trust in an online merchant is a key predictor of purchase intention (Hong & Cho, 2011; Pavlou, 2003; Pavlou & Gefen,
2004; Verhagen, Meents, & Tan, 2006). Then, we are led to believe
that the relationship between perceived risk and purchase intention can be indirect as well as direct; moreover, it can be mediated
by consumer trust. However, little attention has been given to this
research issue to date.
The present research is a step toward closing that gap in extant
research. It aims at addressing the need to study the intriguing
relationships between perceived risk and purchase intention in an
e-commerce setting. To accomplish the research purpose, we established two research questions. First, does perceived risk act as an
inhibitor of purchase intention? Second, does trust in an online
merchant mediate the relationship between perceived risk and
purchase intention? We classied perceived risk into six different
types based on literature, and empirically analyzed both the direct
and the mediation effects of each dimension of perceived risk upon
purchase intention.
The contribution of our research has both theoretical and practical dimensions. Theoretically, it will contribute to the existing body
of knowledge by providing new insights into the mediating role of
consumer trust in an online merchant in the relationships between
dimensions of perceived risk and purchase intention. Practically,
the research will help e-businesses develop strategies to reduce
the specic types of perceived risk found to negatively inuence
trust, thereby engendering consumer trust in an online merchant
and ultimately increasing online sales.
types of risk including nancial, performance, psychological, and

social risks. Meanwhile, risks faced by online consumers are those
engendered by the Internet as a sales channel, in addition to the
traditional consumer risks. The use of the Internet, as a mode of
purchase, creates risks for online transactions with the merchant
since transactions are remote, involving no face-to-face contact
between the merchant and the consumer (Cases, 2002). For example, Internet-based shopping requires a delivery process, unless an
order is placed for a digital product that can be delivered online via
the Internet; therefore, there is a risk for inconsistency between
the ordered product and the delivered product (Ward & Lee, 2000).
In addition, consumers may perceive a payment risk because they
are likely to pay by a credit card, and thus, important personal
information needs to be transmitted when the payment transaction is executed. Although security measures, such as encryption
and authentication, are in place, consumers feel insecure about the
possibility of personal information leakage that may result from
hacking during the course of an online transaction. Jarvenpaa and
Todd (1997) pointed out personal and privacy risks as well as economic, social, and performance risks in Internet-based transactions.
Personal (or payment) risk refers to the fear of giving ones creditcard number online, and privacy risk is associated with the buyers
fear that personal information will be collected without authorization. Based on the above theoretical evidence, it is inferred that
Internet transactions can introduce delivery and payment risks in
addition to the common risks inherent in traditional commerce.
Additionally, we propose an integrative model of risk dimensions:
performance, psychological, social, nancial, online payment, and
delivery risks.
2. Literature review
2.2. Trust
2.1. Perceived risk
Trust has been widely studied over the years, as it is recognized

as a key element in relationships between individuals, between
organizations, and between an individual and an organization.
Nevertheless, trust is perhaps one of the most highly challenging
notions in which concepts are hardly agreed upon by researchers
(Hong & Cho, 2011). As Lee and Turban (2001) noted, trust has been
examined in various contexts including buyerseller relationships,
strategic alliances, and labormanagement negotiations. In general,
trust is dened as the willingness of a party to be vulnerable to the
actions of another party based on the expectation that the other
will perform a particular action important to the trustor, irrespective of the ability to monitor or control that other party (Mayer,
Davis, & Schoorman, 1995). Morgan and Hunt (1994) dened trust
as the belief that the trustee will behave in a favorable manner. Further, they state that trust is critical in successful alliances between
rms. As such, trust refers to believing that the trustee will not
do harm to the trustor and that negative consequences will not
occur.
In the context of electronic commerce, trust becomes an even
more important issue since exchange relationships are based on
the impersonal nature of the Internet infrastructure. In particular,
consumers face the challenge of buying a product or service online
from an unfamiliar merchant; moreover, they cannot actually see
or touch the product. Trust plays a central role in helping consumers overcome the perceptions of risk and insecurity (McKnight,
Choudhury, & Kacmar, 2002). Since privacy and security concerns
are major barriers to the Internet channel, without trust, customers
will not give vendors their personal information, including credit
card information (Hoffman, Novak, & Peralta, 1999). Therefore,
online trust is formed slowly over time as a consumer gains experience through repeated transactions (Cheskin-Research, 1999). For
the purpose of the present research, trust is dened as the consumers belief that the online merchant will not behave in an
Bauer (1960) proposed that consumer behavior could be viewed

as an instance of risk taking. He maintained that consumer behavior involves risk in the sense that any action of a consumer will
produce consequences that one cannot anticipate and of which at
least some are likely to be unpleasant. An individual perceives a
situation as bearing risk if entering this situation might lead to
negative consequences, and also if the individual is not able to
control the occurrence of these consequences (Koller, 1988). Thus,
the more negative are the consequences and the less the individual can control the consequences, the higher is the level of the
perceived risk. Bauer (1960) emphasized that it is not a real world
(or objective) risk but a perceived (or subjective) risk that inuences
consumer behavior. In the context of electronic commerce, Cox and
Rich (1964) dened perceived risk as the nature and amount of
risk perceived by a consumer in contemplating a particular purchase decision. A consumer perceives risk because prior to making
a purchase, she cannot always be certain that the planned purchase
will allow her to achieve her goals of purchasing. The uncertainty
perceived by the consumer with regard to the choice of a product,
brand, retailer, or channel determines the nature of the risk. Meanwhile, the amount of risk perceived by the consumer is a function
of two general factors: the amount at stake in the purchase decision, and the individuals feeling of a subjective certainty that she
will win or lose all or some of the amount at stake (Cox & Rich,
1964).
The risks perceived by consumers in traditional commerce are
classied from various perspectives in the literature. While they
each exhibit unique classication schemes, these studies (for example, Jacoby and Kaplan, 1972; Kurtz & Clow, 1997; Peter & Ryan,
1976; Schiffman & Kanuk, 1994; Stone & Gronhaug, 1993; Taylor,
1974; Zikmund & Scott, 1977) have focused on four essential
opportunistic manner and that the e-commerce environment is

