Online stock trading (OST) is a growing phenomenon across countries, yet there is a sparse literature focusing on the negative utilities (risks) that causing the low adoption. Drawing from perceived risk theory, this article attempts to fill the gap by identifying the influential risk factors that impede the acceptance of OST in a developing country, Pakistan. The study also applies the Hofstede cultural theory to ascertain the effects of cultural moderators on investors' usage behavior (UB). Based on structured questionnaire, 443 valid responses were received from current and potential investors. The model was tested using structural equation modeling through Smart-PLS. The results validate a negative and significant relationship between risk dimensions and investors' behavioral intentions (BI) to use OST. Especially time, financial, performance, privacy and opportunity cost risks are found having a negative impact on investors' BI. Moreover, the study finds that cultural dimensions, collectivism, and uncertainty avoidance, moderate the relationship between BI and UB.
Top1. Introduction
Today, the Internet proliferation has radically changed the operations of brokerage houses and has enabled them to provide online services to their clients for performing seamless transactions irrespective of time and location (Ramayah, Rouibah, Gopi, & Rangel, 2009). Internet stock trading is the provision of online access by the brokerage houses to their client to execute buy or sell stock orders on the brokerage’s Internet-based proprietary trading platforms (Carlos Roca, José García, & José de la Vega, 2009). High liquidity of financial assets, low transactions fees, faster transactions, better information transparency are the direct advantages whereas checking stock quotations, receiving real-time market news, performing transactions from anywhere and anytime are the indirect benefits that investors can gain from online stock trading (Guiso & Sodini, 2013; Lee-Partridge & Ho, 2003). The provision of online services to clients is also advantageous for brokers as it increases revenue by reducing operational expenses (Yiu, Grant, & Edgar, 2007). Traditional settings require excess staff and physical offices for smooth business operations (Cheng, Lam, & Yeung, 2006).
Despite the multiple advantages, high-speed digital gadgets/computers, and Internet access, the online stock trading is still in its infancy (Tai & Ku, 2013). In this respect, scholars have identified different factors by using the dominant information technology models1 that contribute to investors’ decision regarding adoption of online stock trading. For instance, social factors, facilitating conditions, information quality, compatibility, complexity, relative advantages (Lee-Partridge & Ho, 2003) perceived security, perceived privacy, perceived trust, usefulness, ease of use (Carlos Roca et al., 2009) injunctive norms, descriptive norms (Ramayah et al., 2009). However, the literature reveals a limited focus on reflecting the inhibitors (perceived risks) of online stock trading. There are fewer studies that examined perceived risk in the context of online stock trading adoption (Lee, 2009b; Tai & Ku, 2013). These studies used perceived risk as a single construct or with some specific dimensions. The current literature on technology acceptance divides risk into various dimensions, for example financial, time, physical, privacy, psychological, opportunity cost risks etc. (Featherman & Pavlou, 2003; Kassim & Ramayah, 2015; Martins, Oliveira, & Popovič, 2014). Such dimensions are still unexplored in the context of online stock adoption, especially in developing countries. In this regard, the perceived risk theory (PRT), i.e., the users’ behavioral perception of risks, can be appropriately used to explain the acceptance process. In addition to PRT, this study uses the cultural theory of Geert Hofstede (1980) for evaluating the moderation effects of cultural dimensions on the usage behavior of online stock trading adoption.