Aprevalent assumption in the literature is that trust and risk are always relevant in online marketplaces, and that there is always a need to build trust and reduce risk irrespective of context. Challenging this assumption, this study seeks to identify the boundaries of the effects of trust and risk on transaction activity in the context of institutional structures in online marketplaces. The perceived effectiveness of institutional structures (PEIS), defined as the extent buyers believe that appropriate conditions are in place to facilitate transactions with sellers, sets the boundaries of trust and risk by moderating their effects on transaction activity in a quadratic (inverted-U) fashion. Specifically, at the lower boundary condition of PEIS (among buyers who believe institutional structures are ineffective), the high situational uncertainty they perceive should make these buyers unwilling to become vulnerable to sellers, thus rendering trust and risk immaterial to their decision making. Trust and risk should also be immaterial at the higher boundary condition of PEIS (among buyers who believe institutional structures are very effective), because the insufficient situational uncertainty makes trust and risk irrelevant to these buyers' decision making because of a lack of vulnerability. Only between these two boundary conditions (among buyers who perceive moderate levels of PEIS), and thus a moderate degree of situational uncertainty and vulnerability in the marketplace, should trust and risk have a significant effect on transaction activity. Data from 398 buyers on eBay's and Amazon's online marketplaces support the quadratic moderating role of PEIS on the effect of risk on transaction activity, but not on the effect of trust. Theoretical and practical implications on specifying the boundaries of the effects of trust and risk and understanding the direct and moderating role of institutional structures are discussed.
This article discusses the role of commonly used neurophysiological tools such as psychophysiological tools (e.g., EKG, eye tracking) and neuroimaging tools (e.g., fMRI, EEG) in Information Systems research. There is heated interest now in the social sciences in capturing presumably objective data directly from the human body, and this interest in neurophysiological tools has also been gaining momentum in IS research (termed NeuroIS). This article first reviews commonly used neurophysiological tools with regard to their major strengths and weaknesses. It then discusses several promising application areas and research questions where IS researchers can benefit from the use of neurophysiological data. The proposed research topics are presented within three thematic areas: (1) development and use of systems, (2) IS strategy and business outcomes, and (3) group work and decision support. The article concludes with recommendations on how to use neurophysiological tools in IS research along with a set of practical suggestions for developing a research agenda for NeuroIS and establishing NeuroIS as a viable subfield in the IS literature.
The article presents a guide for the use of structural equation modeling (SEM) methods in scholarly writing. The author discusses the advantages of SEM, then describes how to choose an SEM technique. Several selection criteria are covered including exploratory and confirmative research objectives, lack of a robust theory base, a desire to avoid bias in estimations, and formative scales in the research model. Also provided is a discussion of the minimal statistics that should be presented in order to allow readers to evaluate conclusions an author draws from data.
An introduction to the issue is presented in which the editors discuss the topic of novel aspects of trust in under-researched information system contexts, the article "What Does the Brain Tell Us about Trust and Distrust: Evidence from a Functional Neuroimaging Study" by Dimoka, and the article "Are There Neural Gender Differences in Online Trust?," by Riecil, Hubert, and Kenning.
This article discusses various published reports within the issue, including one by Dan J. Kim on culture and trust and another by Dianne Cyr on culture and web site design.
We present an agenda for the future research that has the potential to extend the conceptual foundations of trust in online environments and to improve the practice in the domain. The agenda draws on the previous work on trust, the papers included in this Special Issue, and our perspective on the state of the literature. This agenda is structured into four components--nature and role of trust, moderators of trust, antecedents of trust, and empirical methods for examining trust.
In a world that is flat, where all clients and providers can easily transact with one another, offshoring represents the proposition that information technology providers from low-wage nations can now underbid providers from high-wage nations and win contracts. We examined a particularly flat "world"--an online programming marketplace--and found that this profound tilt to low-wage nations is overstated. We analyzed the entire history of transactions at one of the major online programming marketplaces, a marketplace for outsourcing small IT projects. The data spanned 38 months and included over 263,000 bids by over 31,000 providers from 70 countries on over 20,000 small IT projects requested by over 7,900 clients from 59 countries. Contrary to the world-is-flat proposition, the data in this particular site show some client preference for domestic providers. However, the largest group of clients, the American clients, are a marked exception to clients in the rest of the world: they give relatively less preference to domestic providers. In a sense, the American clients have a higher preference for offshore providers. Among non-American clients the preference for domestic providers is mitigated when both client and provider are from an English-speaking nation. Relative bid price, often very low already, also determines the winning bid, as does the ratio of purchasing power parity (PPP) between the country of the client and the country of the provider. Nonetheless, the strongest determinant of the winning bid is client loyalty: the client gives very strong preference to a provider with whom there has been a previous relationship, regardless of whether the provider is offshore or domestic.