secure enough to provide risk-free transactions.
2.3. Perceived risk and trust
Trust and perceived risk are in a very close and inseparable relationship. Most existing studies predominantly focus on the effects
of trust on the perceived risk (Cheung & Lee, 2001; Corbitt et al.,
2003; Flavian et al., 2005; Gefen, 2002; Gefen et al., 2003; Jarvenpaa
et al., 2000; Pavlou, 2003; Salam et al., 2005). For example, Pavlou
(2003) and Jarvenpaa et al. (2000) reported that an increase in
consumer trust in an online merchant lessens the perceived risk.
However, Mayer et al. (1995, p. 711) noted that it is unclear
whether risk is an antecedent to trust, is trust, or is an outcome
of trust.
Johnson-George and Swap (1982) state that the willingness to
take risks may be one of the few characteristics common to all trust
situations. The presence of trust implies the acceptance of a certain
degree of risk toward the loss when the expected outcome is positive. While the trustor chooses to trust if the risk that she has to take
is within an acceptable range, the trustor has no choice but to give
up making the trusting choice in case the risk is likely to go beyond
the limit. Therefore, the perceived risk can be an important predictor of the trusting decision. Further, Deutsch (1973) postulated
that a trusting choice will be made if the subjective probability of
an event of positive valence is higher than the subjective probability of an event of negative valence. That is, a trustor will not choose
to trust in case risks are expected to be greater than benets. This
theory is applied to the electronic commerce setting. If a consumer
associates high risk with an online transaction, then the level of
trust in the online merchant decreases and the need to control the
transaction increases (Olivero & Lunt, 2004).
Studies of perceived risk suggest that a key source of perceived
risk is uncertainty. Ring and Van de Ven (1994) found that the
risks inherent in a transaction increase in proportion to reductions
in time, information, or controllability. Thus, under circumstances
where there are time pressures or a lack of information or difculties in controlling the trustees behavior, uncertainty will be
present. Pavlou (2003) suggested that risks in electronic commerce
are introduced by both the impersonal nature of the online environment and the uncertainty of using the Internet for transactions.
Then, such uncertainty has two components: behavioral uncertainty from the transaction partner and environmental uncertainty
from the technical environment of online transactions (Pavlou,
2003; Ring & Van de Ven, 1994). Behavioral uncertainty exists
because the Web vendor has the chance to behave in an opportunistic manner, whereas environmental uncertainty exists due to the
unpredictable characteristics of the Internet infrastructure. When
behavioral uncertainty is high, a consumer is likely to feel that the
transaction partner may potentially bring about a loss upon him or
her by taking advantage of the remote, impersonal nature of the
online transaction. On the other hand, in situations where environmental uncertainty is high, the consumer is most likely to fear
that an unauthorized person may take his or her personal information, even if the merchants server is equipped with protective
technologies such as encryption.
Some empirical studies (for example, Jarvenpaa & Leidner, 1999;
Pavlou, 2003) found that perceived risk has a direct negative
inuence on transaction intentions. They suggest that consumers
perceiving a great risk are motivated to avoid engagement in the
transaction since they are not sure they can expect a positive payoff. However, in the present research, we will examine the potential
role of trust as a mediator between risk and transaction intentions.
It is important to note that a consumer may not wish to participate in an online transaction because s/he is not quite sure that the
online merchant will act favorably in the interest of the consumer,
929
not merely because a risk is present. That is, the consumer may
choose not to shop online because the transaction partner cannot be reasonably trusted. Since a consumer as a whole cannot
accurately predict the likelihood that the partner will behave in
an opportunistic manner and thus, can only guess the degree of
risk under uncertainty, the actual risk perception will be developed based on the exposure to media concerning related incidents
or on past shopping experiences. Moreover, if the risk perceived
over time goes beyond the level that s/he can tolerate, then the
consumer may choose to abandon the trusting choice. Therefore,
we will develop a research model centered on the role of trust as a
variable that mediates the relationship between perceived risk and
purchase intention.
3. Conceptual model and hypotheses
3.1. Conceptual model development
The purpose of this paper is to examine the relationships
between dimensions of perceived risk and purchase intention. In
particular, we will explore the mediating role of consumer trust in
such relationships. Earlier in the literature review, we provided the
theoretical grounds for the impact that perceived risk has on trust.
A close examination of the relationship between risk and trust indicates that the inuence of risk is valid for only some specic types
of risk rather than the overall perceived risk. For example, if a consumer cannot trust the merchant because s/he may behave in an
opportunistic manner, then what makes the consumer unable to
trust the merchant is most likely to be either a nancial or a performance risk. Moreover, it would be possible that certain types
of risk may have a direct inuence on purchase intention without
the mediating role of consumer trust (Jarvenpaa & Leidner, 1999;
Pavlou, 2003). For that reason, in order to correctly understand the
causal relationship between perceived risk and trust, we need to
focus on the types of perceived risk as independent variables and
their differential impacts on trust through an empirical analysis.
As we observed in the literature review, the related studies suggest
that the types of risk perceived by a consumer in an electronic commerce setting include performance, psychological, social, nancial,
online payment, and delivery risks. Thus, we will use this taxonomy
in order to classify the perceived risk in our research.
Our conceptual model is presented in Fig. 1. The rst six
hypotheses, namely H1-1, H1-2, H1-3, H1-4, H1-5, and H1-6, focus
on the total effects of the dimensions of perceived risk on purchase intention. The next six hypotheses, namely, H2-1, H2-2, H2-3,
H2-4, H2-5, and H2-6, are designed to explore the mediation effects
of consumer trust in the relationships between the individual types
of perceived risk and purchase intention. We will look at the theoretical background for each of the hypotheses in the following
subsection.
3.2. Hypothesis development
Fig. 2 describes the unmediated and mediated models following Baron and Kennys notation (Baron & Kenny, 1986; Frazier, Tix,
& Barron, 2004; Shrout & Bolger, 2002), where the types of risk
are not specied for simplicity. In the unmediated model as shown
in the gure, we posited that perceived risk negatively inuence
purchase intention. Path c in this model is called the total effect.
On the other hand, in the mediated model also shown in the gure, we hypothesized that the effect of perceived risk on purchase
intention was mediated by trust. Path c is called the direct effect,
while paths a and b are called the indirect effect. If perceived risk
no longer directly affects purchase intention (i.e., path c = 0) after
trust has been controlled, complete mediation exists. When path c
930
Perceived risk
Performance risk
H2-1
Trust
H2-2
H2-3
H2-4
Psychological risk
H1-1
Social risk
H2-5
H2-6
H2-1,2,3,4,5,6
H1-2
H1-3
Financial risk
H1-4
Purchase intention
H1-5
Online payment risk

H1-6
Control variables:
Delivery risk
Age
Gender
Internet usage
Internet shopping frequency
Fig. 1. The conceptual model.
is reduced in absolute size but is greater than zero, partial mediation exists. As we can see in Fig. 1, we established one hypothesis for
each type of risk in the unmediated model for a total of six hypotheses, whereas we formulated six additional hypotheses in order to
examine the mediating role of consumer trust in the relationships
between each dimension of perceived risk and purchase intention.
3.2.1. Examining the total effect: Perceived risk and purchase
intention
Related studies have in general found a negative relationship
between the overall perceived risk and purchase intention. For
example, according to Jarvenpaa et al. (2000), the theory of planned
behavior predicts that a consumer is likely to buy from an online
store, which is perceived to be low in risk, although the consumers
attitudes toward the merchant are not positive. In the context
of Internet shopping, perceived risk may reduce consumers perception of behavioral control that refers to the extent to which a
consumer feels that engaging in a behavior is completely up to
him or her (Jarvenpaa et al., 2000, p. 50). Pavlou (2003) also suggests that perceived risk is negatively related to purchase intention.
He suggests that transaction intentions are inuenced by beliefs
about online retailers that are partly determined by the behavioral
and environmental factors that may lead to risk perceptions. Given
that losses are likely, a consumer will have no reason to engage in a
transaction. The negative relationship found by the existing related
studies between perceived risk and intention to buy is likely to hold
true for the individual dimensions of perceived risk, although the
differential impact of each dimension of risk may vary with product
classes or consumers.
Unmediated
Model
First, compared to perceived risk in traditional shopping, the

