Coastal Education & Research Foundation, Inc.

Network Transaction Cost Advantage and Its Effects on Shopping Intention in Coastal
Economic Zone
Author(s): Kefang Tao, Hanjie Xiao and Jiangeng Ye
Source: Journal of Coastal Research , SUMMER 2020, SPECIAL ISSUE NO. 103. Global Topics
and New Trends in Coastal Research: Port, Coastal and Ocean Engineering (SUMMER 2020),
pp. 60-64
Published by: Coastal Education & Research Foundation, Inc.

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 Journal of Coastal Research SI 103 60–64 Coconut Creek, Florida 2020

Network Transaction Cost Advantage and Its Effects on Shopping

Intention in Coastal Economic Zone
Kefang Tao†, Hanjie Xiao‡, and Jiangeng Ye§*

School of Tourism
†
Business School
‡
Faculty of Humanities and Social
§

Kunming University Huzhou University Science

Kunming 650214, China Huzhou 313000, China Yunnan Agriculture University www.cerf-jcr.org
Kunming 650201, China

ABSTRACT

Tao, K.; Xiao, H., and Ye, J., 2020. Network transaction cost advantage and its effects on shopping
intention in coastal economic zone. In: Yang, Y.; Mi, C.; Zhao, L., and Lam, S. (eds.), Global Topics and
New Trends in Coastal Research: Port, Coastal and Ocean Engineering. Journal of Coastal Research,
Special Issue No. 103, pp. 60–64. Coconut Creek (Florida), ISSN 0749-0208.

www.JCRonline.org A method of forecasting and diagnosing the causal relationship by combining PLS-SEM model and Bayesian
network is proposed. This method not only exerts the ability of PLS-SEM model to be proved by theory, but
also highlights the ability of Bayesian network to forecast and diagnosis and deal with nonlinear relationship,
which is beneficial to the development of management decision. Furthermore, the method is applied to study
the complex relationship between the cost of online shopping transaction and purchase intention. It clarifies
the change of consumers’ willingness to purchase when the transaction cost is in different states, and provides
the basis for the enterprise to formulate effective transaction cost management decision.

ADDITIONAL INDEX WORDS: Partial least squares, structural equation model, Bayesian network,
transaction cost, purchase intention.

INTRODUCTION by the quality of the scale, the subjective consciousness of the

Network retail transaction costs are an important factor that
affects the purchasing power of online consumers, and the basic
basis for consumers to choose consumption (Al-Debei, Akroush,
and Ashouri, 2015; Bilgihan and Gen, 2016). How to reduce
transaction costs, improve consumer purchasing intentions, and
promote the development of online business is an important issue
that the domestic and foreign scholars and electricians concerned
about (Bunduchi, 2005; Wu et al., 2014).
The early research is mainly based on theoretical analysis, such
as Bigelow and Argyres (2008), Neeraj and Ken (2006) made
qualitative comparison of shopping transactions cost difference
between the network retail industry and traditional based on
the transaction cost perspective; Wen, Prybutok, and Xu (2011)
studied the consumer behavior of consumer assumptions based
on the transaction cost perspective, which laid the foundation
for follow-up scholars to carry out empirical study of transaction
costs. The empirical study based on Structural Equation Model
(SEM) is the current hotspot, such as the study of Xi, Li, and
Tao (2013), Fang et al. (2014). This is mainly because SEM
is a model method to establish, estimate and test the causal
relationship model. However, SEM is based on the assumption
that the variables are subject to the normal distribution, and the
model is strictly dependent on the covariance matrix (Guo et al.,
2020). In practice, the quality of the sample data is difficult to
protect because the collection of measurement data is affected
DOI: 10.2112/SI103-013.1 received 11 August 2019; accepted in
revision 3 February 2020.
*Corresponding author: ake-1981@163.com
©
Coastal Education and Research Foundation, Inc. 2020
investigators and other factors, so the deviation caused by multiple
collinearity and non-normal distribution of the problem is easy
to occur (Dijkstra and Henseler, 2015), which greatly limits the
application of this method in the research of network consumer
behaviors.
MODEL AND METHODS
Methods
Partial Least Squares Method (PLS) is particularly suitable for
exploratory study of data that are difficult to obtain and the object
that has no specific role in the evaluate system (Sarstedt, Ringle,
and Smith, 2014). It can be seen that combining PLS and SEM
and constructing structural equation model (PLS-SEM model)
based on the least squares method can not only solve the problem
of measurement error, but also solve the variable non-normal
problem, which enhance the structural equation model empirical
ability and generality, but the PLS-SEM model is still poor in
predicting and diagnosing the relationship between variables.
Bayesian network (Bayesian network, BN) is particularly suitable
for the prediction of the relationship between variables, diagnosis
and treatment on non-linear relationship (Song, Chen, and Lu,
2013), and it lacks the interpretation and empirical ability of
the causal relationship between variables (Song and Lee, 2012).
Therefore, this paper proposes a method based on the combination
of PLS, SEM and BN to further analyze and forecast the impact
of network transaction cost on consumers’ purchasing intention
based from empirical perspective, and provide support for
enterprises to formulate price strategy decision. In view of this,
the ideas and the main steps of PLS-SEM-BN model construction
are as follows:

