Online ISSN 1347-4456 Print ISSN 1347-4464

ABAS: Annals ofBusiness Administrative
ScienceVol. 3, No. 3, July 2004

NOJIMIA Miho

25

Daniel A. HELLER
Takahiro FUJIMOTO

35

Classification of Information on Websites and Perceived Risk in Online Transactions

Inter-Firm Learning in Horizontal High-Commitment Alliances:Findings from Two Cases in the World Auto Industry

http://www.gbrc.jp© 2004 Global Business Research Center

ABAS: Annals of Business Administrative ScienceVol. 3, No. 3, July 2004

CHIEF EDITOR

Junjiro Shintaku

University of TokyoEDITORIAL BOARD

Makoto Abe
University of Tokyo
Takahiro Fujimoto University of Tokyo
Makoto Kasuya
University of Tokyo
Hotaka Katahira
University of Tokyo
Nobuo Takahashi University of Tokyo
Technical Editor: Maki Nishida, Global Business Research Center

ABAS: Annals of Business Administrative Science is published quarterly in January,
April, July, and October, by Global Business Research Center, Marunouchi, Chiyoda-ku, Tokyo,
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Annals of Business Administrative Science Vol. 3, No. 3 (July 2004)

Classification of Information on Websites andPerceived Risk in Online Transactions
NOJIMA Miho
Faculty of Economics, Seikei University
E-mail: mnojima@econ.seikei.ac.jp

Abstract: From the perspective of information management and strategy, we
spotlight contents of information on the web to solve the problem of perceived risk inonline transaction. IT increased the volume of information we acquire, and thevolume of information that exceeds human’s processing ability has caused
perceived risk in online transaction. We attempt to explore the information selection
model to solve the problem of the reduction in perceived risk and conduct consumer
survey. The empirical study shows that consumers classify information on the web infour types; detailed information, evaluation information of experts and mass media,
evaluation information of consumers, and evaluation information in real world. This
classification means that consumers think important by whom goods quality andshops sincerity are evaluated. The concept of risk-reducing information and theinformation classification model from the standpoint of consumers will become thefirst step of the search on information selection model in the information flood age.
Keyword: online retailer, perceived risk, Click & Mortar, empirical study, Japan

1. Introduction

expectations.

Recently online retailers for consumers (B2C)

It is said that consumer’s perceived risk is abecome popular in Japan. In an investigation in 2002,

factor to disturb the development of online trading.

it was confirmed that the market scale of B2C

Online retailers have to promote consumer’s

reached 1,587 billion yen. (Ministry of Publicpurchase decision making by sending information

Management, 2003). However, most online retailers

using a limited method: website. Information on thehave the problem of earnings, which fall short ofwebsiteplays

animportant

role

to

reduce25

Nojimaconsumer’s uneasiness and help the purchaseperceived risk begins to attract attention again by thedecision-making.

appearance of a new shopping method: online

When IT revolution is discussed, only thetransactions.

technical innovation in the tremendously increased

The growth of online shops is disturbed because

volume of information we acquire and process is

uncertainty and consumer’s perceived risks are highpaid attention to. Of course, the internet enabled theamidst various advantages. Actually, consumers

consumer to reduce various costs concerning

think online transactions are risky and hesitate to use

information transmission and processing (Clemon,

the new shopping method (Bhattacherjee, 2002;

Reddi, & Row, 1993; Malone, Yates, & Benjamin,

Einwiller, Geissler, & Will, 2000; Einwiller & Will,

1987), and to choose better goods by little time and2001). Perceived risk in online transaction originateslabor (Bakos, 1997). Nevertheless, the problem

in time and spatial distances between the seller andonline retailers confront cannot be explained fromthe purchaser.

the technical point of view. The problem is that

There are a lot of researches concerning

human ability of information processing is limited

perceived risk: a series of researches of E-Trust(“Bounded Rationality”: Simon, 1945). The problem(Arndt, 1967; Cunningham, 1967; Kollock, 1999;

of consumer’s perceived risk might be cause by theEinwiller & Will, 2001, etc.), and word of mouth

way of information transmission. Online retailers

that contribute to reduce perceived risk (Mayer,

shouldDavis, & Schoorman, 1995; Mcknight & Chervany,

chooseappropriate

informationinconsideration of reducing perceived risk. Nowadays,

1996, 2002, etc.).