risk associated with the product performance in online shopping is
especially signicant because of consumers limited ability to communicate through the Internet and to accurately judge the quality of
the product. For example, when consumers have difculty grasping the features of products such as clothes, shoes, and furniture
solely from Website pictures, they could be easily concerned that
the product ordered might not be exactly as it appeared on the
Website or might not perform up to their expectations (Hassan,
Kunz, Pearson, & Mohamed, 2006). Indeed, many online stores have
witnessed the negative impact of performance risk perceptions on
actual sales and thus have been trying to come up with various
mechanisms to lower consumers perceptions of performance risk.
For instance, instead of simply displaying pictures for the product features, some online stores host a discussion forum to allow
consumers to freely exchange their comments, opinions, or recommendations about the products (Garbarino & Strahilevitz, 2004),
which provide useful purchase guidelines for online consumers.
Given the discussion above, we propose the following hypothesis:
H1-1.
tion.
Performance risk is negatively related to purchase inten-
Second, an online consumer could experience psychological discomfort due to personal ego in making purchase decision (Jacoby
& Kaplan, 1972). This type of psychological loss may result from
consumers lack of experience in buying products or services. In
general, consumers with less online shopping experience may feel
more mental discomfort from potentially making the wrong product choice than those with more experience of shopping online.
Perceived
risk
Purchase
intention
Total effect
Trust
b
Indirect effect
Indirect effect
Mediated
Model
Perceived
risk
c
Direct effect
Fig. 2. The total effect vs. direct effect vs. indirect effect.
Purchase
intention
For example, consumers with prior experience would feel less concerned as they know how to choose products best aligned with
their expectations and how to return products that they do not
like. Therefore, as consumers perceive more psychological risk, they
may experience greater level of anxieties and be less willing to buy
online. Therefore, we propose the following hypothesis:
H1-2.
tion.
Psychological risk is negatively related to purchase inten-
Third, Hassan et al. (2006) states that online shoppers are

concerned about the reaction of others who think of the online
prospective shopper as being foolish or showy. Cases (2002) also
denes social risk as the fear of the reaction of friends and family
concerning the Internet as a mode of purchase. The rise of Internet has increased the convenience of shopping in any place and at
any time; however, at the same time, consumers can get caught
up by the sheer variety of items and an illusion that they have not
spent too much money. As the online shopping addiction and similar compulsive online behaviors on the Internet become important
social issues and problems, online consumers become more afraid
of their acquaintances view about online shopping. When consumers perceived benets of online shopping are outweighed by
perceived social risk, the purchase will likely be avoided. Therefore,
the following hypothesis can be formulated:
H1-3.
Social risk is negatively related to purchase intention.
Fourth, nancial risk is dened as the probability of monetary loss associated with purchasing a product. Thus, in the online
environment, purchasing by consumers has been dominated by
products that carry lower levels of nancial risk such as books,
clothes, and music les. Although the online purchase has been
gradually expanding its area over more expensive products, like a
laptop computer and even an automobile, many online consumers
still perceive relatively high nancial risk with those expensive
products. Thus, consumers may be more hesitant when purchasing
a product or a service likely to have potentially high economic loss.
Based on the above grounds, we suggest the following hypothesis:
H1-4.
Financial risk is negatively related to purchase intention.
Fifth, a risk dimension that can become a key consideration

in online shopping is the perceived risk associated with online
payment. Various surveys have shown that Internet users are
increasingly concerned about the possibility that their private and
credit card information may be captured, collected, and misused
by a hacker or even by online marketers without permission. These
concerns will cause the consumer to look for an alternative mode
of shopping (e.g., making purchases at a department store). As a
result, we propose the following hypotheses.
H1-5. Online payment risk is negatively related to purchase intention.
Finally, when purchasing online, a consumer needs to wait for
an order to arrive. The shipment containing the ordered product
could be lost or delivered to a wrong address if there is a lack of business experience on the part of the delivery company. In addition,
it is possible that the order arrives later than expected, provided
that there is a backorder on the ordered product (Cases, 2002).
A consumer who has strong perception of delivery risk will most
likely lose interest in the online purchase. Therefore, we propose
the following hypothesis:
H1-6.
Delivery risk is negatively related to purchase intention.
3.2.2. Examining the mediation effect: Perceived risk, trust, and

purchase intention
Prior studies on the relationship between risk and trust focus
on examining the causal relationship between the two constructs
931
where trust is viewed as an antecedent of the perceived risk. However, as we have seen in the literature review, the risks that result
from behavioral and environmental uncertainties are what make
an online merchant untrustworthy to consumers.
Behavioral uncertainty is associated with consumers concerns
that the online vendor may not behave in a socially responsible manner based on opportunistic calculation. Environmental
uncertainty has to do with the possibility that consumers private
information may leak out as transactional data are transmitted over
the Internet (Pavlou, 2003). Pavlou (2003) suggested that behavioral uncertainty may lead to economic risk (i.e., nancial loss),
personal risk (i.e., the likelihood that the consumer may be a victim due to the use of unsafe products or services), seller risk (i.e.,
negative consequences that may result because of the inability to
monitor the sellers transactions), and online payment risk (i.e.,
the danger that exists because the consumers private information is given to a third party). On the other hand, environmental
uncertainty that surrounds the online transactional infrastructure
may result in economic risk (i.e., concerns over nancial loss) and
privacy risk (i.e., the likelihood that the consumers private information may be stolen or illegally disclosed). Likewise, when a
consumer perceives risks due to the uncertainty associated with
the transaction partner or with the online transactional infrastructure, the consumer would nd it difcult to trust the transaction
mechanism and furthermore, to participate in the online transaction. This is particularly true when we consider Mayer et al.s (1995)
denition of trust as the willingness of a party to be vulnerable to
the actions of another party based on the expectation that the other
will perform a particular action important to the trustor, irrespective of the ability to monitor or control that other party. While a
consumer can trust the other party despite the presence of some
degree of risk, once the amount and probability of the risk goes
beyond an acceptable range, the consumer is most likely to give up
that trust (Gefen, 2000).
Meanwhile, the causal relationship between trust and purchase intention has been also noted by researchers. Jarvenpaa
et al. (2000) applied the theory of reasoned action (TRA) to Webbased shopping, and concluded that a consumers online purchase
intentions are inuenced by attitude, and attitude is affected by
consumer trust. Heijden, Verhagen, and Creemers (2003) conducted an empirical study based on TRA, and reported a similar
nding; trust has an indirect effect on transaction intentions
through the attitude as a mediator. In online commerce, trust in a
transaction partner represents behavioral beliefs about the partner,
and these beliefs can change the consumers behavioral intentions
for online transactions. However, the majority of other related studies (for example, Gefen et al., 2003; Salam et al., 2005) provide
contrary research ndings indicating that trust has a direct impact
on purchase intentions. To cite one example, Shankar, Urban, and
Sultan (2002) found that online trust has a signicant inuence on
purchase intention and customer loyalty, and conrmed a direct
relationship between trust and purchase intention. The above line
of reasoning leads us to believe that trust is most likely to play a
mediating role between perceived risk and purchase intention.
At the level of individual components of perceived risk, the
mediation effect is likely to hold true. That is, the relationship
between each type of perceived risk and purchase intention is likely
to be indirect and to be mediated by consumer trust in an online
merchant. Each of these risk dimensions will act as an antecedent to
trust that in turn will become an antecedent to purchase intention.
First, strong perception of product performance risk will result
in minimal trust in the online merchant. For example, an online
consumer considering purchasing such products as fresh fruits, a
fabric detergent, or a computer often takes precautions to ensure
that the product under consideration for online purchase meets his
or her performance expectations. Are the fruits really fresh? Will
932
the fabric detergent surely function to remove all the dirts? Will the
computer run fast and store large amounts of data? If the consumer
has some doubts concerning these performance questions, he will
put little trust in the merchant. And low consumer trust is likely to
lead to little or no intention to make a purchase. Based on this line
of reasoning, we propose the following hypothesis:
H2-1. Trust in an online merchant mediates the relationship
between performance risk and purchase intention.
Second, a consumer who is much worried about the potential
psychological discomfort that may result from the incorrect choice
of a product will rst lower her trust in the online merchant, which
will, in turn, act to negatively inuence her intention to buy online.
For example, an online consumer considering the purchase of a
fashion clothing product may be most likely serious about the visual
match between her image and the product. Since the online store
does not provide a way of tting the clothing on, the consumer will
have intense psychological concerns. Under this circumstance, she
will begin to distrust the online transaction system as far as the t
of the clothing is concerned, and will probably choose not to buy
online. Thus, we propose the following hypothesis:
between psychological risk and purchase intention.
Third, if a consumer is much concerned that his acquaintances
may feel that the purchased product does not appear suitable for
her, then she will be reluctant to put trust in the online store.
Typical examples of products of this category include laptops,
smartphones, wrist watches, and a mink robe, which all tend to
easily grab the attention of fellow workers, friends, and family
members. Although the consumer perceives no psychological risk
(i.e., there is a good t between her self-image and the product), if
she feels that other people is likely to nd it unsuitable for her, then
the social risk may grow large. A substantial amount of social risk
will render the online merchant less trustworthy. As a result, the
consumer will no longer trust the online purchase system, thereby
abandoning the purchase intention. Therefore, we propose the following hypothesis:
between social risk and purchase intention.
Fourth, given that a consumer has unusual worries over big
nancial loss associated with the opportunistic behavior of the
seller, his trust in that seller will diminish. For example, a computer
user considering the online purchase of a $ 4000 Apple Mac Pro on
eBay may be concerned about the possibility that the unknown
eBay seller might take his payment without shipping the ordered
product. If the records show that the seller has a minimal number
of positive ratings on eBay, then the risk perception for that seller
will be quite strong. As a result, the consumer will have no intention to buy online from that merchant. Therefore, we propose the
following hypothesis:
between nancial risk and purchase intention.
Fifth, provided that a consumer is unusually concerned that his
private and nancial information may leak out due to the possibility
of a hacking incident, he is likely to lose trust in the online environment, in which case there will be no further desire to buy. For
example, when customers nd that an online shopping site does
not provide minimum security protection (e.g., security protocol,
keyboard encrypting, electronic certicates, etc.), they are likely to
doubt the reliability of the Website and even to choose not to buy
online. Thus, we propose the following hypothesis:
between online payment risk and purchase intention.
Finally, an online shopper who experienced several incidents

