Institution-Based Trust in Interorganizational Exchange Relationships: The Role of Online B2B Marketplaces on Trust Formation

Journal of Strategic Information Systems (2002), 11 (5/6), 215-243.

29 Pages Posted: 7 Mar 2016

See all articles by Paul A. Pavlou

Paul A. Pavlou

Temple University - Department of Management Information Systems; Temple University - Department of Strategic Management

Date Written: 2002

Abstract

Given the uncertainty of online transactions, the digital economy encourages the creation of institutional structures that assure online interorganizational exchange relationships. This research examines how institution-based trust develops in online B2B marketplaces to facilitate interorganizational trust (buyers’ trust in sellers). Building upon the notion of institutional trust [Zucker,1986], this study proposes how specific institution-based structures help engender interorganizational trust and indirectly influence transaction success in B2B marketplaces. Five specific institution-based mechanisms are proposed — perceived monitoring, perceived legal bonds, perceived accreditation, perceived feedback, and perceived cooperative norms. To assess the influence of the proposed two dimensions of interorganizational trust — credibility and benevolence — in buyer–seller relationships, three trust outcomes are examined — satisfaction, perceived risk, and continuity. The proposed model is tested on data from 102 organizational buyers in an online B2B marketplace. The results support the proposed model, delineating the relationship between institution based trust and interorganizational trust. The study provides evidence on how specific institutional mechanisms build trust in online B2B marketplaces, stressing the ability of institution-based trust to build a trustworthy trading environment in the digital economy. The paper discusses the theoretical and managerial implications of this study and proposes several suggestions for future research.

Keywords: Institutional trust, Interorganizational trust, Buyer–seller relationships, B2B e-commerce, Structural assurances, Online B2B marketplaces

Suggested Citation

Pavlou, Paul A., Institution-Based Trust in Interorganizational Exchange Relationships: The Role of Online B2B Marketplaces on Trust Formation (2002). Journal of Strategic Information Systems (2002), 11 (5/6), 215-243.. Available at SSRN: https://ssrn.com/abstract=2742311

Paul A. Pavlou (Contact Author)

Temple University - Department of Management Information Systems ( email )

1810 N. 13th Street
Floor 2
Philadelphia, PA 19128
United States

Temple University - Department of Strategic Management ( email )

Fox School of Business and Management
Philadelphia, PA 19122
United States

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