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A multitheoretical approach for solving trust problems in B2C e-commerce

Trust has been identified as a major barrier in online shopping, especially in the B2C e-commerce model. It has been studied for several years, but there is no indicator that a satisfactory solution for trust in online shopping has been achieved. A
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     Int. J. Networking and Virtual Organisations, Vol. 5, Nos. 3/4, 2008 369  Copyright © 2008 Inderscience Enterprises Ltd. A multitheoretical approach for solving trustproblems in B2C e-commerce Siddhi Pittayachawan*, Mohini Singhand Brian Corbitt School of Business Information TechnologyRMIT UniversityG.P.O. Box 2476V, Melbourne 3001Victoria, AustraliaE-mail:*Corresponding author Abstract: Trust has been identified as a major barrier in online shopping,especially in the B2C e-commerce model. It has been studied for several years,but there is no indicator that a satisfactory solution for trust in online shoppinghas been achieved. A trust model is proposed in this paper in order to addressthis issue. It is uniquely based on five current issues (cybercrime, security,control, web interface, and a trusted third party) that impact trust, guided byfour supportive theories: Semiotics, Trust in Signs, Simmelian Model of Trustand Trustworthiness. The research was accomplished with an online survey tocollect data from online shoppers around the world. Structural EquationModelling (SEM) was used to validate the trust model revealing that privacyand security of information are most important factors affecting trust in B2Ce-commerce followed by web interface and control. Keywords: B2C trust model; e-commerce trust issues; online shoppingsolution for e-vendors. Reference to this paper should be made as follows: Pittayachawan, S.,Singh, M. and Corbitt, B. (2008) ‘A multitheoretical approach for solving trustproblems in B2C e-commerce’,  Int. J. Networking and Virtual Organisations ,Vol. 5, Nos. 3/4, pp.369–395. Biographical notes: Siddhi Pittayachawan is a lecturer in the School of Business Information Technology at RMIT University. He received his PhDdegree addressing trust issues in B2C e-commerce. His research interests areonline shopping, trust, security, and other consumer issues.Mohini Singh is a Professor of Information Technology and E-business in theSchool of Business Information Technology at RMIT University. She earnedher PhD from Monash University, and has published widely in the areas of e-business and new technology and innovation management. Her publicationscomprise books, book chapters, journal and conference papers. She is theprincipal Editor of two highly regarded books on e-business and serves as amember on the editorial boards of several international journals.   370 S. Pittayachawan, M. Singh and B. Corbitt  Professor Brian Corbitt is currently Professor of Management InformationSystems and Head of the School of Business Information Technology atRMIT University, Australia. He has previously been Professor of Management Science at Shinawatra University in Thailand, Pro-ViceChancellor (online services) at Deakin University, and JADE Professorof e-Commerce at Victoria University of Wellington in New Zealand. Hespecialises in IT policy development, in health information systems, analysisand implementation in business modelling and electronic commerce traderelationships, and knowledge management. He has published ten booksincluding six on e-business, e-commerce and e-government and over 150refereed scholarly papers. 1 Introduction Trust is an important barrier discouraging consumers to transact online, especially inBusiness-to-Consumer (B2C) model, although e-commerce has expanded and grown inthe last five years. The issue of trust in e-commerce is widely addressed, however, asatisfactory solution is yet to be achieved. On the contrary, it is reported that trust inonline shopping is not improving, in fact, becoming a bigger problem for electronicvendors (e-vendors), leading to a decline in online shopping (NECTEC, 2006).The aim of this paper is to provide e-vendors a simple trust model to address trustproblems in B2C e-commerce. Trust is known to be very complex and multidimensional(McKnight and Chervany, 2001), and therefore, it entails several variables whiche-vendors should be aware of. This paper includes a discussion on current trends inonline business on the issues of trust and a critical review of literature on trust modelsfrom previous research. From an extensive review of literature on trust issues ( e.g. ,cybercrime, security and web interface), 21 propositions were developed to establishconsumer issues in online trust. An online survey establishing consumer perceptionguided by Semiotics (Chandler, 2002), Trust in Signs (Bacharach and Gambetta,2001), Simmelian Model of Trust (Möllering, 2001), and Trustworthiness (Hardin, 1996)theories was undertaken to develop a trust model for e-vendors. Data analysis based onSEM identifying privacy of information and secure transactions to be the most importantcomponents of trust form the gist of this paper. 