of wrong delivery and thus perceives strong delivery risk will no
longer trust the online merchant, and probably intend not to buy.
It is also applicable when the online stores outsource their delivery
process to the third party service providers. We can take Amazon.com and eBay.com for example. Amazon uses UPS as their
major delivery service provider, but sellers in eBay often ship via
smaller, less reliable delivery companies. With the higher level of
perceived delivery risk, consumers may put less trust in the online
store, and thus, may look for other alternatives to buy online from.
Based on the theoretical grounds, we propose the following hypothesis:
between delivery risk and purchase intention.
Overall, whether a consumer considering an online purchase
perceives risk with regards to product performance, psychological/social damage, monetary loss, online payment, or delivery, that
dimension of risk intensely perceived by the consumer will rst
lower consumer trust in a merchant, thereby eventually making
the consumer reluctant to buy online from that merchant.
4. Research methodology
To test the research model, we employed an empirical study
using data from online survey responses. The survey participants
were undergraduate students at a large university who voluntarily
participated in the survey for extra credit. Although student participants may not fully represent the online shopper population,
many previous studies (Bhatnagar, Misra, & Rao, 2000; Featherman
& Pavlou, 2003; Gefen, 2000; Jarvenpaa et al., 2000; Jarvenpaa &
Tractinsky, 1999; Lee & Turban, 2001; Pavlou, 2003) showed that
college students are a good surrogate for online consumers. Indeed,
the data collected in the present study also indicated that the participants are active online consumers: over 90% of the respondents
reported that had shopped online least once in the last six months.
4.1. Measures
A survey questionnaire was designed to measure the research
constructs under consideration in this study. Above all, the
perceived risk construct was not measured as an overall perceived
risk, but as individual dimensions or components of the perceived
risk. We considered a total of six types of perceived risk: performance, psychological, social, nancial, online payment, and
delivery risk (Cases, 2002; Jacoby & Kaplan, 1972).
Performance risk was dened as the likelihood of problems associated with purchasing unfamiliar brands or defective products.
Psychological risk was dened as the likelihood of an insufcient
t between the purchased product and the consumers self-image
or self-concept. Social risk was dened as the likelihood of the purchased product inuencing others view of the consumer. Financial
risk was dened as the likelihood of some nancial loss resulting from overpriced products, online fraud, or from unexpected
expenses (e.g., a 15% restocking fee). Online payment risk refers
to the likelihood that a consumers private information, including
personal and credit card information, may be exposed to potential threats, and that such private information may be misused.
Finally, delivery risk was dened as the likelihood of a delivery problem (e.g., late delivery of products, delivery to a wrong address,
and delivery of a wrong product). Each type of risk was measured
using three item variables. Many of these measurement items were
adapted from existing consumer behavior and e-commerce literature (Featherman & Pavlou, 2003; Jarvenpaa & Todd, 1997; Pavlou,
2003; Schiffman & Kanuk, 1994; Stone & Gronhaug, 1993).
933
Table 1
Prole of the respondents (n = 206).
Attribute
Value
Frequency
Percentage (%)
Gender
Male
Female
20s
30s
Never
Less than once every six months
At least once every six months
At least once every three months
At least once a month
At least once a week
Less than 10 h
Between 10 h and 30 h
More than 30 h
141
65
202
4
4
20
17
63
83
19
73
111
22
68.4
31.6
98.0
2.0
9.2
40.3
30.6
8.3
9.7
1.9
35.4
53.9
10.7
Age
Weekly Internet usage
On the other hand, trust was dened as the extent to which a

consumer believes that the merchant will behave in the interest
of the consumer in purchasing a product online. Three items were
used to measure this construct, drawn from Pavlou (2003) and Hong
and Cho (2011).
Finally, purchase intention was dened as the consumers inclination to purchase online. This construct was measured by three
items designed to rate the extent to which a respondent chooses
to buy from an online merchant and recommend the merchant to
acquaintances. The items used were drawn from Jarvenpaa et al.
(2000). All the above ve-point Likert scales ranged from 1 strongly
disagree to 5 strongly agree. The resulting twenty-four (24) items
and the list of the survey questions making up each measure
are summarized in Table A1.
4.2. Survey procedure and data analysis
Student participants were asked not only about their overall
shopping experience but also about their risk perceptions, trusting beliefs, and purchase intention with regards to a popular online
retailer that sells a wide variety of products to consumers. While
we provided the store name Interpark.com in the questionnaire
as a representative online storefront, students were instructed to
consider other familiar storefronts (e.g., Lotte.com or Samsungmall.com) as well in answering the questionnaire items in order to
avoid store-dependent responses. Interpark.com, founded in 1997,
is Koreas rst Internet-based shopping mall selling a broad range
of goods and services including collectibles, appliances, computers,
equipment, vehicles, food, tickets, clothes, jewelry, and tour packages. In 2011, Interpark.com has recorded market shares of 27% in
books, 70% in entertainment tickets, 50% in tour products, and 8% in
general merchandise in Korea. Although it recently introduced an
online marketplace within the same Website (just as Amazon.com
storefront and marketplace coexist on a single Website), the sales
are predominantly generated by the digital storefront portion of
the business.
Prior to the main survey, we conducted a pilot test using 25
students in order to make sure that the questionnaire items were
properly developed to meet the research objectives. We examined the responses to the preliminary instrument for consistency
and revised the items in the questionnaire, such that there are no
redundant items; all items are phrased clearly and concisely. Then,
we surveyed a total of 214 students in order to access a suitable
sample of consumers who experienced B2C online shopping. After
eliminating observations with missing and unusable data, we used
206 observations to test the model and hypotheses. The participants were 68% male and 32% female, and most of the respondents
were aged between their 20s and 30s. The respondents prole is
summarized in Table 1.
We used structural equation modeling (SEM) in order to analyze
the data collected and test the research model. SEM is a statistical
technique that incorporates factor analysis (using a measurement

