The effect of perceived financial risk on purchase intention in Pakistan

ABSTRACT

Purpose The purpose is to understand the fundamental mechanism of the consumer decision-making process and how perceived financial risk of search and experience goods influences electronic word-of-mouth adoption (e-WOMA) on social networking sites (SNSs), which will lead to purchase intention. Design/methodology/approach Drawing on information processing theory, the study conceptualizes a moderated mediation model to investigate the underlying influence of perceived financial risk and online social ties on e-WOMA and the subsequent effect on online purchase intention. Survey data from 275 individuals were analyzed through statistical tools using Statistical Package for the Social Sciences (SPSS). Findings The results revealed that e-WOMA mediates the effect of perceived financial risk of search and experience goods on online purchase intention. Strength of online social ties on SNSs positively moderates the electric word of mouth adoption for both the experience and search goods. Research limitations The limitation of this study was about the researcher's restrictions related to the length of the survey. Moreover, causal explanations can't be deduced as this is a cross-sectional study. Practical implications This research offers insight into the consumers that allow marketers to dive into the target market. Marketers should focus on social ties importance while selling products/services of markets online. Originality/value The study is novel in the context of an emerging economy to educate marketers on the product categorization of search goods and experience goods based on financial risk.