only the information technology proceeds and theIn the prior researches, perceived risk andeffective way of information transmission under the

information have been discussed as follows. First ofbounded rationality is not discussed enough.

all, the relation between volume of information andIn this research, online retailers’ activity is

the purchase decision-making is discussed. The

analyzed and the method of offering appropriate

volume of information, which the consumers acquire

information to the consumer is discussed.

promotes purchase (Cox & Rich, 1964; Dowlin &Staelin,

1994;

Peterson,Balasubramanian,&

2. Review of Prior Researches

Bronnenberg,1997).

When

Bauer (1960) advocates “perceived risk” as theinformation

increases,

theuneasiness consumers hold when they face a new

consumer’s decision-making increases, and a more

shopping method, and various marketing researches

effective

have discussed perceived risk in the context ofpossible (Peterson, et al., 1997). The marketing

mail-order system. Recently the problem of thetheory26purchasemeasuresthevolumeofalternatives

fordecision-makinganamountofbecomes

consumer’sInformation on Websites and Perceived Risk in Online Transactions
information search action as risk reduction behaviorrisk and consumers’ level of perceived risk.

(Cox & Rich, 1964; Dowling & Staelin, 1994).

Nonetheless, there are a lot of uncertain points to the

However, the quality of the content of information

content of information, and the number of researches

becomes a problem in online transactions while awhich focused the framework of informationhuge amount of information can be technicallyselection is limited (Danyi & Shao, 2003; Nojima,

displayed on the website. The content of information

2000; Nojima, Shintaku, Takeda, & Kokuryo, 2002).

elaborately chosen by online retailers’ efforts can

It remains a question what kind of information

decide their competitive advantages, because theonline retailers should publish in their websites.

amount of information is provided by technological

Information selection becomes an importantinnovation which all retailers may equally enjoy.

subject under the online environment, but in theHere, research on the content of information

prior researches it had not been much discussed. The

originate.

necessity of the information selection can be
explained

Some researches discussed influence which

from

the

conceptof“Bounded

specific information gave to the perceived risk

Rationality” (Simon, 1945). We often think that

reduction and purchase promotion. For instance, it isperceived risk will be reduced if retailers offer plenty

clarified that consumer’s reputation has large

of information. The truth is that consumers are

influence on perceived risk reduction and purchasedrowning in the flood of information. IT innovation

promotion

studies.

has changed technological ability of information

Perceived risk of the customer who visited retailers’transmission and accumulation, but does not change

websites for the first time can be reduced byhuman ability of information processing. It is very

disclosure of reputations of other customers who haddifficult for us to pick up useful information in thealready

middle of huge amount of information (Kokuryo,

in

used

variousthewebexperimental

shop(Arndt,1968;1999). The effort to select and send appropriate

Cunningham, 1967a, 1967b; Kollock, 1999).

information to customers is needed to acquire

Investigation for an inclusive framework ofcustomers.

risk-reducing information is at the stage of groping,although individual risk-reducing information suchas reputation have been studied. A pioneering3.

investigation by Roselius (1971) present 11 risk

Risk-reducing Information

reduction methods (information) and focused thePrior to thinking about information selection

problem of selecting risk-reducing information fromframework, we investigated typical information on

severaleffective

online retailers’ websites in Japan. Table 1 shows ainformation corresponding to the kind of perceived

summary of information, which typical online

alternatives.

