Psychological Determinants for Consumer Trust in E-Retailing

Transcription

1 Psychological Determinants for Consumer Trust in E-Retailing Rita Walczuch, Joyce Seelen and Henriette Lundgren University of Maastricht, International Institute of Infonomics, The Netherlands 1 Introduction The Internet has made it possible to conduct business-to-consumer transactions across an open network [Ford, 1998]. Although the open network has many benefits, e.g. low investment costs, it also raises many concerns. Currently the most important concerns of people with respect to e-commerce and e-retailing are security, privacy and consumer protection issues. These concerns have resulted in the fact that the existing dimensions of e-commerce and e-retailing are still smaller than expected [IDCResearch, 2000]. Research has found that the formerly mentioned concerns privacy, security and consumer protection can all be reduced to consumers lack of trust in e-retailing [Dontje and Olthof, 1999]. Trust is central to any commercial transaction, whether conducted in the conventional way (i.e. in a retail outlet) or over the Internet (i.e. by means of a web-site). Only if the consumer trusts the retailer he will feel free to purchase a product, give away personal information and use payment methods others than cash. Therefore, trust increases the probability of (re)purchase. Several authors believe that without consumer trust, the development of e-retailing will never reach its economic potential [Ferraro, 1998; Javenpaa and Tractinsky, 1999]. Only recently, research on factors influencing consumer trust in e-retailing has been conducted. Most of this recent research has been on the effects of situational factors on trust in e-retailing, i.e. the design of the website, the use of brand names or of trust seals [Noeteberg, The copyright of this paper belongs to the paper s authors. Permission to copy without fee all or part of this material is granted provided that the copies are not made or distributed for direct commercial advantage. Proceedings of the Eighth Research Symposium on Emerging Electronic Markets (RSEEM 01) Maastricht, The Netherlands, September 16-18, 2001 (M. Schoop, R. Walczuch, eds.) 1

2 R. Walczuch, J. Seelen and H. Lundgren Christiaanse et al., 1999]. So far no study has attempted to identify what exactly happens in somebody s mind before or while the person decides to trust. In other words: What are the psychological determinants of trust in e-retailing? Trust, according to Rousseau, is defined as: / / a psychological state comprising the intention to accept vulnerability based upon positive expectations of the intentions or behavior of another [Rousseau, Sitkin et al., 1998]. This definition was chosen since it depicts trust as a psychological state based upon positive expectations. But, how exactly are theses positive expectations formed? Is trust determined by somebody s personality or should we expect a more cognitive explanation? Another source of trust could be the acquired knowledge of prior experience with e-retailing. This paper is an attempt to identify psychological determinants of consumer trust in e-retailing. Firstly, the psychological determinants tested in this research will be defined. Thereafter, the research methodology will be depicted. The next section will show the research results. And finally, the findings will be discussed and a conclusion will be drawn. 2 Psychological determinants for consumer trust in e-retailing To identify the psychological determinants for consumer trust in e-retailing, the psychological factors that have an influence on trust in general have to be identified. Due to the fact that there is no comprehensive theory available, several theories are combined to form a complete picture of all psychological factors influencing trust. The factors are divided into the following five categories. Personality-based factors; Perception-based factors; Experience-based factors; Knowledge-based factors; and Attitude. The above-mentioned categories are split up into several factors (see Appendix 1). Figure 1 represents a graphical representation of the hypothesized effects. 2 Eighth Research Symposium on Emerging Electronic Markets 2001

