Effect of Product Return Policy on Consumer’s Risk Perception, Store Image, and Store Patronage: A Causal Investigation (Abstract)

Abstract

This study investigates the interaction effects of product return policy and perceived product price and quality on purchase risk, store image, and store patronage. Using Warranty theory, this study argues that a consumer’s perception of product price and quality interacts with return policy in driving down the risk of purchase, thereby increasing image of the store and patronage intention. Using an experiment design, this study finds significant support for the prediction that lenient return policy and quality perception interact with each other to influence store image and patronage intention. In addition, results show support for the prediction that the interacting effect of return policy and product quality on patronage intention is mediated by risk perception. Theoretical and managerial implications of the findings are also provided.