model) and path analysis (using a structural model) (Qureshi &
Compeau, 2009; Wetzels, Odekerken-Schroder, & Oppean, 2009).
The advantages of SEM compared to other statistical techniques
include more exible assumptions (e.g., partial allowance of multicollinearity) and less measurement error with conrmatory factor
analysis (CFA) enabled by multiple indicators per construct. In particular, we tested the model through partial least squares (PLS)
using SmartPLS 2.0 with bootstrapping (Wetzels et al., 2009).
5. Results
5.1. Measurement model assessment
The internal consistency (reliability) statistics were assessed by
Cronbachs alpha and composite reliability (Dillon Goldsteins Rho),
and the results are summarized in Table 2. All Cronbachs Alpha and
composite reliability values exceeded the recommended reliability
threshold of 0.7 (Fornell & Larcker, 1981). Therefore, all of the questionnaire items were deemed reliable. In addition, we tested the
convergent validity by examining the average variance extracted
(AVE), which measures the percentage of the variance of the measurement items that can be accounted for by the constructs relative
to the measurement error. Table 2 illustrates that for each construct, the AVE value was greater than the cut-off value of 0.5 (Yoo
& Alavi, 2001).
Further, we tested the discriminant validity by examining
whether a latent variable better explains the variance of its own
indicators than the variance of other latent variables. To validate
this, we compared the square root of AVE for each construct with
its cross-correlation with other constructs. The results supported
the discriminant validity of our constructs in that in all cases, the
diagonal elements in the matrix (i.e., the square root of AVE) were
higher than the off-diagonal elements in the corresponding rows
and columns, as shown in Table 2.
Lastly, we tested the convergent validity using the factor and
cross loadings of all indicator items in relation to their respective
latent constructs. The results are summarized in Table 3, which
indicate that all items loaded (i) on their respective constructs
with a factor between 0.70 and 0.95 and (ii) more highly on their
respective constructs than on any other construct. Further, these
entire factor loadings were highly signicant (t-statistics > 11.377,
p < 0.001) based on the SmartPLS output. Therefore, we can conrm that these indicator items accurately represent distinct latent
constructs.
5.2. Structural model assessment
The assessment of the structural model includes estimation of
the path coefcients and R2 values. In particular, to measure the
1.00
Note: 1. PER: Performance risk; 2. PSR: Psychological risk; 3. SOR: Social risk; 4. FIR: Financial risk; 5. OPR: Online payment risk; 6. DER: Delivery risk; 7. TR: Trust; 8. PI: Purchase intention; 9. GEN: Gender; 10. AGE: Age; 11. IUH:
Internet usage hour; 12. ISF: Internet shopping frequency.
The principal diagonal (in boldface) of the inter-correlation matrix represents the square root of the average variance extracted (AVE) per construct.
Control variables include gender, age, Internet usage hour (IUH), and Internet shopping frequency (ISF).
1.00
0.09
1.00
0.09
0.10
1.00
0.36
0.06
0.02
0.86
0.02
0.04
0.06
0.17
0.87
0.57
0.03
0.03
0.06
0.06
0.86
0.24
0.17
0.04
0.12
0.10
0.04
0.87
0.31
0.25
0.30
0.09
0.06
0.05
0.06
0.80
0.18
0.30
0.25
0.35
0.14
0.14
0.03
0.06
0.86
0.31
0.07
0.26
0.32
0.33
0.08
0.04
0.12
0.06
12
10
9
8
7
6
5
4
3
2
0.85
0.56
0.35
0.12
0.28
0.35
0.36
0.00
0.07
0.12
0.02
0.84
0.27
0.27
0.37
0.33
0.26
0.41
0.36
0.04
0.14
0.03
0.07
1
AVE
0.71
0.72
0.74
0.64
0.75
0.73
0.77
0.73
1.00
1.00
1.00
1.00
0.88
0.89
0.90
0.84
0.90
0.89
0.91
0.89
1.00
1.00
1.00
1.00
Reliability
Alpha
0.80
0.80
0.83
0.74
0.84
0.82
0.85
0.82
1.00
1.00
1.00
1.00
0.85
0.89
0.91
0.77
1.00
0.77
0.71
0.77
0.47
2.19
14.60
1.17
SD
Mean
Table 2
Reliability and convergent validity assessment of the measurement model.
3.14
2.44
2.12
2.68
3.13
3.07
3.27
3.07
0.32
24.48
18.25
4.25
14
1. PER
2. PSR
3. SOR
4. FIR
5. OPR
6. DER
7. TR
8. PI
9. GEN
10. AGE
11. IUH
12. ISF
934
effect of mediation in the research model, we sequentially assessed