3 Psychological Determinants for Consumer Trust in E-retailing Perception-based factors Reputation (+) Investment (+) Similarity (+) Normality (+) Control (+) Familiarity (+) Personality-based factors Extraversion (+) Neuroticism ( ) Agreeableness (+) Conscientiousness ( ) Openness to experience (+) Propensity to trust (+) Knowledge-based factors Information practices ( ) Security technology (+) Attitude Computers (+) The Internet (+) Shopping (+) Experience-based factors Duration of experience (+) Satisfaction (+) Communication (+) Figure 1: Hypothesized psychological factors that influence consumer trust in e-retailing 2.1 Personality-based factors According to Dibb et al [Dibb, Simkin et al., 1994], personality consists of all the internal traits and behaviors that make a person unique. There exist a number of competing views as to what the few important dimensions of a person s personality are [Carver and Scheier, 1992; Gleitman, 1995]. In this research use is made of one of the most accepted theories, namely Costa and McCrae's [Costa and McCrae, 1992] trait-theory, which contains the following five traits. 1. Extraversion; 2. Neuroticism; 3. Agreeableness; 4. Conscientiousness; and 5. Openness to experience. Next to these five factors, we added the personality trait (6) propensity to trust due to its obvious positive relationship with the dependent variable trust. Extraversion can be defined as being focused on the outside world. Extravert people like to be in other people s company. Because extrovert people are focused on the outside world, are Eighth Research Symposium on Emerging Electronic Markets

4 R. Walczuch, J. Seelen and H. Lundgren more sociable, careless and fast to change [Carver and Scheier, 1992; Gleitman, 1995; Angenent, 1998], it can be argued that they will be more likely to trust e-retailers, especially with respect to information practices. Neuroticism is characterized by emotional instability, pessimism and low self-esteem. People high in neuroticism often perceive that they have an unfavorable position in transaction processes [Angenent, 1998; Olson and Suls, 1998]. They feel that they have no control. Perceived low control has a negative influence on trust. People high in agreeableness have positive beliefs toward other people and appreciate other people s values and convictions. In contrast, people who are low in agreeableness have little respect for other people s interests and well-being, and are less concerned with social norms. It is thought that people having respect for others also believe that others have respect for them. Therefore, people high in agreeableness are expected to be more trustful [Angenent, 1998; Olson and Suls, 1998]. Furthermore, people high in conscientiousness are thought to be responsible, dutiful and trustworthy. In addition, they tend to be more serious and cautious in making decisions. People low in conscientiousness will be more likely to trust and hence more trustful [Angenent, 1998; Olson and Suls, 1998]. Alternatively, it can be argued that people high in conscientiousness expect other people to be conscientious as well and hence they are more likely to trust. In this research, however, we hypothesize that the first relationship is true. Openness to experience is characterized by open-mindedness. People high in openness to experience are more likely to make liberal decisions, in contrast to people who are low in openness to experience who tend to make more conservative and moderate decisions. More openness leads to more willingness to embrace new concepts and being more careless with respect to new things [Olson and Suls, 1998]. Propensity to trust indicates the likelihood of a person to trust. Obviously, the higher somebody s propensity to trust the more likely he is to trust, which may also apply for e- retailing. To put it all in a nutshell, it is assumed that personality traits influence trust in general: some do so in a negative, and some in a positive way. As mentioned before, parallels exist between trust in general and consumer trust in e-retailing. This leads to the formulation of hypothesis 1. H 1 : Personality-based factors such as extraversion, neuroticism, agreeableness, conscientiousness, openness to experience and propensity to trust influence consumer trust in e-retailing. 2.2 Perception-based factors Several scholars [Lewis and Weigert, 1985; Ganesan, 1994; Yamagishi and Yamagishi, 1994; Das and Teng, 1998; McKnight, Cummings et al., 1998; Javenpaa and Tractinsky, 1999; Milne, 1999] have investigated the influence of consumer perception of certain factors on trust. Here, the various theories are combined and six factors that have been shown to have an influence on trust are discussed. 1. Perceived reputation of e-retailer; 4 Eighth Research Symposium on Emerging Electronic Markets 2001