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 Network Transaction Cost Advantage and Its Effects on Shopping Intention in Coastal Economic Zone61

Step 1: Build the PLS-SEM model of the purchase intention
influencing factors of the network consumers according to the
PLS-SEM.
Step 2: Calculate the latent variable score of the PLS-SEM
model as the sample data for the BN model according to Ha’s
(2012) method. The biggest advantage of the Joreskog et al.
Method is that both the measurement error and the latent variable
score are calculated in the same covariance matrix.
Step 3: The latent variable path relationship determined by the
PLS-SEM model is used as the knot of the BN causal model.
Step 4: On the basis of Step 3, the Bayesian reasoning and
diagnosis of the purchase intention and its influencing factors are
carried out.
Conceptual Model Construction
Purchase frequency is an important measure of consumers’
purchase intention, specifically refers to the frequency that
consumers buy product on the network. The higher the frequency
of purchase means that the desire to buy is stronger. Based on the
above analysis, the PLS-SEM conceptual model of the relationship
between online shopping transaction costs and purchase intention
are shown in Figure 1.
According to Figure 1, the path assumes (Al-Debei, Akroush,
and Ashouri, 2015) are:
H1: Transaction cost has a reverse effect on the purchase
intention, that is, the higher the transaction costs of online
consumption that the online consumers perceived, the lower the
consumers’ purchase intention is;
H2: Uncertainty has a reverse effect on the purchase intention,
that is, the higher the uncertainty of online consumption that the
online consumers perceived, the lower the consumers’ purchase
intention is;
H3: The purchase frequency has a direct positive effect on the
purchase intention, that is, the higher the frequency of purchase
on the network, the higher the consumers’ purchase intention is;
H4: Uncertainty has a direct positive effect on transaction
costs, that is, the higher the uncertainty of online consumption
that the online consumers perceived, the higher the corresponding
transaction costs are;
H5: The purchase frequency has a reverse effect on the cost of
online shopping transactions, that is, the higher the frequency of
purchases by consumers on the Internet, the lower the transaction
costs perceived by consumers.
H6: The online purchase frequency of consumers has a reverse
effect on consumers’ uncertainty perception, that is, the higher the
frequency is, the lower the uncertainty is perceived by consumers.
RESULTS AND DISCUSSION
Empirical and Analysis of Model
(1) Exploratory Factor Analysis
The survey published a total of 708 questionnaires, 604
valid questionnaires (no missing data), so the effective rate
was 85.31%. Data validation was carried on data of valid
questionnaires. Validation shows the values of Cronbach’s Alpha
four latent variables (Bonett and Wrigh, 2014) were respectively
0.85, 0.79, 0.81 and 0.83, which indicated that the sample data
had good reliability and validity.In order to verify the validity of
the sample data, KMO measurements and Bartelett spherical tests
were performed on the sample data (Avkiran, 1994; Dziuban and
Shirkey, 1974). The results showed that the KMO values were
0.81> 0.80 and df = 120, p = 0, which indicated that the data were
suitable for factor analysis.Based on SPSS17.0 software and 1/3
survey data, factor analysis is carried on, the results are shown in
Table 1.
From the data shown in Table 1, the four common factors can
reflect more than 80% (Ferguson and Cox, 2007) information of
the original nine customer demand indicators, which means that
these four common factors can be used to describe more than 80%
needs of customers, and achieve the demand indicators of network
consumer dimension Reduction and screening.