two separate structural models: the unmediated model and the
mediated model.
Fig. 3 and Table 4 show the unmediated structural model
results with the values of all path coefcients. We found that
performance risk ( = 0.160, t-statistic = 2.328, p < 0.05), psychological risk ( = 0.177, t-statistic = 2.643, p < 0.01), nancial risk
( = 0.167, t-statistic = 2.270, p < 0.05), and online payment risk
( = 0.201, t-statistic = 2.967, p < 0.01) negatively affect purchase
intention. However, we could not nd a signicant inuence either
from the social risk ( = 0.121, t-statistic = 1.638, n.s.) or delivery
( = 0.063, t-statistic = 0.905, n.s.) risk. The R2 for purchase intention was 0.29, reecting that the variation in the given risk factors
explains 29% of the total variance of consumer purchase intention.
Fig. 4 and Table 5 show the mediated structural model results
with the values of all path coefcients. Consistent with the
unmediated model, social risk and delivery risk did not show any
signicant inuence either in the direct or indirect path. We found
that performance risk ( = 0.273, t-statistic = 3.887, p < 0.01) and
psychological risk ( = 0.174, t-statistic = 2.114, p < 0.05) have a
negative and signicant impact on trust. Note that, after controlling trust, psychological risk still kept its direct impact on purchase
intention ( = 0.101, t-statistic = 1.836, p < 0.1); however, performance risk no longer showed a direct inuence on purchase
intention ( = 0.038, t-statistic = 0.584, n.s.). Financial risk and
online payment risk did not affect trust; yet, it only presented a
direct impact on purchase intention ( = 0.161, t-statistic = 2.384,
p < 0.05 and = 0.154, t-statistic = 2.394, p < 0.01, respectively).
Lastly, we found a signicant positive impact of trust on purchase
intention ( = 0.428, t-statistic = 7.700, p < 0.01), which is necessary to support the hypotheses regarding the indirect impact of
perceived risk on purchase intention by means of trust. R2 for purchase intention was 0.43, which is far greater than 0.291 found in
the unmediated model. In terms of R2 , we found that R2 increased
greatly from 0.291 in the unmediated model to 0.428 in the mediated model, which implies that the mediated model has a better t
than the original model.
Given the results of the mediated model, we further examined
the mediation effect of trust following the Baron and Kenny (1986)
steps. Using the same notations shown in Fig. 2 (c, a, b, and c ) in
the previous section, Table 6 presents the outcomes of the analysis
in order to examine the mediational hypotheses.
There are several ways to assess whether the mediated effect
is signicant or not. In particular, we tested the signicance of the
indirect effect (product of paths a and b) using the Sobel test (Sobel,
1982). The test statistic1 for both performance risk (z = 3.47,
p < 0.01) and psychological risk (z = 2.04, p < 0.05) showed that
trust was a signicant mediator.
The amount of mediation is often dened as the reduction of
the effect of the initial variable on the outcome or the difference
between the total effect and direct effect (i.e., |cc |). Theoretically,
this is same as the indirect effect or product of paths a and b (i.e.,
|c c | |ab|). Baron and Kenny (1986) suggested that a small effect
size would be |ab| = 0.01, medium size would be |ab| = 0.09, and large
size would be |ab| = 0.25. In our results, performance risk showed
that |c c | = 0.160 (where c = 0 since the path coefcient is not
statistically signicant), which is slightly greater than |ab| = 0.117.
On the other hand, psychological risk showed that |c c | = 0.076,
which is almost the same as the value of |ab| = 0.075. As a result,
we concluded that medium to large size mediated effects for performance risk, and small to medium size mediated effects for
psychological risk.
z=
ab
.
(b2 SEa2 )+(a2 SE 2 )
b
935
Table 3
The cross-loading matrix.
PER1
PER2
PER3
PSR1
PSR2
PSR3
SOR1
SOR2
SOR3
FIR1
FIR2
FIR3
PRR1
PRR2
PRR3
DER1
DER2
DER3
TR1
TR2
TR3
PI1
PI2
PI3
GEN
AGE
IUH
ISF
PER
PSR
SOR
FIR
PRR
DER
TR
PI
GEN
AGE
IUH
ISF
0.84
0.87
0.82
0.20
0.19
0.33
0.30
0.28
0.14
0.22
0.31
0.34
0.27
0.22
0.33
0.15
0.18
0.34
0.35
0.34
0.39
0.29
0.37
0.25
0.04
0.14
0.03
0.07
0.28
0.22
0.19
0.91
0.92
0.71
0.43
0.48
0.53
0.29
0.22
0.32
0.07
0.06
0.16
0.24
0.29
0.19
0.32
0.31
0.30
0.32
0.32
0.28
0.00
0.07
0.12
0.02
0.29
0.17
0.20
0.58
0.55
0.26
0.84
0.91
0.82
0.17
0.08
0.37
0.02
0.02
0.16
0.24
0.24
0.17
0.30
0.23
0.31
0.27
0.23
0.35
0.08
0.04
0.12
0.06
0.33
0.26
0.32
0.32
0.36
0.20
0.24
0.36
0.20
0.77
0.72
0.90
0.06
0.06
0.28
0.32
0.27
0.20
0.22
0.25
0.19
0.33
0.31
0.25
0.14
0.14
0.03
0.06
0.27
0.32
0.25
0.07
0.03
0.27
0.05
0.02
0.10
0.10
0.13
0.19
0.87
0.85
0.87
0.27
0.27
0.25
0.16
0.25
0.25
0.24
0.31
0.22
0.09
0.06
0.05
0.06
0.25
0.27
0.14
0.26
0.20
0.27
0.18
0.19
0.28
0.21
0.20
0.30
0.26
0.22
0.30
0.86
0.90
0.81
0.19
0.16
0.28
0.20
0.08
0.17
0.04
0.12
0.10
0.04
0.38
0.27
0.38
0.34
0.32
0.23
0.19
0.27
0.35
0.10
0.12
0.30
0.17
0.11
0.31
0.17
0.24
0.21
0.86
0.88
0.88
0.47
0.50
0.49
0.03
0.03
0.06
0.06
0.36
0.29
0.25
0.34
0.31
0.26
0.26
0.29
0.29
0.21
0.18
0.37
0.22
0.23
0.31
0.17
0.13
0.15
0.46
0.53
0.50
0.89
0.90
0.77
0.02
0.04
0.06
0.17
0.00
0.05
0.05
0.02
0.01
0.01
0.06
0.09
0.05
0.13
0.09
0.13
0.08
0.09
0.07
0.04
0.01
0.07
0.03
0.04
0.00
0.00
0.06
0.01
1.00
0.36
0.06
0.02
0.16
0.11
0.09
0.06
0.07
0.03
0.06
0.01
0.04
0.10
0.07
0.14
0.02
0.03
0.09
0.09
0.06
0.16
0.04
0.03
0.01
0.00
0.01
0.10
0.36
1.00
0.09
0.10
0.02
0.11
0.00
0.10
0.07
0.16
0.13
0.12
0.06
0.02
0.02
0.04
0.03
0.02
0.07
0.03
0.09
0.14
0.02
0.03
0.10
0.02
0.07
0.06
0.06
0.09
1.00
0.09
0.13
0.06
0.01
0.05
0.06
0.07
0.09
0.04
0.03
0.06
0.01
0.06
0.01
0.00
0.12
0.07
0.02
0.01
0.08
0.02
0.10
0.13
0.04
0.28
0.02
0.10
0.09
1.00
Perceived risk
Performance risk
- 0.160 (2.328)**
Psychological risk
- 0.177 (2.643)***
Social risk
Financial risk
- 0.121(1.638)
Purchase intention
R2 = 0.291
- 0.167 (2.270)**
- 0.201 (2.967)***
Online payment risk
Control Variables:
Age: -0.039 (0.625)
Gender: 0.002 (0.027)
Internet usage: 0.016 (0.296)
Internet shopping frequency:0.132 (1.887)*
0.063 (0.905)
Delivery risk
Fig. 3. The results of the unmediated research model.
Table 4
Summary of the results of the unmediated model.
Hypothesis
Effect
Coefcient
H1-1
H1-2
H1-3
H1-4
H1-5
H1-6
Control
Performance risk purchase intention

Psychological risk purchase intention
Social risk purchase intention
Financial risk purchase intention
Online payment risk purchase intention
Delivery risk purchase intention
Age
Gender
Internet usage
0.160
0.177
0.121
0.167
0.201
0.063
0.039
0.002
0.016
0.132
*
**
***
p < 0.1.
p < 0.05.
p < 0.01.
S.E.
0.069
0.067
0.074
0.073
0.068
0.069
0.060
0.063
0.055
0.070
t-Statistics
**
2.328
2.643***
1.638
2.270**
2.967***
0.905
0.625
0.027
0.296
1.887*
Conclusion
Supported
Supported
Not supported
Supported
Supported
Not supported
936
Perceived risk
Performance risk
-0.273 (3.887)***
Trust
R2 = 0.258
-0.174 (2.114)**
-0.126 (1.580)
-0.015 (0.242)
-0.115 (1.632)
-0.038 (0.584)
-0.046 (0.605)
Psychological risk
Social risk
0.428(7.700)***
-0.101 (1.836)*
0.077(1.053)
Financial risk
Purchase intention
R2 = 0.428
-0.161 (2.384)**
-0.154 (2.394)***
Online payment risk

0.088 (1.345)
Control Variables:
Age: -0.012 (0.217)
Gender: 0.016 (0.291)
Internet Usage: 0.019 (0.361)
Internet Shopping Frequency:0.124 (1.875)**
Delivery risk
Fig. 4. The results of the mediated research model.
A different way to describe the amount of mediation is in terms

of the proportion of the total effect that is mediated, which is
dened by ab/c (Frazier et al., 2004; Shrout & Bolger, 2002). Given
the path coefcients, we obtain 0.117/0.160 = 0.73 for performance
risk and 0.075/0.177 = 0.42 for psychological risk. Thus, about 73%
of the total effect of performance risk on purchase intention is
mediated by trust, and about 42% of the total effect of psychological risk on purchase intention is mediated by trust. Similar to this
approach, we examined the types of mediation as well. The relationship between performance risk and purchase intention was
completely mediated by trust (i.e., c = 0, n.s). In contrast, the relationship between psychological risk and purchase intention was
partially mediated by trust, where the absolute size of the direct
path coefcient was reduced by |c c | = 0.160, while c is still not
zero.
6. Discussion
The ndings of the present research point to a set of implications
for the academics. Most of all, our analysis of the cause-and-effect
Table 5
Summary of the results of the mediated model.
Hypothesis
Effect
Coefcient
S.E.
t-Statistics
Conclusion
H2-1
Performance risk purchase intention

