Consumer Trust In an Internet Store

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1 Consumer Trust In an Internet Store Sirkka L. Jarvenpaa, Noam Tractinsky and Michael Vitale Presented By Vandana Janeja

2 Trust Consumer trust as a barrier to Internet s potential Trust: Trustor s expectations about motives and behaviors of a trustee Is trust required before a consumer goes to a store What evokes a consumer s trust in an Internet store Need for Trust: Uncertainty, vulnerability, dependence The spiral of trust When consumer sees some investment on the part of the merchant Trustor(Consumer) Trust Trustee(Merchant/store)

trust in an Internet store Need for Trust: Uncertainty, vulnerability, dependence The spiral of trust

3 Trust in Buyer-Seller Relationship

4 Voluntary relationship between consumer and merchant

5 Theories of Social Relationship Exchange Theory Associations on the basis of trust Individuals Avoid exchange relationships that bring a loss Balance Theory Positive attitude with prior associations Theory of reasoned action and planned behavior Behavior influenced by behavioral intention and intentions determined by attitudes Attitudes mediate between beliefs and intention

with prior associations Theory of reasoned action and planned behavior Behavior influenced by

6 Factors to evoke Trust Size of the store H1: A consumer s trust in an Internet store is positively related to the store s perceived size. Reputation of the store H2: A consumer s trust in an Internet store is positively related to the store s perceived reputation. H3: An Internet store s perceived size is related to the store s perceived reputation.

Reputation of the store H2: A consumer s trust in an Internet store is positively

7 Risk Perception and Attitudes H4A: Higher consumer trust towards an Internet store will reduce the perceived risks associated with buying from that store. H4B: Higher consumer trust towards an Internet store will generate more favorable attitudes towards shopping at the store. H4C: The lower the consumer s perceived risk associated with buying from an Internet store, the more favorable the consumer s attitudes towards shopping at that store.

H4B: Higher consumer trust towards an Internet store will generate more favorable attitudes towards shopping at

8 Purchase Intentions H5A: Favorable attitudes towards an Internet store will increase the consumer s willingness to purchase from that Internet store. H5B: Reduced perceived risks associated with buying from an Internet store will increase a consumer s willingness to purchase from that Internet store.

H5B: Reduced perceived risks associated with buying from an Internet store

9 Control Variables Control Variables Factors affecting attitudes and willingness of consumers to shop in an Internet store. The antecedents and consequences of consumer trust in an Internet store, A consumer s past experience on the Internet in general, Shopping on the Internet specifically The predisposition towards computers in general In traditional retail channels, shopping orientation(catalog/in person) Consumer s general risk attitudes towards the Internet. The frequency of Internet usage, The frequency of Internet shopping, Shopping enjoyment in general, Attitudes towards computers, Past direct shopping experience (e.g., catalog and TV shopping), Web-shopping risk attitudes.

predisposition towards computers in general In traditional retail channels, shopping orientation(catalog/in person) Consumer s general risk attitudes towards the Internet.

10 Methodology Undergraduate and MBA students in Australia Group One: 120 students Supervised survey in lab sessions Pentium workstations, 17 inch monitors US$7 for 2hrs, Overall $100 prize Group two: 64 students Voluntarily completing the activities in E-commerce courses At home or University labs No pay Total 184 participants

2hrs, Overall $100 prize Group two: 64 students Voluntarily completing the

13 Experimental Tasks Selecting and buying a book as a gift for a friend Buying a specified book for a course Planning a holiday trip to Helsinki, Finland, Planning a work-related trip to Sydney, Australia. Perception of Size and reputation: own impressions and summary pages provided

Helsinki, Finland, Planning a work-related trip to Sydney, Australia.

15 Procedures

16 Constructs Attitudes towards a Store Willingness to buy Risk Perception Shopping Enjoyment Attitudes towards Computers Direct Shopping Experience Web-Shopping Risk Attitudes

17 Measures Construct validity of model s scale measured using Confirmatory factor analysis 6 common fit indices and their model values

18 Correlations Correlations among the control variables(cv) Correlations among the model variables(mv) Correlation among the CVs and between the MVs and CV is low Strong correlations among the model s variables.

19 Ctrl Vars Amazon Finnair model Vars

20 Results: Preferences

21 Results: Preferences

22 Results: Preferences

23 Results: Preferences

24 Results: Testing the Structural Model Test 1: model s appropriateness to both book and travel sites Test 2: Testing for equivalence of path coefficients Test 3:Testing for partial equivalence of path coefficients

25 Test 1: model s appropriateness to both book and travel sites 578 evaluations of bookstore sites 458 evaluations of travel sites Chi square statistic : DF=192 Fit indices: within the recommended guidelines, indicating tha model fits for both types of sites

26 Test 1: model s appropriateness to both book and travel sites

27 Test 2: Testing for equivalence of path coefficients Testing if the path coefficients in the model are same for both store types Model tested under the constraint that both data fit the path coefficients equally If not there will be a significant decrease in the chi-square statistic New model s?² = DF=199 Difference in first and second?²= =17.42 Difference is significant at 0.01 level(?²=17.42, df=7) Despite the acceptable values of the fit indices: the path coefficients are not equal for the data subsets of the two types of sites

28 Test 3:Testing for partial equivalence of path coefficients coefficients differ mainly on the paths that relate Perceived Reputation and Perceived Size to Trust. Perceived Reputation and Perceived Size to Trust estimated separately(test1) All other path coefficients were required to be the same (test2). New Chi-square was with df=197 The difference (first-new)=8.82 with df=5, not significant at the 0.10 all fit indices were at least as good as those obtained under test 1

29 Var B B T Var T B T Var B Var T B T

30 Observations Results provide support for model Hypothesis hold for both types of web sites Perceived size and reputation affect trust differently based on type of store Large variability in participants perceptions of perceived size Less variability in assessment of store reputation Variability in trust across sites was smaller than variability in reputation and perceived size Presence of physical store enhanced trust in the internet store of the same merchant

32 Limitations Measures Conservative results: Participants background in CS Tasks were set up : Positive bias Only two retail domains: Books, travel

33 Implications Theoretical Effect of reputation on trust was much stronger than perceived size Presence of a physical store has an effect on trust in internet store Infrastructure or Internet related System trust Practical Claims on the web sites about size of store should be encouraged Reputation claims: in the form of consumer s, or creation of store under the umbrella of well reputed store

THE ONLINE CONSUMER TRUST CONSTRUCT: A WEB MERCHANT PRACTITIONER PERSPECTIVE

THE ONLINE CONSUMER TRUST CONSTRUCT: A WEB MERCHANT PRACTITIONER PERSPECTIVE Allen C. Johnston Mississippi State University [email protected] Merrill Warkentin Mississippi State University [email protected]