5 Psychological Determinants for Consumer Trust in E-retailing 2. Perceived investment of e-retailer; 3. Perceived similarity of e-retailer; 4. Perceived normality of e-retailer; 5. Perceived control of consumer; and 6. Perceived familiarity of consumer. Reputation is based on second hand information about a (potential) seller s traits [Yamagishi and Yamagishi, 1994; McKnight, Cummings et al., 1998]. Second hand information is not as assuring as first hand information, which is collected during a history of experiences with e- retailing. According to McKnight et al [McKnight, Cummings et al., 1998], sellers with a good reputation are seen as trustworthy, and those with a bad reputation as untrustworthy. According to Mitra et al [Mitra, Reiss et al., 1999], information sources can be classified into three categories, which are information from (1) consumer dominated sources (word of mouth; information from friends and relatives); (2) neutral sources; and (3) marketer dominated sources (items are ordered according to their level of importance). If perceived reputation has an influence on consumer trust in e-retailing, then second hand information is supposed to have an influence on consumer trust in e-retailing. Since it is not very likely that e-retailers will spread negative information about e-retailing, it is more likely that just the lack of positive information from marketer-dominated sources negatively influences consumer trust in e- retailing. Perceived organizational investment is the perceived amount of resources a seller has invested in his business. Perceived investment is believed to have an influence on consumer trust in e-retailing. The higher the losses a seller will incur if he violates consumer trust, the less likely he is to actually violate consumer trust and hence the higher consumers perceived trustworthiness of the seller [Ganesan, 1994; Javenpaa and Tractinsky, 1999]. Therefore, a positive relationship between perceived investment and trust is hypothesized. Perceived similarity means that one perceives the other as being similar to oneself. Perceived similarity is believed to have a positive influence on trust, because people grouped together tend to have the same goals and values and therefore tend to perceive each other positively. Thus a consumer who perceives a merchant to be similar to himself will be more likely to trust this merchant [Brehm and Kassin, 1998; McKnight, Cummings et al., 1998]. Perceived normality is defined as the consumer s perception that things are normal or common. Situational normality depicts a properly ordered setting that seems to enable a successful interaction. An individual who perceives a situation as being normal will feel more comfortable and hence will be more trustful toward the other party [McKnight, Cummings et al., 1998]. Deutsch [Deutsch, 1958] defines control as the consumer s perceived power to influence the other person s outcome and hence to reduce any incentive he may have to engage in untrustworthy behavior. Das and Teng [Das and Teng, 1998] and McKnight et al [McKnight, Cummings et al., 1998] have identified three control mechanisms, i.e. regulations, guarantees, and legal recourse, which increase consumers perceived control and hence their confidence in e-retailing. When a consumer has some power to influence the outcome of the e-retailer, he is Eighth Research Symposium on Emerging Electronic Markets

6 R. Walczuch, J. Seelen and H. Lundgren more likely to expect trustworthy behavior and thus to trust the other person [Deutsch, 1958; Young and Wilkinson, 1989]. Familiarity is the phenomenon that the more often people are exposed to a certain stimulus, the more positively they will evaluate it [Brehm and Kassin, 1998], and therefore trust it. Furthermore, when dealing with an unknown vendor, consumers are more concerned about privacy, and therefore less likely to trust [Noeteberg, Christiaanse et al., 1999]. It should be stated that familiarity is not the same as experience over time. Experience is the active interaction with a process, while familiarity is the mere exposure to a person, a store or an event. In sum, all perception-based factors are thought to influence consumer trust in a positive way. This yields the second hypothesis. H2: Perception-based factors such as perceived investment, perceived similarity, perceived normality (all of the retailers), perceived control and perceived familiarity (both of the consumers) influence consumer trust in e-retailing. 2.3 Experience-based factors Experience in this study is defined as first hand knowledge. This first hand knowledge is accumulated through active participation of the consumer in the online buying process [Wordsmyth, 1999]. The following three experience-related aspects are important with respect to trust. 1. Experience over time; 2. Satisfaction; and 3. Communication. Several scholars [Ganesan, 1994; McKnight, Cummings et al., 1998] have proposed that trust develops over time as consumers build trust-relevant knowledge through experience with e- retailing. Of course, trust does not build from experience alone. The perceived satisfaction with past outcomes is also very important [Ganesan, 1994]. People who are experienced in buying online and have had positive experiences will view e-retailing as being trustworthy. According to several scholars, communication plays an important role in establishing trust [Deutsch, 1958; Loomis, 1959; Anderson and Weitz, 1992; Morgan and Hunt, 1994]. In this research communication is defined as the formal and informal sharing of relevant, reliable and timely information between seller and customer [Morgan and Hunt, 1994]. According to Loomis [Loomis, 1959] and Deutsch [Deutsch, 1958] a well functioning communication system contains communication about expectations, intentions, retaliation ( expression of one s planned reaction to violations of one s expectations [Deutsch, 1958]) and absolution ( expression of means of restoring co-operation after a violation of one s expectation has occurred [Deutsch, 1958]). These four elements have a positive influence on trust and thus the lack of the communication of these elements might to a large extent hinder the development of trust. The above mentioned factors clearly show that the more experience a consumer has, the higher the level of trust will be in a traditional or an electronic retailer. Hypothesis 3 indicates the relationship between experience and trust. 6 Eighth Research Symposium on Emerging Electronic Markets 2001

