Perceived Risk and Trust

The effects of internet shoppers’ trust on their purchasing intention in china 275 shopping mall.

3.1.2 Perceived Reputation and Trust

As reputation is a valuable asset, sellers usually try to avoid getting a bad reputation. A vendor can signal its trustworthiness by building a good reputation. Reputation is a main characteristic of a vendor’s trustworthiness Doney Cannon, 1997. Reputation requires a long-term investment of resources, effort, and attention to the customer relationship. Since reputation represents a third-party or public opinion of the vendor, it must be transferred from the third party or the public to customers, influencing them to build trust in the Internet shopping mall owned by the vendor. Not only a potential customer but also a repeat customer can build trust through the perception of the good reputation that an Internet shopping mall has. When a potential customer has little or no direct experience with the vendor, the third-party opinion about the trustworthiness of the Internet shopping malls can be a major source of information for trust building. Moreover, repeat customers estimate the trustworthiness of the Internet shopping mall by its reputation Kim et al., 2004. The better the seller’s reputation, the more the mall has presumably committed resources to build that reputation and the higher the penalty when violating a consumer’s trust. Hence, the more trustworthy the seller is perceived to be Jarvenpaa Tractinsky, 1999. Doney Cannon 1997 also find that a supplier firm’s reputation invokes the trust building-process and it serves as a significant factor on the calculative step and transference step of the trust-building process. Retailers are probably a big part of e- customers in B2B market. Their favorable perception of an e-vendor’s reputation leads to its increased credibility which is one of the two dimensions of trust Ganesan, 1994. At the same time, perceived reputation is regarded as a kind of indirect information. Indirect information cannot provide consumers with as much belief as direct information that is collected during an actual Internet shopping experience. However, for those consumers who are short of purchasing experience in using an Internet shopping mall, indirect information works as a sort of piece of key information to establish their trust Lee Lee, 2003. In general, e-vendors with a good reputation recognize that there should be a great loss of reputation if they act unreliably. The recognition becomes much stronger especially in the case that the consumer network remains small-scaled and the opportunities for communication or interaction between consumers are increasing Jong Lee, 2000. Thus, we set up the following hypothesis: H : The perceived reputation of an Internet shopping mall is positively associated with consumer trust.

3.1.3 Perceived Risk and Trust

The Internet is an open, global, and constantly changing marketing channel. The Internet shopping malls in the virtual channel makes it hard to inspect physical goods Jarvenpaa Tractinsky, 1999. Compared to the traditional offline marketing channel, an e-customer can get less assurance of transaction safety and product quality. Vol.4, No. 3, 2007, p. 269-286 p , y y g g reputation. A vendor can signal it it it s s s t trustworth h hin in in es es es s s by building a good reputation. Reputation is a main charact t t er er er i i istic of a vendor’s trust t t wo wo wo rthiness Doney Cannon, 1997. Reputation requires es es a long-term investment of resource ce ces, s effort, and attention to t the customer relations ns s hi hi hip. Since reput ut ut ation represents a third-par r ty ty ty or public opinion of the vendor, it mus us us t t t be transferred f f fr ro r m m m th th th e e e th th th ir ir ir d p pa p rty or the pub ub ublic to customers, influencing them em m to build tr tr tr us us s t t t in in in the In In In te te e rn rn rn et et et sho ho h pp pp pp in in in g g g ma ma mall o o wned by th h he e e vendor. Not t o o only a p p ot

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ential al l c cu u usto t t mer but also a repeat cus s sto to to me m m r ca ca a n build tr tr trus u u t through the percep ep ep ti on of f f th th th e e e good repu pu pu ta ta ta ti ti ti on t a ha t t an I Int t nt er er er ne ne ne t shoppi ng ng ng m m mall has. When a potentia ia ia l l custom om me er er h h h as littl tl tl e e e or no direct e e xperience wi ith th h t t t he h ven n n do do do r, r, r t t t he third rd rd-party opinio io ion ab b

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t t th th th e e e t tr t ustw tw two orth th iness of the Inte te rnet shopping ma m ll ll lls s s can be be be a a a m m m aj a or s s ou

