An investigation of risk propensity and the risk handling process in industrial marketing

A considerable body of literature has emerged suggesting that perceived risk and the risk reduction behavior are important in the industrial vendor selection process. Yet, relatively few studies have been published concerning the relationship between risk propensity and the risk handling process of industrial purchasing professionals in a comprehensive manner.

The purposes of this study are to better understand risk propensity and the risk handling process of industrial purchasing professionals, and to propose a model that would guide future research on risk, especially in the industrial marketing area. The proposed model integrates risk propensity, factors affecting risk propensity, the risk handling process, and factors influencing the risk handling process.

Data was collected through a mail survey which collected data from a national sample of the purchasing professionals in the chemical industry. The data collected was analyzed to examine the relationships between (1) risk propensity and the risk handling process, (2) the risk handling process and the supplier related factors influencing the risk handling process, and (3) correlates of risk propensity.

The results indicated that involvement and source loyalty were better discriminators among those groups classified based on the employment of risk handling strategies. Perceived image and source credibility, however, turned to be insignificant discriminators.

There existed significant relationships between perceived risk and the following supplier related factors: perceived image, source loyalty, and source credibility. No significant association could be found between perceived risk and involvement.

Only the number of years purchasing experience revealed a significant relationship with risk propensity. Quite possibly, the measurement of risk propensity might invalidate the role of risk propensity in the proposed model.

The information provided from this study can be beneficial to both practitioners and academicians that have an interest in either the theoretical foundations which were developed, or the application of perceived risk and the risk handling process.