Perceived Purchase Risk in the Technological Goods Purchase Context: An Instrument Development and Validation

Abstract

Each purchase decision is most likely to be a risky decision. Woodside and DeLozier (1976) proposed that consumer purchase-related behaviors correspond to the perceived level of risk in the purchase. Therefore, understanding consumer’s perceived purchase risk is paramount for marketers –especially marketers of high risk products. This study intends to develop a valid and reliable instrument in measuring consumer’s perceived purchase risk using the concept of perceived risk by Peter and Ryan (1976). This study does not intend to infer conclusions regarding the population of respondents used in the research, but only conclusions regarding the sample of items used in the instrument. The instrument was validated using two purchase context, smartphone and netbook purchase. An item is considered valid only if it tested valid in both contexts. The nomological validity of the instrument was tested using Confirmatory factor analysis as the primary method of analysis. Correlations between instruments were also tested to analyze convergent and concurrent validity of the instrument. This study employs LISREL for WINDOWS 8.51 Full Version (Jőreskog and Sőrbom, 2001) as software used for the analysis. The result of this study is that all instrument used in the study have good nomological validity. However, some item were found to be not valid in at least one purchase context, thus was excluded from the measurement model. The newly developed instrument has better convergent validity, even though with slightly weaker concurrent validity than existing instrument.