This study examines the role of business familiarity in determining how software development outsourcing projects are managed and priced to address risks. Increased business familiarity suggests both more prior knowledge, and hence reduced adverse selection risk, and increased implied trust about future behavior, and hence implied reduced moral hazard risk. Preferring high business familiarity partners may also alleviate concerns about incomplete contracts. By reducing these risks, higher business familiarity is hypothesized to be associated with higher priced projects, reduced penalties, and an increased tendency to contract on a time and materials rather than a fixed price basis. These hypotheses were examined with objective contractual legal data from contracts made by a leading international bank. Integrating trust theory into agency theory and into incomplete contract theory and examining unique contract data, the contribution of the study is to show that the premium on business familiarity and the trust it implies is not in directly affecting price, but, rather, in changing how the relationship is managed toward a tendency to sign time and materials contracts. Implications about integrating trust into agency theory and incomplete contract theory, as well as implications regarding trust premiums and software development outsourcing, are discussed.
This study examines the nature and role of Psychological Contract Violation (PCV) in online marketplaces, a critical factor that has been largely overlooked by previous research. Applied to buyer-seller relationships, PCV is defined as a buyer's perception of having being treated wrongly regarding the terms of an exchange agreement with an individual seller. PCV with individual sellers is proposed as a formative first-order construct driven by the occurrence of fraud, product misrepresentation, contract default, delivery delay, and failure to follow product guarantees and payment policies. PCV with an individual seller is proposed to prompt a generalized perception of PCV with the entire community of sellers in a marketplace. PCV with the community of sellers is hypothesized to negatively affect buyer transaction behavior in a marketplace by directly impacting transaction intentions, price premiums, trust, perceived risk, and the perceived effectiveness of institutional structures. PCV is also hypothesized to act as a moderator, transforming the buyers' initial trust-based mindset to one more centered on perceived risk. Finally, PCV is hypothesized to attenuate the positive impact of trust on transaction intentions, while reinforcing the negative impact of perceived risk on transaction intentions. It is also proposed to attenuate the impact of the perceived effectiveness of institutional structures on trust, while strengthening its negative effect on perceived risk. As a means of preventing PCV, the buyers' positive experience and the sellers' favorable past performance are hypothesized to make PCV with the community of sellers less likely. A combination of primary and secondary longitudinal data from 404 buyers in eBay's and Amazon's online auctions support the proposed hypotheses, validating PCV as a central element of buyer-seller relationships in online marketplaces. Interestingly, ex post facto results show that buyers with higher perceptions of PCV with the community of sellers are less likely to experience PCV with an individual seller in the future. Implications for buyer-seller relationships in online marketplaces and the PCV literature are discussed. Also discussed is how the increasing number of buyers who experience PCV in online marketplaces extends the literature that has been largely developed based on buyers who had not experienced PCV.
Institution-based trust is a buyer's perception that effective third-party institutional mechanisms are in place to facilitate transaction success. This paper integrates sociological and economic theories about institution-based trust to propose that the perceived effectiveness of three IT-enabled institutional mechanisms--specifically feedback mechanisms, third-party escrow services, and credit card guarantees--engender buyer trust in the community of online auction sellers. Trust in the marketplace intermediary that provides the overarching institutional context also builds buyer's trust in the community of sellers. In addition, buyers' trust in the community of sellers (as a group) facilitates online transactions by reducing perceived risk. Data collected from 274 buyers in Amazon's online auction marketplace provide support for the proposed structural model. Longitudinal data collected a year later show that transaction intentions are correlated with actual and self-reported buyer behavior. The study shows that the perceived effectiveness of institutional mechanisms encompasses both "weak" (market-driven)and "strong" (legally binding) mechanisms. These mechanisms engender trust, not only in a few reputable sellers, but also in the entire community of sellers, which contributes to an effective online marketplace. The results thus help explain why, despite the inherent uncertainty that arises when buyers and sellers are separated in time and in space, online marketplaces are proliferating. Implications for theory are discussed, and suggestions for future research on improving IT-enabled trust-building mechanisms are suggested.
To a large extent, trust determines expected utility derived from business transactions where the trusting party is dependent upon others, but lacks control over them. In many instances, this typifies the relationship between clients and an enterprise resource planning (ERP) customization vendor. This exploratory study examines how trust is built during an ERP implementation, and the relative weight of this trust compared with the perceived qualities of the implemented ERP itself in determining clients' assessment that the business relationship with the vendor is worthwhile. The data, collected from companies that were involved in the process of implementing a new ERP with the on-site assistance of a certain customization vendor, show that all three trust antecedents suggested by Zucker's seminal study of trust--process-based, characteristic-based, and institution-based mechanisms--contribute significantly to client trust. The data also show that client trust in this customization vendor and the perceived usefulness of the ERP both contribute to client assessment that their business relationship with the vendor is worthwhile, showing that both getting the job done and creating a trust-based relationship contribute to this assessment. The implications of the importance of creating trust in ERP implementation and the means of doing how to do so are discussed.