7 Psychological Determinants for Consumer Trust in E-retailing H3: Experience-based factors such as experience over time, satisfaction and communication influence consumer trust in e-retailing. 2.4 Knowledge-based factors In this paper there is a distinction made between knowledge-based and experience-based trust, i.e. knowledge is seen more in the sense of technical knowledge. Technical knowledge can be divided into knowledge about information practices and security technology. People who have knowledge about information practices know whether it is possible for a seller to retrieve certain information from certain sources [Milne, 1999]. Automatically, consumers with good knowledge of negative information practices could be less trusting. On the other hand, it is thought that consumers who are not aware of what is possible with regards to information practices will be more trustful. Secondly, an individual who has knowledge about security technology also has knowledge about how the security aspects (integrity, confidentiality, etc.) can be technically guaranteed. Thus, such people are able to check for features that indicate that an e-retailers website is secure. It is expected that people with this knowledge are more confident with regard to buying online and trust e-retailers more. A combination of the two knowledge-based factors forms the fourth hypothesis. H 4 : Knowledge-based factors such as information practices and security technology influence consumer trust in e-retailing. 2.5 Attitude Attitude can be defined as the evaluation of entities [Gilbert, Fiske et al., 1998]. Javenpaa and Tractinsky [Javenpaa and Tractinsky, 1999] have proposed that consumers attitude towards shopping and computers have an influence on trust in an Internet store. But since consumers can only buy something in an Internet store if they also have an Internet connection, it is believed that also their attitude towards the Internet has an influence on their trust in e- retailing. Therefore, when speaking about consumers attitude towards trust in e-retailing all three components, namely attitude towards computer, the Internet and shopping should be considered. These arguments lead to the formulation of hypothesis 5. H 5 Attitudes such as attitudes towards computers, the Internet and shopping influence consumer trust in e-retailing. 3 Research Methodology 3.1 Sample US students were chosen as the research population. They usually have (in contrast to e.g. Europeans) unlimited, free access to the Internet and are rather familiar with the medium through their studies. Furthermore, many e-retailers target the young population (e.g. CD Eighth Research Symposium on Emerging Electronic Markets

8 R. Walczuch, J. Seelen and H. Lundgren shops like CD Now) and the student population (e.g. book shops like Amazon.com). In addition, technical, logistical and payment issues have reached the most advanced state in the US e-retailing market. 3.2 Survey instrument A questionnaire was administered to these students. All categories mentioned in the hypotheses were measured with the help of this questionnaire. Whereas the hypotheses were stated in general and included several constructs, the questionnaire tested the various constructs of one category separately. Most of the items were measured on a 5-point Likert scale. The remaining questions were in an ordinal or nominal format. Appendix 2 presents the list of constructs used in this research including the references used. Pre-tested and validated instruments or items were used where available. Otherwise, items were created by the authors to measure the construct. The existing literature on these constructs was used as a guide to formulate items. Two or more items, some of which are reversely scored to keep the attention of the participant, measure each construct. Reliability was tested using Cronbach s alpha. Appendix 3 shows the Cronbach s alpha values for each of the constructs used in this research. According to Nunally [Nunally, 1978] an alpha of 0.50 or higher indicates a sufficient level of internal reliability. As can be read from the table, the majority of constructs reach a sufficient internal reliability level. However, this measurement was not applicable to all factors in the questionnaire, i.e. the questions about information from consumer dominated sources, from neutral sources and from marketer dominated sources as well as the questions about knowledge of information practices and security technology. The just mentioned factors should not be seen as constructs (where an idea is measured in an indirect way) but as direct and explicit questions about the level of knowledge or information. Therefore, it would not make sense to apply an instrument like the Cronbach s alpha to these questions since no construct is used. Only the two constructs perceived investment (0.13) and perceived familiarity (0.21) scored values lower than the sufficient level. The construct communication independent of the buying process was created after calculating the internal reliability of the construct communication of expectations. Further investigation had shown that the construct communication of expectations was twodimensional, and thus is had low internal reliability. To combat this, the new construct was created. While testing for multicolinearity, only the constructs attitude towards computers and attitude towards the Internet were combined as they had a correlation coefficient of The construct attitude consists of 6 items, the 3 items used to measure attitude towards computer and the 3 items used to measure attitude towards the Internet. The calculated Cronbach s alpha is Eighth Research Symposium on Emerging Electronic Markets 2001