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rce of i informa ma mati ti tion on on for or or trust b b uilding. Mor or eover, repea eat t cust tom om omers es es es ti ti ti m m mate the tru u ustworth th h in in ine es e s of f f t th he Internet t sh s opping m al ll by its repu put tation Kim m et al l l ., ., , 2 2 2 00 00 00 4. Th Th The be be be tt er t he he he s s eller’s s s reputation, the he m m ore the ma m ll has pre resu sumably comm it it itte t d re re re so so so ur ur ur ce c c s to to to b b build th th th at at t r epu ut utation and the hi igh gh er the p pe enalty wh whe en violating a con on nsume me me r’ r’ r’ s s s tr t ust. . H Henc c c e, e, e, t t t h h he m m mo ore tr trus u tworthy the se ell l er is s p perceiv ved d to be Jarve e np np aa T ra ra ract ct ct in in in sky, 19 9 9 99 . D D D oney y y Canno non n 1 1 997 als so o fi f nd tha hat a su u p pplier firm’ m s s r reputation n n inv v vok ok ok es es e the he he tr rus us ust building ng ng -process and d i i t t se se rves a as a a s sign nif f i ican ant fact ct or or o on the calculat t i iv i e step a a a nd nd nd tr r ran sf s s erence e step of the trust- bu bu il ldi di ng ng p p ro o cess ss . Re Reta ta il iler er s s are probably a b ig i g part of of of e e e - u cu ustom m mers in n n B2B market. Their f f av avor o ab ab le perc e epti i on on of an e-vendor’s repu u utation n n lead ds d to to to i i i ts inc c c re re re as s s ed ed c c re re di di bi bi li li ty ty w hi hi h ch is one of the two dimens i ions o f f tr trus us t t G G an an e e esan n n, 1994 4 4 . . . At the s am am e e e ti ti time me me, pe pe rc rc c ei ei ei ve ve ve d d d re r r putati i i o o on is is is r r r eg eg ar ar r de de de d d d as as as a a k k i ind of indir ir ir ec ec ec t t in n nfo fo fo rm rm rmation. Indirect information cann ot ot ot p p p rov ov ov i id ide consumers with as much belie ie ie f f f a a as di i i re re rect ct ct i i i nf n n ormation that is collected during ng an actual Internet shopping exp p p e er erie ie ienc nc nc e. Ho o ow we weve ve ver, f f f

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f f k k key y y in in in fo fo form rm rmat at ation to est t tab ab abli li li sh s s t h h he ir ir ir t t t ru ru ru st st st Le e Le e e e Le Le Lee, 2 2 2 00 00 00 3 3 3 . In In In g g en en en er er er al al al, , , e- e- e- ve ve ve nd nd ndor or or s s with a g g g ood reputa a a t t t io io ion recogn gn gniz iz i e th th th at at at t t t he he he re re re s s s ho ho hou u uld be a great loss o f f f re re re pu pu pu ta ta ta ti ti ti o on on if they act unrel el el i i ably. T Th The recognition be be beco co co me me me s s s m mu much stronger especially in the case that the cons ns ns um er net et etwork remains small-scaled and the r opportunities for communication or int teraction be e etween consumers are increasing Jong Lee, 2000. Thus, we set up the follo o owing hypo o ot thesis: H : The perceived reputation of an Inter er rnet shop op opping mall is positively associated with consumer trust. Li, Rong. Kim, JaeJon, Park, JaeSung 276 Moreover, when problems arise, sellers will probably attribute them to technical problems or systems problems. All these increase the uncertainty and may result in adverse consequences for those engaged in transaction activities. When perceived risk is present and it is increasing, consumers’ trust will suffer. Ratnasinghams 1998 argues that if e-commerce is to become the dominant business platform of the next millennium, systems should be integrated and the transaction process should be standardized to ensure that any business transaction is operated in a secure way. By addressing every aspect of a consumer’s concern, the consumer can place complete reliance on the confidentiality, security, integrity, and availability of information processed and stored. H : Perceived risk will reduce consumer trust.

3.1.4 Perceived Ease of Use and Trust PEOU