An Integrated Framework for the Conceptualization of Consumers' Perceived-Risk Processing

Abstract

Research on risk is built on a complex array of diverse and sometimes inconsistent definitions, constructs, models, and outcomes. This study examines various literatures to formulate an integrated framework for the conceptualization of perceived-risk processing. The framework specifies three phases (framing, assessment, and evaluation) and their accompanying outcomes of risk attention, perceived risk, and risk-taking propensity. Explicit linkages are specified between situational and individual characteristics. Perceived-risk evaluation is identified as conceptually distinct from assessment of perceived risk, and the construct of risk-taking propensity is separated from those of risk affinity and perceived risk. The framework further presents points of intersection between the literatures on perceived risk and the literatures on consumer decision-making, information search, and satisfaction. Finally, it serves as an anchor for framing future research to promote conceptual and methodological consistency, and to guide progress in directions that are consistent with some leading edge paradigms outside of marketing.

Are conservative approaches to new product selling a blessing in disguise?

“…We invest a lot of resources and time in away days, workshops, training, information meetings, drinks, exclusive trips, et cetera.M anagers expect that salespeople become less conservative because information lowers perceived risk through clarifying how the new product benefits customers and Bsignaling^the company's commitment to the new product (Erdem and Swait 1998). However, in accordance with perceived risk processing theory, we do not posit a direct but a moderating effect of new product information as it influences how employees act on their perceived risk dimensions (Conchar et al 2004). …”

“…We focus on conservative behavior, which entails conducting known courses of action before engaging in new and unknown activities when making decisions under risk. A useful lens for studying such behavior is provided by literature on perceived risk processing, which describes how individuals perceive risk and consequently make behavioral decisions (Conchar et al 2004). Risk reflects the extent to which there is uncertainty about realizing potentially significant and/or disappointing outcomes of decisions.…”

“…First, individual preferences toward risk are captured in self-confidence (Conchar et al 2004;Mitchell 1999), company tenure (Wang 2015), and past performance (Sitkin and Pablo 1992). These factors provide an individual with evidence from past or enduring abilities to overcome obstacles and therefore drive individuals to accept risks that others would avoid (Wiseman and Gomez-Mejia 1998).…”

“…These factors provide an individual with evidence from past or enduring abilities to overcome obstacles and therefore drive individuals to accept risks that others would avoid (Wiseman and Gomez-Mejia 1998). Second, people are more or less likely to take risk as a function of their past investments and resultant current asset levels; individuals with more favorable current assets are more likely to avoid risky choices (Conchar et al 2004). We thus consider a salesperson's pay scale and customer relationship quality (i.e., the salesperson's perceptions of his/her customers' trust in, satisfaction with, and commitment to him/her) to represent past investments and achievements within the company and its customer base, respectively.…”

“…In response we introduce the concept of conservative selling behavior (CSB) and build on perceived risk processing theory (Conchar et al 2004;Jacoby and Kaplan 1972) to investigate its antecedents and consequences. Because the process of dealing with perceived risk is inextricably linked with information processing (e.g., Conchar et al 2004;Dowling and Staelin 1994), we pay particular attention to the role of new product information provided to salespeople. We empirically substantiate that managers do not appreciate salespeople's conservatism, despite the fact that it proves to be an effective strategy to sell new products.…”