2 B2C e-commerce B2C e-commerce has become a popular method for sale of goods and services toconsumers in the last ten years. It enables vendors to access customers globally(Miniwatts, 2006), to generate higher income (comScore, 2006), to gain a competitiveadvantage (Lederer et al ., 2000), to enhance and integrate business processes (Piris et al .,2004), and to improve customer service (Lovett, 2003). McGann (2004) advocates thatthe benefits of B2C e-commerce to consumers include faster transaction (78%), cheaperprices (51%), more selection of similar products or services (43%), simpler shippingprocess (40%), more customisable products (28%), and more product information (20%).Due to these benefits, B2C e-commerce is a trend widely adopted and is constantlygrowing since 1995 (Netcraft, 2007). Despite its rapid growth and popularity, trust is a     A multitheoretical approach for solving trust problems in B2C e-commerce 371 critical problem discouraging the use of B2C e-commerce (CMO Council, 2006; Grazioliand Jarvenpaa, 2000; Hsiung et al ., 2001; NECTEC, 2006; Tsiakis et al ., 2004; Wangand Emurian, 2005). 2.1 The importance of trust in B2C e-commerce According to McKnight and Chervany (2001), trust has several meanings includingcompetence, predictability, benevolence and integrity, each meaning different things indifferent situations. In B2C e-commerce, competence may be used in a trust relationshipwhere the ability of an e-vendor is key to foster consumer trust while benevolence maybe applied in a trust relationship where care and responsiveness are important toconsumers. This kind of trust relationship is three-part trust relation (Hardin, 2002),which is defined as  A trusts B to do C  .Trust has been identified to be an important factor affecting online consumers’decisions to commit a purchase (McKnight and Chervany, 2001). An important functionof trust in e-commerce is to help consumers confidently shop online even if e-vendorsare not known or recognised (Akhter et al. , 2004; Jutla et al. , 2004). Winning consumertrust is especially important for new e-vendors who are using the internet as a platformfor business.Although trust has been identified to be a barrier to e-commerce, it is also a successfactor for e-vendors if satisfactorily implemented (Stockdale and Standing, 2003). Trustis also a central factor in e-transaction (Daughtrey, 2001), business collaborations (Bryantand Colledge, 2002), security systems (Ratnasingam and Pavlou, 2003) and organisations(Antoci et al ., 2006). It supports B2C e-commerce as it simplifies transaction process(Riegelsberger et al ., 2003) as well as maintains long-term relationships betweene-vendors and customers (Keen, 1997), improves customer loyalty (Thatcher and George,2004), improves price tolerance (Delgado-Ballester and Munuera-Alemán, 2001), andgains a competitive advantage (Wernerfelt, 1991). Trust is important to every e-vendorbecause it is a key factor for increased sales and improved market share in onlineshopping (McKnight and Chervany, 2001; Nielsen et al ., 2001). 2.2 Barriers to online trust  There are several new developments that affect trust which impacts e-commerce. Theseinclude cybercrime, security, control, web interface, and third party intervention. Each of these issues is explained separately in the following section. 2.2.1 Cybercrime Cybercrime is an activity that utilises computing and communication technologies astools to carry out a crime (Smith, 2004). Identity theft and fraud are two main types of cybercrime that affect consumer decisions to shop online (Hoffman et al ., 1999a; TaylorNelson Sofres & TRUSTe, 2005). Identity theft ( i.e. , stealing information) leads tofraud (Foley et al ., 2004), and this causes fear among consumers (Farrell et al ., 2000),and discourage them from shopping online (Entrust, 2005). Cybercrime is perceived riskaffecting consumer behaviour (Gefen et al ., 2003a) on the internet. Since cybercrimeaffects trust (Farrell et al ., 2000), it generates a negative impact on consumer trust andshopping behaviour in e-commerce (Krebsbach, 2006).   372 S. Pittayachawan, M. Singh and B. Corbitt  2.2.2 Security Security refers to data protection in e-transactions, and is recognised to be a fundamentalcomponent in e-commerce (Aldridge et al ., 1997; IDC, 2003; Turban et al ., 2006).It scrambles text ( e.g. , e-transactions or financial details) into something unreadable( i.e. , an encrypted message) by intruders ( e.g. , opportunists and criminals) in orderto establish secure information exchange. Since scrambled contents generated bysecurity are extremely difficult to decipher, it can deter cybercrime activities (ITUTelecommunication Standardization Sector, 1997; Turban et al ., 2006), and thus, fosterconsumer trust (Farrell et al ., 2003; Kini and Choobineh, 1998). McKnight and Chervany(2001) clarify that security makes consumers perceive assurance, helping them tocomplete transactions without risks.In spite of this, the internet does not naturally support security in online shopping, andsubsequently, e-vendors must recognise the importance of security in B2Ce-commerce and properly deploy it in their online businesses (Bhimani, 1996).Specifically, four critical aspects of security must be met including authentication ( i.e. ,identities of transacting parties are genuine), confidentiality ( i.e. , e-transactions are secretto outsiders), integrity ( i.e. , e-transactions are not compromised) and non-repudiation( i.e. , e-transactions are undeniable by relevant parties) in order to establish securee-transactions (ITU Telecommunication Standardization Sector, 1997). This clearlyrequires technical knowledge, and thus, it can be notably challenging for e-vendorsto correctly utilise security in online shopping. Implementing it wrongly can resultin security breaches, and consequently, destroy consumer trust in e-vendors and B2Ce-commerce (BBC, 2007; CMO Council, 2006).Several researchers (Chan and Lee, 2003; Gefen et al ., 2003b; Lee and Turban, 2001)are of the opinion that security improves trust and intention to shop online. It also helpsconsumer to trust e-vendors (McKnight and Chervany, 2005). Although Ratnasingam andPhan (2003) state that security is a success factor in e-commerce, Katsikas et al . (2005)argue that security issues need to be further explored in e-commerce. 