Performance risk trust
Psychological risk purchase intention
Psychological risk trust
Social risk purchase intention
Social risk trust
Financial risk purchase intention
Financial risk trust
Online payment risk purchase intention
Online payment risk trust
Delivery risk purchase intention
Delivery risk trust
Trust purchase intention
Gender
Age
Internet usage
0.038
0.273
0.101
0.174
0.077
0.126
0.161
0.015
0.154
0.115
0.088
0.046
0.428
0.017
0.013
0.020
0.124
0.066
0.070
0.055
0.082
0.073
0.080
0.068
0.064
0.064
0.071
0.066
0.077
0.056
0.057
0.057
0.054
0.066
0.584
3.887***
1.836*
2.114**
1.053
1.580
2.384**
0.242
2.394**
1.632
1.345
0.605
7.700***
0.291
0.217
0.361
1.875*
Supported
H2-2
H2-3
H2-4
H2-5
H2-6
H2-16
Control
*
**
***
Supported
Not supported
Not supported
Not supported
Not supported
p < 0.1.
p < 0.05.
p < 0.01.
Table 6
Summary of the results for mediation effect.
Risk type
Path
Path coefcient
S.E.
t-test
Sobel test
Mediation type
Performance risk
c
a
b
c
c
a
b
c
0.160
0.273
0.428
0.038
0.177
0.174
0.428
0.101
0.069
0.070
0.056
0.066
0.067
0.082
0.056
0.055
2.328**
3.887***
7.700***
0.584
2.643***
2.114**
7.700***
1.836*
z = 3.47 (p < 0.01)
Complete mediation
z = 2.04 (p < 0.05)
Partial mediation
Psychological risk
*
**
***
p < 0.1.
p < 0.05.
p < 0.01.
relationship between the perceived risk and purchase intention

was conducted by separating the risk into six dimensions. Existing research often considers perceived risk as a unidimensional
construct, and thus, focuses on demonstrating that the perceived
risk as a whole tends to inhibit consumer attitude and transaction
intentions. On the contrary, our results revealed that the impact
of perceived risk on its consequences were different depending
on the dimensions of the perceived risk. The results provide substantial support for the research model as shown in Fig. 1. Four
(H1-1, H1-2, H1-4, and H1-5) out of six hypotheses were supported, regarding the unmediated inuence of perceived risk. We
also found two signicant mediation effects supporting H2-1 and
H2-2.
In the unmediated model, while we found that the consumers
perceived risk mostly has a negative inuence on purchase intention (i.e., performance risk, psychological risk, nancial risk, and
online payment risk), two types of perceived risk (i.e., social risk
and delivery risk) turned out not to inuence purchase intention;
thus, H1-3 and H1-6 were rejected. The lack of support for these
two hypotheses may be the outcome of the changes in the recent
online shopping environment. A likely reason why there was no
signicant inuence of social risk was that Internet shopping has
become so popular amongst users that nobody considers purchasing a product online as unusual. In particular, with the advance of
Web 2.0 tools, such as social network systems, consumers who have
purchased products are increasingly sharing their buying experience online. Furthermore, potential customers can also have access
to useful suggestions from others and anticipate what responses
their friends and family will give concerning their online purchase
in advance. As a result, other peoples views on online shopping are
no longer a concern. With regards to the delivery risk, most online
merchants outsource their delivery function to well-known specialized companies, such as UPS, FedEx, and DHL. With advances
in new technologies, such as RFID and wireless barcode reading
devices, these companies provide real-time tracking information.
In particular, in a metropolitan area, same-day delivery service is
very common and reliable. In addition, the consumer knows that
in the event of incorrect delivery he can always call the customer
service to identify the potential problem and request that the order
should be reshipped to the correct address. Hence, a consumer who
is willing to buy a product online is not likely to abandon his intention, even if he has some worries over correct delivery of the order,
because he will assure himself that any potential issue with delivery
can be properly addressed by the vendor.
In the mediated model, it was conrmed that performance and
psychological dimensions of perceived risk and trust are in a very
close, inseparable relationship, and this nding is consistent with
other studies (Johnson-George & Swap, 1982; Olivero and Lunt,
2004). From a managerial perspective, to reduce the perceived performance risk, a rm may consider ways to reduce discrepancies in
product appearance, specication, and quality as advertized in the
online Website. For example, Matsuhita Electric Works has decided
to allow consumers to design their kitchen in virtual reality and
choose matching appliances (Haag & Cummings, 2009). Likewise,
a CAVE (cave automatic virtual environment) provides a 3D virtual
reality room where one can even talk with a remotely located sales
person, feeling that she is in the same room. Similar technologies,
such as hepatic interfaces and custom-t clothes through biometrics, are evolving to overcome the limitations of online shopping.
As another way to reduce performance risk, rms may utilize active
marketing, online advertising, and promotional activities in order
to attract consumers by emphasizing that the quality and performance of the products purchased online is as good as that of those
purchased ofine. For example, rms can promote the active participation of existing shoppers through a discussion board where
they can post reviews indicating that their purchased products met
937
their expectations. This may reduce the risk associated with product discrepancy.
To overcome the psychological risks for consumers, it is suggested that online merchants focus on identifying target customers
and offering products that best meet the psychological needs of
those customers. In addition, it may be necessary to improve the
process related to returning and exchanging products purchased
online. When consumers know that they can easily return or
exchange any product with which they do not feel quite comfortable, much of their psychological concerns will be relieved. For
example, Amazon.com provides an automated process of enabling
a customer to request a return and to print a return address label,
and thus, customers feel that the cost of resolving the psychological
discomfort resulting from the wrong choice of a product is minimal.
Online merchants must keep in mind that online trust is formed
slowly over time as consumers gain experience through repeated
transactions (Cheskin-Research, 1999).
Meanwhile, it is interesting to note that the nancial risk and
online payment risk had a direct negative inuence on purchase
intention but not on the consumers trust in a merchant. In terms
of nancial risk, many price-comparison Websites (e.g., pricegrabber.com, nextag.com, and bizrate.com) are available to provide
consumers with easily accessible and reliable price information.
Moreover, consumers do not consider a merchant trustworthy
merely based on its relatively low prices. Instead, in addition to pricing information, these Websites also provide sellers ratings based
on existing shoppers reviews, which may be critical information
for consumers in building their trust. Indeed, people often shop at
highly reputable stores that they trust, such as Amazon.com, even
though prices may be higher than those of competitors. Meanwhile,
one possible reason why online payment risk was directly related
to purchase intention may be that today more and more online
stores tend to outsource the online payment function to a reliable third party payment solution provider in order to avoid risks
associated with payment handling. For example, PayPal has been
embedded in many online stores and has processed over $ 71 billion
through 87 million registered users in 2009 (www.wikipedia.com,
retrieved on Sep. 10, 2013). Although the relevant risks associated
with using this kind of specialized payment service still exist and
have an impact on purchase intention, they may not reduce the
consumers trust in the store itself.
7. Conclusions
Recently, the Internet is being widely used as an important vehicle to conduct business transactions online, as it removes time and
space barriers to enable convenient 24/7 shopping for customers.
We have seen steady growth in electronic commerce sales as well as
the number of online consumers. Such changes have been driven
in part by improvements in the Web-based ordering system and
reduction in transaction costs. Nevertheless, consumer perceptions
of risks associated with online purchases remain a great obstacle
to the continued growth of electronic commerce. In this context,
this paper focused on investigating the intriguing relationships
among dimensions of perceived risk, consumer trust, and purchase
intention. An empirical study was conducted in two phases: (1)
examining the total effect without mediation, and (2) examining
the mediation effect.
When we probed the total effect under the unmediated model,
the ndings revealed that performance, psychological, nancial,
and online payment risks have signicant negative inuence on
purchase intention. On the other hand, an examination of the mediation effect under the mediated model indicated that trust in an
online merchant completely mediates the effect of performance risk
but partially mediates that of psychological risk. Given the mixture
938
of unmediated as well as mediated effects of perceived risks on