9 Psychological Determinants for Consumer Trust in E-retailing 4 Research Before this research, a pilot study with 107 Dutch students was conducted to test the questionnaire. Small adoptions to the design of the questionnaire were made to improve the readability of this instrument. The outcome of the pilot study showed promising results regarding validity and reliability of the survey instrument. The research was organized partially by sending questionnaires to US universities, and for the rest by administering questionnaires to exchange students from the US in the Netherlands. Data of 149 students was collected. A simple comparison of buyers (mean= 3.5) and nonbuyers (mean = 2.7) showed that there is a significance difference in trust between these two groups tested at a p<0.01 level. This indicates that trust indeed is one important determinant of online purchase behavior. In the research two regression models were calculated. The first model contains the constructs that are applicable to all participants. The second model contains the constructs that are only applicable to the participants who have bought or considered buying, thus have some experience with e-retailing. The two models are described in figure 2. The advantage of these two models is that no data will be lost because model 1 uses all the available data. The drawback is that not all constructs can be regressed on trust at the same time. The following paragraph will offer and interpret the results of the conducted regression analyses. Model 1 includes all the personality-based constructs, the perception-based constructs, the knowledge-based constructs, the attitude constructs and the experience-based construct, experience over time in an regression analysis against the dependent variable trust. Next, the results of the regression analysis of model 2, which includes all the experience-based constructs except for the construct measuring duration of experience, will be discussed. Eighth Research Symposium on Emerging Electronic Markets

10 R. Model Walczuch, 1 J. Seelen and H. Lundgren Trust = a + b 1 Extraversion + b 2 Neuroticism + b 3 Ageeableness + b 4 Conscientiousness + b 5 Openness to experience + b 6 Reputation + b 7 Word of mouth + b 8 Friends and relatives + b 9 Neutral sources + b 10 Marketer dominated sources + b 11 Investment + b 12 Similarity + b 13 Normality + b 14 Control + b 15 Familiarity + b 16 Experience + b 17 Knowledge about information practices + b 18 Knowledge about security technology + b 19 Attitude towards the Internet and computers+ b 20 Attitude towards shopping Model 2 Trust = a + b 1 Satisfaction + b 2 Communication independent of buying process + b 3 Communication of expectations + b 4 Communication of intentions + b 5 Communication of retaliation + b 6 Communication of absolution + b 7 Experience over time 4.1 Results of regression using model 1 Figure 2: Regression models From the results of the regression analysis in table 4 it becomes clear that model 1 contains five statistically significant factors at a 0.01, one at a 0.05 and two at a 0.1 level. These are: reputation, information from friends and relatives, word of mouth, perceived investment, perceived similarity, perceived familiarity and perceived control, knowledge about information practices and experience over time. The F-ratio of the regression model 1 is and statistically significant (p < 0.01). The R Square Adjusted of the regression is Thus model 1 suggests that the majority of perception-based factors influence consumer trust in e-retailing. It can be stated that 99.8% of consumer trust is influenced by the four factors: reputation, similarity, control and knowledge about information practices. 10 Eighth Research Symposium on Emerging Electronic Markets 2001