2.2.3 Control Control in this paper implies consumers’ abilities to control, influence, or monitor theonline environment and information (Hoffman et al ., 1999b; Robles et al ., 2001). If control exists, then consumers tend to commit to transactions even if trust is not adequate(Tan and Thoen, 2002). Since a lack of trust and the rise of cybercrime cause consumersto fear e-commerce and to raise concern for the safety of their information, control isrecognised as another factor contributing to trust (Yoon, 2002).A lack of control in the online environment create disputes between consumers ande-vendors (Olivero and Lunt, 2004). This is due to the fact that the nature of e-commerceis such that it does not automatically give power to consumers (Yoon, 2002). Therefore,e-vendors must understand what kinds of control should be given to the customers to wintheir confidence in this environment. Not allowing a consumer to unsubscribe from amailing list, an e-mail sent to them without consent, inability to change information andinability to close an account (TRUSTe, 2006) are examples of control issues in B2Ce-commerce. Silverpop (2006b) suggests that consumers should be able to control contentand decide how often they want to receive e-mails about products. Continuously sendinge-mails without allowing consumers to unsubscribe from a mailing list generates a     A multitheoretical approach for solving trust problems in B2C e-commerce 373 negative impact on brand reputation and trust (Lee and Turban, 2001; Silverpop, 2006a).Furthermore, spam e-mails are on the rise and more difficult to be detected by anti-spamsoftware, which frequently carry malware, searching and capturing shopping informationfor cybercriminals (Anti-Phishing Working Group, 2007; Sophos, 2006). This furtherdiscourages consumers from shopping online (Taylor Nelson Sofres & TRUSTe, 2005).Hence, it is clear that cybercrime raises the need for more control over e-commerce(Gauzente, 2004). 2.2.4 Web interface Web interface plays a significant role in e-commerce as it is the first link between acustomer and an e-vendor (Fogg et al ., 2001). If web interface does not win consumers tobelieve that e-vendors are trustworthy, then a transaction will not take place (Ang andLee, 2000). This view is supported by Kini and Choobineh (1998) who recognise thatdisplay modes, information of e-vendors and visual effects on the screen are importantcomponents of trust. McKnight and Chervany (2001) advocate that site quality, a privacystatement, a trusted seal and links to other websites also support trust and intention toshop online; and Wang and Emurain (2005), are of the opinion that the four dimensionsof web interface which enhance trust are graphics, structure, content and social cues.A security and privacy statement, which is categorised as a part of content dimensionby Wang and Emurain (2005) is also important in e-commerce. Consumers are concernedabout how e-vendors collect and use their information. It is reported that 68% of consumers want e-vendors to disclose where and how their information is beingprocessed (Krebsbach, 2006), and 95% of consumers refuse to provide information if there is no privacy statement (Gauzente, 2004; Hoffman et al ., 1999a). It is thereforeclear that a security and privacy statement on the website is important information forconsumers affecting their decision to shop online. In addition, a security and privacystatement should be written in a way that is easily understood by consumers (Rivest andLampson, 1996). Therefore, web interface is an important factor affecting shoppingintention, trust, security and control. 2.2.5 Third party intervention A trusted seal is a part of content dimension described by Wang and Emurian (2005). It isa piece of graphics displayed on the front page of shopping websites. Its function is to tellconsumers that this e-vendor has been verified, and therefore, it is safe to purchase goodsor services from this particular website.A trusted seal has an impact on consumer trust and online shopping behaviour(McKnight and Chervany, 2001). However, a trusted seal is merely a piece of graphics,and it does not contain any trustworthy value. In fact, when consumers trust a seal that isdisplayed on websites, they trust an identity of the seal issuer and not the seal itself (Sztompka, 2000). An issuer of a trusted seal is commonly known as a Trusted ThirdParty (TTP). In e-commerce, examples of TTPs are Verisign, 1 GeoTrust, 2 and TRUSTe. 3 Hu et al . (2004) suggest that a trusted seal has a positive impact on consumer trust,and encourages them to purchase products from unknown websites confirming that thee-vendor is genuine. Furthermore, a well-known TTP has been identified to have agreater impact on trust (Peszynski and Thanasankit, 2002).
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