He

classified

27

Experimental

InvestigationofNojimaTable 1.
Risk-reducing information

Average

Variance

1

Goods and service are famous

3.28

1.32

2

Goods can be confirmed in actual store

3.10

1.45

3

Online retailer has an actual store

2.86

1.54

4

Goods introduced by another website or magazine

2.71

1.22

5

Publicity in mass media

2.59

1.19

6

Experts evaluate goods

2.42

1.20

7

Consumers evaluate goods (BBS)

3.14

1.31

8

Consumers evaluate transaction process (BBS)

3.13

1.22

9

Stock situation

4.12

0.78

10

Delivery method and date

4.23

0.65

11

Privacy policy

4.24

0.74

12

FAQ

4.33

0.61

13

Detailed description of goods

3.88

1.05

14

Evaluation and certification by the third party

3.59

1.23

15

Webmaster’s comment and photograph

2.96

1.35

retailers in Japan offer on the website. We call theseIn Table 1, averages and variances of

information “risk-reducing information,” which

consumer’s valuations are shown. Information with

reduces consumer’s perceived risk.

high valuing level of four or more on the average
waswas “stock situation,” “delivery method and date,”

conducted among the internet shopping experienced“privacy policy” and “FAQ.” Variances of valuations

person in Japan in October 2001, to search

are also small, and a lot of consumers think these areconsumer’s valuation in risk-reducing information.

important.

The

consumerquestionnaire

surveyThe answers were taken on the web page. As a result,

Oppositely, “publicity in mass media,” “experts

the data of 4750 samples was obtained. The

evaluate goods,” and “goods introduced by anotherconsumertowebsite or magazine,” are not relatively valued byrisk-reducing information by five scales standard (1:consumers. Similarly, it is not much valued whether

not important, 5: very important). Additionally, thethe online retailer has an actual store.

answeredthevaluinglevel

The effectiveness of click & mortar has beenanswer concerning the consumer attribute wasdiscussed (Pottruck & Pearce, 2000). The existingobtained.
28

Information on Websites and Perceived Risk in Online Transactions
enterprisecansuppressmarketingcost

brand are prior information (Taylor, 1974). After theofadvertisement and can achieve the synergy effect by

fact

information

reduces“consequencesrisk”

using the brand in the real world and distribution

concerning the damage caused as a result of theinfrastructure as well as on internet. Success of click

failure of shopping. Product warranty and the& mortar company can be explained by stock

repayment system are after the fact information.

and complaintThis research focus on prior risk-reducing

treatment (FAQ), which depend on infrastructure andinformation, for prior information to prevent

know-how of existing business. High valuation of

shopping failing is important to reduce perceived

these information may have relationship with therisk. Cox and Rich (1964) describes that the goal of

success of click & mortar companies. However,shopping is important, because refund system can“Online retailer has an actual store” is not valued

not compensate for loss of time and frustrations.

management,delivery method,

Secondarily, in view of the cause of risks,very much. What does this mean?

risk-reducing information can be divided into

4.

Classification

Frame

of

“information

on

the

goods

qualityrisk,”

Risk-reducing Information“information on the transaction process risk,” andIn the investigation of descriptive statistics, the“information on security” (Nojima, 2000; Nojima etknow-how of distribution and complaint treatment isal., 2002). Goods quality risk occurs in online

highly valued by consumers, and neither thetransaction because customers cannot actually

evaluation of the mass media nor the existence of aconfirm the goods. The transaction process risk

real store are valued. However, it is impatient tomeans failure of delivery and the price settlement,

decide the conclusions. We think classification ofand so on. The transaction process risk becomes highrisk-reducing information is needed.

in online transaction because of time and spatialof

distance between sellers and customers. Security

information classification which can be applied toprevents danger to consumer’s personal information

online transactions. First, perceived risk is classified

and information leak on the computer network. To

as “Outcome Risk” and “Consequences Risk”

analyze risk-reducing information from a business(Roselius, 1971). Corresponding to this classification,

administrationrisk-reducing information can be divided into priorsecurity information will be abstracted.

We

enumerate

theoreticalframework

aspect,technical

solutionslike

information and after the fact information. Priorrisk-reducing information is information that reduces5.