11 Psychological Determinants for Consumer Trust in E-retailing Model 1 Std. b Std. Sig. error Constant Extraversion Neuroticism Agreeableness Conscientiousness Openness to experience Propensity to trust Reputation *** Information from friends and relatives ** Word of mouth *** Information from neutral sources Lack of information from marketer dominated sources Investment Similarity *** Normality Control *** Familiarity * Knowledge about information * practices Knowledge about security technology Attitude toward the internet & computers Attitude towards shopping Experience over time *** F-ratio R square adjusted * significant at a < 0.1 ** significant at a < 0.05 *** significant at a < 0.01 Table 1: Results regression model 1 Eighth Research Symposium on Emerging Electronic Markets

12 R. Walczuch, J. Seelen and H. Lundgren Personality based factors The regression above shows that none of the personality factors had a significant effect on the dependent variable trust. Since the internal reliability of all these constructs were between 0.6 and 0.85 (and therefore sufficient) it can be stated that personality traits are not determinants of consumer trust in e-retailing Perception based factors There are seven perception based factors that have a statistically significant influence on trust, namely reputation, information from friends and relatives, word of mouth, perceived investment, perceived similarity, perceived familiarity and perceived control. The factor reputation influences consumer trust to a large extent. The coefficient is on a significance level of p< To recall, this category of second-hand information consisted of the following three more detailed factors: information from consumer dominated sources, divided in the two constructs information from friends and relatives and word of mouth, information from neutral sources and information from marketer dominated sources. The constructs information from friends and relatives and word of mouth also have a significant influence on trust at a level 0.05 and 0.01 level respectively. It can be concluded that the opinions of friends and relatives about e-retailing as well as information about e- retailing gathered from someone who has actual experience with buying online have a significant influence on consumer trust in e-retailing. Unlike the expected relationship between perceived investment and trust, the results show that this factor has a small but negative effect on the dependent variable (p = 0.1, b = ). Thus, the belief that higher perceived investment has a positive effect on consumer trust can be rejected. Furthermore, the influence of consumers perceived similarity of e-retailers to himself is statistically significant (p = 0.002, b = 0.159). It can be concluded that a consumer who perceives e-retailers to have different goals and values to him will be more likely to distrust e- retailers. Moreover, familiarity has an influence on the dependent variable trust at a significance level of (b = 0.113). The factor control has an influence on the dependent variable trust at a statistical significance level < 0.01 (b = 0.381). The findings point towards a relationship between perceived control and trust in e-retailing. In contrast to the expected relationship, it seems that consumers who perceive that they have power to influence e-retailers outcome and hence reduce any incentive e-retailers may have to engage in untrustworthy behavior, will be more trustful against e-retailers Knowledge based factors The factor knowledge about information practices has a significant effect on trust. The regression showed this at a level of 0.1 (b = 0.146). Opposed to the hypothesized relationship 12 Eighth Research Symposium on Emerging Electronic Markets 2001

13 Psychological Determinants for Consumer Trust in E-retailing between trust and knowledge about information practices, the coefficient shows that more knowledge relates to more consumer trust Attitude Contrary to a previous study conducted by Javenpaa and Tractinsky [Javenpaa and Tractinsky, 1999] none of the attitude-based factors seems to have a significant influence on trust. Therefore, the hypothesis with respect to attitude, hypothesis 5, can be rejected. The only explanation for this finding is that attitude toward computers, the Internet and shopping is just not related to trust with respect to e-retailing. 4.2 Results of regression using model 2 From the results of the regression analysis in table 5 it becomes clear that model 2 contains only one statistically significant factor at a 0.1 level. The F-ratio of regression model 2 is and significant at p < But unfortunately, the R Square Adjusted is only which is explained by the lack of significant factors. Model 2 Std. b Std. error Sig. Constant Satisfaction Communication independent of buying process Communication of expectations Communication of intentions * Communication of retaliation Communication of absolution F-ratio R Square * significant at a < Experience based factors Table 2: Results regression model 2 The influence of the experience-based factors on trust was analyzed using both model 1 and model 2. Model 1 included experience over time (significant at a level, b=0.093); the influence of the other experience-based factors was analyzed using model 2. The only significant factor in this model was communication of intentions with a coefficient of b= Therefore, if the e-retailer communicates the different stages a product goes through before reaching the customer, the consumer will be more trustful. Eighth Research Symposium on Emerging Electronic Markets

