Determinants and consequences of trust in online environment

Abstract

The fundamental role of trust in numerous business transactions, and especially in customer relationship management, has been widely acknowledged by both industry and academia. The establishment of trust is a necessary condition for the long-term success of any business enterprise. This is particularly true in the Internet environment, where rapid technological advances accompany the rise and fall of many companies in a relatively short period of time. Previous studies have emphasized the significance of trust in Internet strategies; virtual experiences created by online systems eliminate or minimize face-to-face contact, but human trust is still essential for the experience to be effective. However, while the importance of trust in online environments is recognized, the determinants and consequences of customer trust have not been systematically investigated across a variety of industries, particularly in B2C context. This research is designed to investigate consumer perceptions of trust and the role of trust in consumer behavior in e-Business environments. It examines the following key research questions: What exactly is online customer trust? How is online trust different from offline trust? How does online trust affect customer behavior on a website? What are the antecedents and consequences of online trust? To address these questions, a model is developed that links consumer perceptions of website characteristics to perceptions of overall trust in a website, and perceptions of trust to consumer behavior related to the website. The proposed model identifies a number of factors that drive online trust, shows how website cues and online trust shape customer decision process, and identifies special role of online trust as a mediator in the link between website characteristics and consumer behavior. A large-scale empirical study is presented that applies this model across a variety of websites in various industries, using a structural equation modeling approach (LISREL), coupled with application of moderator/mediator analysis techniques. A holdout sample is utilized to test the validity of the model. Managerial implications for successful Internet strategies, incorporating appropriate usage of different website trust cues for different categories of customers, are presented.