“outcome risk,” risk of the failure of shopping

Information Seen from Consumer

occurances. Detailed information about goods andWe tried empirical investigation of consumer’s
29Classificationof

Risk-reducing

NojimaTable 2. Classification of Risk-reducing Information
Characteristic value

Risk-reducing information
Goods and service are famous
Online retailer has an actual store
Goods can be confirmed in actual store
Goods introduced by another website ormagazine
Publicity in mass media
Experts evaluate goods
Consumers evaluate goods (BBS)
Consumers evaluate transaction process (BBS)
Stock situation
Delivery method and delivery date
Privacy policy
FAQ
Detailed description of goods
Webmaster’s comment and photo
Evaluation and certification by the third party

5.124

2.251

1.187

0.986

Evaluation
informationof experts Evaluation Evaluation
Detailed
and mass information information in
information media
of consumers real world
0.107
0.250
0.111
0.709
-0.0170.396-0.007
0.488
0.113
0.179
0.140
0.848
0.064
0.051
0.030
0.102
0.129
0.784
0.820
0.735
0.761
0.154
0.060
0.329

0.810
0.823
0.678
0.252
0.247
0.222
0.094
-0.121-0.105
0.017
0.186
0.189

0.241
0.130
0.461
0.860
0.815
-0.001-0.006
0.152
0.211
0.150
0.313
0.094

0.207
0.238
0.130
0.138
0.089
-0.027-0.004
0.168
0.193
0.188
0.007
0.119

Source: Nojima et al. (2002).

behavior to classify risk-reducing information.

evaluation information of consumers, and evaluation

Principal component analysis was done with theinformation in real world.
The first principal component shows thatabove-mentioned data of consumers’ valuation of

consumer use detailed information or evaluationrisk-reducing information.
When the principal ingredient was analyzed

information before purchase. In addition, evaluation

after standardization of data, the characteristic value

information is subdivided to three by the subject

to each element became 5.124, 2.251, 1.187, 0.986,

who gives the evaluation. The second principal

0.870, and 0.735. Table 2 shows the element matrix

component shows evaluation on the mass media, andafter the varimax rotation of the first-fourth element.

the third principal ingredient shows information on

We named each element; detailed information,

the evaluation which other consumers gave, and theevaluation information of experts and mass media,

fourth principal ingredient shows evaluation in the30

Information on Websites and Perceived Risk in Online Transactionsof experts and mass media, evaluation information ofreal world.
In the analysis of descriptive statistics, there

consumers, and evaluation information in real world.

a

four

Detailed information such as stock management,

information, stock situation/delivery method anddelivery method and complaint treatment aredelivery date/privacy policy/FAQ, which fall in

distinguished clearly from evaluation information

detailed information. These are information on theand put on emphasis by consumers.

wastendency

thatconsumers

value

processes of the delivery and the payment. This

This classification can be explained by the

analysis shows that valuation of transaction processaspect of who evaluate goods quality and shop

differ from the evaluation of the goods and the shop

sincerity. Detailed information means consumers

in consumer decision making, thus we need anotherevaluate goods and shops by themselves, evaluation

kind of information. Detailed information online

information of experts and mass media means

retailers announce are important for consumers whenevaluation by third parties of authority, evaluation

they are going to purchase, though the quality of

information of consumers means evaluation by othergoods and uneasiness concerning sincerity in the

consumers, and evaluation information in real worldshop can be solved by evaluation information bymeans brand in real world. This classification fromothers. Not only their brand in the real world but thethe standpoint of consumers will make the analysis

fact they offer detailed information may result in

on information on the web operationable and willclick & mortar companies’ advantage.

show the effective way of offering information to
reduce perceived risk in the information flood age.

6. Discussion

We conclude that it is important for online

We try to operationalize contents on online retailers

retailers to select information which agrees withwebsites by enumerating 15 information that reduce

consumer’s information processing process so as toconsumer’s perceived risks. And we named thesesuppress the load of consumer’s information

information “risk-reducing information”.

processing ability. Further studies are needed to
examine

The result from which stock management,

which

informationisselectedinconsideration of consumer’s attribute.

delivery method, and complaint treatment are valuedby consumers is not only the problem of the resourceof the online shop and the real store, which has been

Referncesreferred in the prior theory, but also the problem of

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