purchase intention, the ndings have conrmed that while there
is a negative relationship between perceived risk and purchase
intention, this relationship is also mediated by consumer trust in
an online merchant. Therefore, it is reasonably conceivable that
efforts made by online merchants to lessen certain types of risk
will rst improve consumer trust, and then ultimately increase the
consumers intention to purchase online.
7.1. Implications
Appendix A. Table A1. List of item variables and survey

questions.
Item code
Questionnaire
PeR1
The product quality may be lower than that advertised in

the online store
The product appearance may be different from the product
picture shown in the online store
The product dimension may be different from that
advertised in the online store
If I bought a product from the online store, I would abase
myself
If I bought a product from the online store, it would not t
with my image
The online store would not sell high-class products
If I bought a product from the online store, I would be held
in lower esteem by my friends and families
If I bought a product from the online store, I would be
negatively thought of by my friends and family
demeaned by my friends and family
I would be concerned that the product in the online store
may be more expensive than products in a different place
I would be concerned that I might be able to buy the same
product at a different place at a lower price than in the
online store
If I bought a product from the online store, I may suffer
monetary loss due to sales fraud
I would be concerned as to whether the online store is
equipped with a security monitoring tool
I would be concerned as to whether the online store is
equipped with a security-enabled log-in process
I would be concerned as to whether the online store
appropriately manages customers private information
concerned as to whether the product would be delivered
to a wrong address
concerned as to whether the product would be lost during
delivery
concerned as to whether a wrong product would be
delivered
I trust the online store and would purchase products from
this Website
I believe that the online store is trustworthy.
I believe the online store will keep its promises and
commitments
I would like to purchase a product from this online store
I would like to recommend my friends and family to
purchase a product from this online store
If there is a product that I want to purchase, I would like to
use the online store
What is your age?
What is your gender?
PeR2
PeR3
PsR1
PsR2
The present research offers academic as well as practical

implications. First, it makes scholarly contributions by providing
new insights into the theoretical relationships among perceived
risk, consumer trust, and purchase intention. Unlike the existing
research, our research has found that some, if not all, components of perceived risk are an inhibitor of consumer trust. It was
revealed that performance and psychological risks have a negative effect on trust. Research ndings further indicate that the
relationships between these two risks and purchase intention are
mediated by trust in an online merchant. In addition, some components of perceived risk (i.e., performance, psychological, nancial,
and online payment risks) were shown to have a negative inuence on consumers intention to buy online. This nding provides
new insights, since we addressed the effects of the individual components of perceived risk, rather than that of perceived risk as a
whole.
On the other hand, the study provides practical implications for
managers of electronic commerce rms. First, the mediating role
of consumer trust in the relationships between perceived risks and
purchase intention suggests that an online merchant can increase
sales by rst lowering the perceived risks, thereby improving consumer trust that then will function to boost purchase intention.
In order to make this vision a reality, electronic commerce rms
will need to ensure that consumer trust can be enhanced by effectively reducing performance and psychological risks associated
with online purchases. Furthermore, practitioners must keep in
mind that purchase intention is directly affected by performance,
psychological, nancial, and online payment risks. It implies that
they should make efforts to mitigate these risk perceptions if they
are to increase revenues.
PsR3
SoR1
SoR2
SoR3
FiR1
FiR2
FiR3
OpR1
OpR2
OpR3
DeR1
DeR2
DeR3
TR1
TR2
TR3
PI1
PI2
PI3
7.2. Limitations
Despite the potential contributions mentioned earlier, this
research is subject to a few limitations. The rst shortcoming is that the use of students as respondents in the survey
makes the research results less realistic than when actual consumers were employed. Although an increasing number of college
students today are online consumers themselves, the range of products they buy online is somewhat limited. Second, the research
model may have overlooked other antecedents to consumer trust.
While the estimation shows that purchase intention is signicantly inuenced by consumer trust, purchase intension could be
affected by other factors, such as the reputation of the online
merchant and the advertisement, which may be also correlated
with consumer trust. Should this be the case, trust and purchase intention may have no direct causal connection. Third, the
present research does not take into account the reputation of an
online store. In general, consumer trust depends largely on the
reputation of online stores. For example, many consumers have
condence in buying goods from Amazon, yet perceive a considerable amount of risk when buying from an unknown e-commerce
Website.
Age
Gender
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Ilyoo B. Hong is presently professor of management information systems at ChungAng University, Seoul, Korea. He earned his Ph.D. degree in MIS from the University
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UCLA Anderson School of Management. Ilyoo Hong has published in such journals as
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Hoon S. Cha is associate professor of management information systems at ChungAng University. He holds an M.S. and Ph.D. in Management Information Systems
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Seoul National University. He worked for Samsung for three years as an IT consultant. His research examines the impact of IT offshoring decisions on rm knowledge
and costs and the allocation of IT investment among business functions and its
effects on business value. His publications have appeared in MIS Quarterly, Journal of Management Information Systems, and Communications of the ACM, among
others.

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International Journal of Information Management 33 (2013) 927939

Contents lists available at ScienceDirect

International Journal of Information Management

The mediating role of consumer trust in an online merchant in

types of risk including nancial, performance, psychological, and

2.1. Perceived risk

Trust has been widely studied over the years, as it is recognized

Bauer (1960) proposed that consumer behavior could be viewed

opportunistic manner and that the e-commerce environment is

Online payment risk

Fig. 1. The conceptual model.

First, compared to perceived risk in traditional shopping, the

Performance risk is negatively related to purchase inten-

Psychological risk is negatively related to purchase inten-

Third, Hassan et al. (2006) states that online shoppers are

Social risk is negatively related to purchase intention.

Financial risk is negatively related to purchase intention.

Fifth, a risk dimension that can become a key consideration

Delivery risk is negatively related to purchase intention.

3.2.2. Examining the mediation effect: Perceived risk, trust, and

Finally, an online shopper who experienced several incidents

Weekly Internet usage

On the other hand, trust was dened as the extent to which a

technique that incorporates factor analysis (using a measurement

effect of mediation in the research model, we sequentially assessed

Online payment risk

Fig. 3. The results of the unmediated research model.

Performance risk purchase intention

Online payment risk

Fig. 4. The results of the mediated research model.

A different way to describe the amount of mediation is in terms

Performance risk purchase intention

z = 3.47 (p < 0.01)

z = 2.04 (p < 0.05)

relationship between the perceived risk and purchase intention

of unmediated as well as mediated effects of perceived risks on

Appendix A. Table A1. List of item variables and survey

The product quality may be lower than that advertised in

The present research offers academic as well as practical

Pavlou, P. A. (2003). Consumer acceptance of electronic commerce: Integrating trust

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