14 R. Walczuch, J. Seelen and H. Lundgren Clearly model 2 does not measure the main influencing factors since only one of the factors is statistically significant. Furthermore, the adjusted R Square is too low to draw the conclusion that the model is complete. We must assume that the main factors that influence consumer trust of experienced buyers have been covered in Model I already. 4.3 Conclusion Figure 3 gives a summarizing overview of the factors that have, based on the literature and the conducted pilot study, a significant influence on consumer trust in e-retailing. Quite interesting is the finding that personality based factors are completely eliminated from the model. This means that trust in online retailing is contrary to our expectations not influenced by the individual personality. We do not expect that other personality factors may have an influence since even a direct factor like propensity to trust did not have an effect. Although other researchers have found significant relationships, attitude towards computers and the Internet or attitude to shopping did also not have a significant influence on consumer trust in e-retailing. When analyzing all possible reasons for consumer trust in e-retailing, Consumers seem to make their decision to trust an e-retailer on a rather rational basis. The hypotheses of this paper were partly supported for knowledge-based factors like knowledge about information practice and on experience-based factors like the duration of experience and experience with communication of intention. In both cases only a rather small part of the possible influences were indeed supported. This indicates that knowledge-based and experience-based factors in general may only play a rather limited role in determining online consumer trust. The three sub issues identified here however do play a significant role in the decision process of the customer and should not be ignored by businesses. To put it plainly, the customers who are informed about information practices tend to trust lest. Positive experience over time especially with the communication of intention increases online trust. However, in general, the perception-based factors seem to have the greatest influence on consumer trust in e-retailing. Issues like the reputation of the company from various sources, the perceived similarity, perceived control, and the perceived familiarity with e-retailing are the issues that determine online consumer trust. For an online business this is rather good news since these are factors that can be influenced at least to an extent. Possibly by marketing initiatives or simply by doing good business and thus supporting a positive word of mouth among its customers. 14 Eighth Research Symposium on Emerging Electronic Markets 2001

15 Psychological Determinants for Consumer Trust in E-retailing Perception-based factors Reputation (+) Information Sources: - Information from friends and relatives - Word of mouth Similarity (+) Control (+) Familiarity (+) Knowledge-based factors Information practices (+) Experience-based factors Duration of experience (+) Communication of intentions (+) Figure 3: Results of the study: psychological reasons for consumer trust in e-retailing Eighth Research Symposium on Emerging Electronic Markets

16 R. Walczuch, J. Seelen and H. Lundgren References [Anderson and Weitz, 1992] E. Anderson and B. Weitz. The Use of Pledges to Build and Sustain Commitment in Distribution Channels. Journal of Marketing Research, 24: [Angenent, 1998] H. Angenent. Opvoeding en persoonlijkheidsontwikkeling. Uitgeverij Intro, [Brehm and Kassin, 1998] Brehm and Kassin. Social Psychology. Houghton, [Carver and Scheier, 1992] C. S. Carver and M. F. Scheier. Perspective on Personality. Allyn and Bacon, [Costa and McCrae, 1992] P. T. Costa and R. McCrae. Revised NEO Personality Inventory INEO PI-R) and NEO Five-factor Inventory (NEO_FFI): professional manual. Odessa, FL. [Das and Teng, 1998] T. K. Das and B. Teng. Between trust and control developing confidence in partner cooperation in alliances. Academy of Management Review, 23(3): [Deutsch, 1958] M. Deutsch. Trust and Suspicion. Journal of Conflict Resolution, 2(4): [Dibb, Simkin et al., 1994] S. Dibb, L. Simkin, W. M. Pride and O. C. Ferrell. Marketing Concepts and Strategies. Houghton Mifflin Company, [Dontje and Olthof, 1999] M. J. Dontje and C. F. Olthof. No trade without trust. Compact, 6: [Ferraro, 1998] A. Ferraro. Electronic Commerce: The Issues and Challenges to Creating Trust and a Positive Image in Consumer Sales on the World Wide Web. First Monday, 3(6). [Ford, 1998] M. D. Ford. Identity Authentication and 'E-Commerce'. The Journal of Information, Law and Technology,(3). [Ganesan, 1994] S. Ganesan. Determinants of Long-Term Orientation in Buyer-Seller Relationships. Journal of Marketing, 58: [Gilbert, Fiske et al., 1998] D. T. Gilbert, S. Fiske and L. Gardner. The handbook of social psychology. McGraw-Hill, Eighth Research Symposium on Emerging Electronic Markets 2001