A separate and distinct interaction with both the actual e-vendor and with its IT Web site interface is at the heart of online shopping. Previous research has established, accordingly, that online purchase intentions are the product of both consumer assessments of the IT itself--specifically its perceived usefulness and ease-of-use (TAM)--and trust in the e-vendor. But these perspectives have been examined independently by IS researchers. Integrating these two perspectives and examining the factors that build online trust in an environment that lacks the typical human interaction that often leads to trust in other circumstances advances our understanding of these constructs and their linkages to behavior. Our research on experienced repeat online shoppers shows that consumer trust is as important to online commerce as the widely accepted TAM use-antecedents, perceived usefulness and perceived ease of use. Together these variable sets explain a considerable proportion of variance in intended behavior. The study also provides evidence that online trust is built through (1) a belief that the vendor has nothing to gain by cheating, (2) a belief that there are safety mechanisms built into the Web site, and (3) by having a typical interface, (4) one that is, moreover, easy to use.
Customer Relationship Management (CRM) systems require extensive configuration during which users come into extensive contact with the technical implementation team. Previous research examining other Enterprise Resource Planning (ERP) modules has shown that user perception of the responsiveness of such teams, as an indicator of a possible social exchange, is significantly associated with an increased favorable assessment of the new system and ultimately its adoption, the reason being that perceived responsiveness creates a constructive social exchange. However, previous research, using survey data alone, did not examine causation. The objective of this study is to examine, using a quasi-experimental design, whether different degrees of actual responsiveness in different sites during CRM implementation result in significant differences in the users' favorable assessment of the correctness and ultimately their approval of a new CRM. The data support these hypotheses, but show that the downstream effects of actual responsiveness are mediated by perceived responsiveness. Implications concerning the social exchange relationship during CRM adoption are discussed.
As a retrospective on the Straub article, this research seeks to determine if and how the field has advanced in instrument validation. As evidence of the change, we coded positivist, quantitative research articles in five major journals over a recent three year period for use of validation techniques. Findings suggest that the field has advanced in many areas, but, overall, it appears that a majority of published studies are still not sufficiently validating their instruments. Based on these findings, approaches are suggested for reinvigorating the quest for validation in IS research via content/construct validity, reliability, and manipulation validity.Over 10 years ago, the issue of whether IS researchers were rigorously validating their quantitative, positivist instruments was raised (Straub 1989). In the years that have passed since that time, the profession has undergone many changes. Novel technologies and management trends have come and gone. New professional societies have been formed and grown in prominence and new demands have been placed on the field's research and teaching obligations. But the issue of rigor in IS research has persisted throughout all such changes. Without solid validation of the instruments that are used to gather data upon which findings and interpretations are based, the very scientific basis of positivist, quantitative research is threatened. As a retrospective on the Straub article, this research seeks to determine if and how the field has advanced in instrument validation. As evidence of the change, we coded positivist, quantitative research articles in five major journals over a recent three year period for use of validation techniques. Findings suggest that the field has advanced in many areas, but, overall, it appears that a majority of published studies are still not sufficiently validating their instruments. Based on these findings, approaches are suggested for reinvigorating the quest for validation in IS research via content
This study extends the TAM model (Davis 1989) and the SPIR addendum (Straub 1994) by adding gender to an IT diffusion model. The technology acceptance model (TAM) has been widely studied in IS research as an explanation of the use of information systems across IS types and nationalities. While this line of research has found significant cross-cultural differences, it has ignored the effects of gender, even though in socio-linguistic research, gender is a fundamental aspect of culture. Indeed, socio-linguistic research has shown that men tend to focus discourse on hierarchy and independence, while women focus on intimacy and solidarity. This literature provides a solid grounding for conceptual extensions to the IT diffusion research and the technology acceptance model. Testing gender differences that might relate to beliefs and use of computer-based media, this study sampled 392 female and male responses via a cross-sectional survey instrument. The sample drew from comparable groups of knowledge workers using e-mail systems in the airline industry in North America, Asia, and Europe. Study findings indicate that women and men differ in their perceptions but not use of e-mail. These findings suggest that researchers should include gender in IT diffusion models along with other cultural effects. Managers and co-workers, moreover, need to realize that the same mode of communication may be perceived differently by the sexes, suggesting that more favorable communications environments might be created, environments that take into account not only organizational contextual factors, but also the gender of users. The creation of these environments involves not only the actual deployment of communication media, but also organizational training on communications media.