By Francis Morris,2014-06-11 09:25
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    The importance of trust in e-business has been widely touted by

    practitioners and academicians alike (Jarvenpaa; Heil and Yovovic). Even if trust has been traditionally associated with successful buyerseller relationships ( Barney; Bromiley; Doney; Geyskens and Zaheer), trust has been recently regarded as the foundation of the digital economy ( Keen and Stewart). The e-business environment is notably characterized by (a)

    the impersonal nature of the online environment, (b) the extensive use

    of communication technology as opposed to face-to-face transactions, (c)

    the implicit uncertainty of using an open technological infrastructure

    for transactions, and (d) the newness of the transaction medium. Given

    these attributes, the digital economy resembles the environment where

    institutional trust would be particularly important by creating the need

    to certify the trustworthiness of business partners ( Zucker, 1986). Following McKnight et al. (1998), this paper attempts to shed light on

    trust formation in online buyerseller relationships by examining how

    firms engender trust by employing the institutional structures available

    in online B2B marketplace

    While trust is likely to play a major role in the e-business environment,

    trust in the digital economy seldom complies with the traditional view

    of dyadic trust that the academic literature has focused (Doney and Zaheer). Given the new context of most online interorganizational

    exchanges, the nature of buyersupplier relationships is expected to

    undergo some significant changes ( Sproull et al., 1997). Since an increasingly large number of buyer organizations conduct business with

    many new, even anonymous sellers, the dyadic view of familiarity trust

    does not readily correspond to the reality of the digital economy ( Shapiro,

    1987). In fact, Geyskens et al. (1998) urge future research to go beyond

    conventional dyadic relationships and examine the broader context of

    buyersupplier relationships. This study investigates the target of

interorganizational trust as the population of sellers participating in

    an online B2B marketplace. This view is theoretically appealing in the

    sense that trust within this context has its primary source in

    institutional structures and not in familiarity or similarity with

    specific sellers. Since online B2B marketplaces resemble a networked

    community of organizations that are governed by specific structures and

    policies, this study contributes to the interorganizational trust

    literature by examining a unique set of trust antecedents that arise from

    institutional structures in online networks. From an empirical

    perspective, this study provides experiential support to the theoretical

    work of McKnight and McKnight on initial trust formation. The managerial

    contribution comes from the study's results on the relative effectiveness

    of several trust-building institutional structures that could help the

    design of structural assurances in online B2B marketplaces.

    Online B2B marketplaces have received a considerable attention in

    e-business (Bakos; Palmer and Sarkar) since an increasingly large number

    of transactions occur over their technology platforms. Forrester Research

    ( predicts that transactions through these B2B marketplaces will reach $2.7 trillion in 2004 (Blackmon, 2000). Online

    B2B marketplaces are virtual networked organizational forms ( Pavlou and

    El Sawy, 2002), which provide infrastructure technologies and value-added services to facilitate industrial buyerseller relationships ( Hempel

    and Kwong, 2001). As many interfirm exchange relationships take place online, it is important to theoretically and empirically examine the role

    of these B2B marketplaces on instituting trust among their participants.

    From a managerial perspective, the design of online B2B marketplaces could

    utilize the findings of this study to improve their trust-building

    structural mechanisms to promote a trustworthy trading environment as a


While trust has generally been studied from the perspective of e-commerce

    adoption (Pavlou and Pavlou), this study focuses on ongoing online

    relationship building . Toward this end, this study aims to shed light

    on the role and nature of institutional trust in online industrial

    buyerseller relationships, by providing theoretical insights and

    empirical findings on the following research questions: (1) What is the

    role of institution-based trust in industrial buyerseller

    relationships? (2) What is the role of online B2B marketplaces and the

    perceptual effectiveness of their institutional structures? (3) What is

    the relationship among institution-based trust, interorganizational

    trust, and trusting?

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