Table 1. Factor analysis statistics table.

Common Factor Eigenvalues Variance (%) Cumulative Variance (%)

TC 4.238 36.363 36.363
Unc 2.587 23.518 59.881
PF 1.385 12.591 72.472
PI 1.021 9.281 81.753

Note: TC for Transaction Cost, Unc for Uncertainty, PF for Purchase Frequency, PI for Purchase Intention.

Uncertainty Uncertainty
H2 -0.379
H4
transaction H1 purchase -0.309 0.347 -0.287
H6 transaction purchase
cost intention
cost intention
H5 -0.214
H3
Purchase
frequency Purchase 0.552
frequency
Figure 1. Conceptual model of the relationship between transaction costs
and purchase intention. Figure 2. Empirical model of factors affecting purchase.

Journal of Coastal Research, Special Issue No. 103, 2020

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62 Tao, Xiao, and Ye

Table 2. Test results of the relationship between variables.

Latent Variable ← Latent Variable Estimates Standardized Estimates T value SD P Result

Purchase Intention ← Transaction Cost -0.267 -0.287 -6.212 0.046 0.000 support
Purchase Intention ← Uncertainty -0.249 -0.379 -5.648 0.067 0.000 support
Purchase Intention ← Purchase Frequency 0.211 0.552 10.455 0.053 0.000 support
Transaction Cost ← Purchase Frequenc -0.206 -0.214 -5.258 0.041 0.000 support
Transaction Costs ← Uncertainty 0.235 0.347 5.347 0.065 0.000 support
Uncertainty ← Purchase Frequency -0.152 -0.309 -3.848 0.080 0.000 support

Table 3. The prior probability of each latent variable.

Variable
Transaction Cost
TC Unc PF PI
P (H) 0.498 0.386 0.313 0.345
P (M) 0.309 0.422 0.212 0.206
P (L) 0.193 0.192 0.475 0.449

Note: TC for Transaction Cost, Unc for Uncertainty, PF for Purchase Frequency, PI for Purchase Intention.

Table 4. Bayesian reasoning under different transaction costs.

Transaction Transaction Frequency Uncertainty Purchase Intention

Cost P (H) P (M) P (L) P (H) P (M) P (L) P (H) P (M) P (L)

P (H) 0.155 0.236 0.609 0.547 0.344 0.109 0.135 0.340 0.625

P (M) 0.367 0.174 0.459 0.265 0.612 0.123 0.492 0.151 0.357

P (L) 0.637 0.215 0.148 0.165 0.319 0.576 0.652 0.202 0.146

Note: H for high, M for medium, L for low.

(2) Confirmatory Factor Analysis
SmartPLS software is used for parameter estimation and
hypothesis testing. The results show that the model is convergent
after 4 iterations, and the final empirical model is shown in
Figure 2, and the structural model and the path coefficients of the
measurement model are shown in Table 2.
It can be seen from Figure 2 that the study assumes of model
are scientific and reasonable, which presents the path relation of
the expected influencing factors of purchase intention and lays
the foundation for the construction of the follow-up Bayesian
network model.
BN Model of Transaction Cost and Purchase Intention
(1) Bayesian Reasoning
As can be seen from Figure 2, each node in the network
structure is a latent variable, and only a latent variable score is
required Bayesian inference and prediction can be performed. On
this basis, the Bayesian network simulation software Netica4.08
is used to calculate the prior probabilities of four nodes in the
network structure: transaction costs, uncertainties, purchase
frequency and purchase intention (Liu, 2018a, b). In order to
reduce the complexity of the operation process, the clustering
state of each node is divided into high, medium and low, and then
Netica Bayesian simulation software is used to calculate the prior
probability of each node (transaction cost, transaction frequency,
uncertainty and purchase intention), the results are shown in Table
3.
On the basis of Table 3, the conditional probability distribution
of each node is calculated by Netica 4.08. The calculated results
are shown in Table 4.
As shown in Table 4, when the transaction costs of online
shopping change as “high → medium → low”, the purchase
frequency and purchase intention show the exactly same
trend. Among them, the “high” probability of online shopping
purchase frequency and purchase intention increase, while the
“high” probability of uncertainty significantly gets smaller;
The “medium” probability of purchase frequency and purchase
intention become smaller first and become bigger later; The
probability of purchase frequency and the probability of “low”
purchase intention show a smaller trend, and the probability of
“low” uncertainty gets bigger.
(2) Bayesian Diagnosis
The purpose of Bayesian reasoning (diagnosis) is to analyze
the causes of “low purchase intention of consumers”, and to
provide scientific and reasonable decision-making management
for enterprises. When the uncertainty is in different states, the
probability of purchase frequency, transaction cost and purchase
intention are shown in Table 5.

Journal of Coastal Research, Special Issue No. 103, 2020

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 Network Transaction Cost Advantage and Its Effects on Shopping Intention in Coastal Economic Zone63
Table 5. Bayesian reasoning for purchase intention.
Transaction Cost
Uncertainty
P (High) P (Medium) P (Low) P (High)
High 0.673 0.294 0.033 0.105
Medium 0.519 0.312 0.169 0.362
Low 0.100 0.332 0.568 0.623
As shown in Table 5, when the uncertainty changes like “high
→ medium → low”, the probability of “high” transaction cost get
lower, and the probability of “high” purchase frequency and “high”
purchase intention gets higher; The probability of “medium” and
“low” transaction costs tends to increase, and the probability of
purchase frequency the “medium” purchase intention get higher
first and then get smaller, and the probability of “low” becomes
smaller. Table 5 also shows that when the transaction cost is
controlled in the “low” state, the consumers’ purchase intention
to participate in online shopping will be significantly enhanced.
In addition, when the enterprise discovers that the purchase
frequency and uncertainty change, the Bayesian network can infer
the state of the transaction cost, and provide the decision basis for
the effective control and management of transaction cost.
CONCLUSION
The complex relationship between the network consumers’
purchase intention and the transaction cost and how to effectively
control the transaction cost in the enterprise are the important
issues that the network retail industry and academia pay attention
to. In this paper, by combining PLS-SEM with Bayesian network
and based on the PLS-SEM model, the Bayesian network model
of transaction cost and purchase intention is established, and
the complex relationship between transaction cost and purchase
intention is effectively predicted and diagnosed. This method
combines the advantages of PLS-SEM model and BN model,
which not only exert the empirical ability of PLS-SEM model
and determine the nodes and relationship between network nodes
for Bayesian network model, but also highlights the BN model’s
ability to the nonlinear relationship between Variables, so the
prediction and diagnosis of the complex relationship between the
transaction cost and purchase intention are achieved. The results
of this research will help the online retail enterprises further
understand the impact mechanism of transaction cost on the
purchase intention, and help enterprises to develop more effective
transaction cost control and management program. The proposed
method can also be applied to other areas, such as the complex
relationship between customer satisfaction and engineering
characteristics, the impact evaluation of low-carbon supply chain
and management.
ACKNOWLEDGMENTS
The authors acknowledge the Natural Science Fund Project of
Huzhou City (No. 2018YZ13), Zhejiang Philosophy & Social
Sciences Planning Projects (No. 19NDQN312YB).
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Journal of Coastal Research, Special Issue No. 103, 2020
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