17 Psychological Determinants for Consumer Trust in E-retailing [Gleitman, 1995] H. Gleitman. Psychology. W. W. Norton & Company, Inc., [IDCResearch, 2000] IDCResearch. One Quarter of Europeans Now Online. Nua Internet Surveys. Accessed on: February 2nd, 2000, Created: [Javenpaa and Tractinsky, 1999] S. L. Javenpaa and N. Tractinsky. Consumer trust in an Internet store: A Cross-Cultural Validation. Journal of Computer-Mediated Communication, 5(2). [Lewis and Weigert, 1985] J. D. Lewis and A. J. Weigert. Trust as a social reality. Social Forces, 63: [Loomis, 1959] J. L. Loomis. Communication, the Development of Trust, and Cooperative Behavior. Journal of Human Relations, 12: [McKnight, Cummings et al., 1998] D. H. McKnight, L. L. Cummings and N. L. Chervany. Initial trust formation in new organizational relationships. Academy of Management Review, 23(3): [Milne, 1999] G. R. Milne, and Boza, M. Trust and concern in consumers' perceptions of marketing information management practices. Journal of Interactive Marketing, 13(1): [Mitra, Reiss et al., 1999] K. Mitra, M. C. Reiss and L. M. Capella. An examination of perceived risk, information search and behavioral intentions in search, experience and credence services. Journal of Services Marketing, 13(3): [Morgan and Hunt, 1994] R. M. Morgan and S. D. Hunt. The Commitment-Trust Theory of Relationship Marketing. Journal of Marketing, 58: [Noeteberg, Christiaanse et al., 1999] A. Noeteberg, E. Christiaanse and P. Wallage. The Role of Trust and Assurance Services in Electronic Channels: An Exploratory Study. in Proceedings of the International Conference on Information Systems, Charlotte, NC, [Nunally, 1978] J. C. Nunally. Psychometric Theory. McGraw-Hill Book Company, [Olson and Suls, 1998] B. D. Olson and J. Suls. Self-, Other-, and Ideal-Judgements of Risk and Caution as a Function of the Five-Factor Model of Personality. Personality and Individual Differences, 28: Eighth Research Symposium on Emerging Electronic Markets

18 R. Walczuch, J. Seelen and H. Lundgren [Rousseau, Sitkin et al., 1998] D. M. Rousseau, S. B. Sitkin, R. S. Burt and C. Camerer. Not so different after all: a cross-discipline view of trust. Academy of Management Review, 23(3): [Wordsmyth, 1999] Wordsmyth. Experience Accessed on: July, 25th, 2001, Created: [Yamagishi and Yamagishi, 1994] T. Yamagishi and M. Yamagishi. Trust and Commitment in the United States and Japan. Motivation and Emotion, 23(2): [Young and Wilkinson, 1989] L. C. Young and I. F. Wilkinson. The Role of Trust and Cooperation in Marketing Channels: A Preliminary Study. European Journal of Marketing, 23(2): Eighth Research Symposium on Emerging Electronic Markets 2001

19 Psychological Determinants for Consumer Trust in E-retailing Appendix 1: Overview of categories and factors Category Personality Perception Experience Knowledge Attitude Factors Extraversion Neuroticism Openness to experience Agreeableness Conscientiousness Propensity to trust Reputation - Consumer dominated - Neutral sources - Marketer dominated Investment Similarity Normality Control Familiarity Duration of experience Satisfaction Communication Information practices Security aspects The Internet & Computers Shopping Eighth Research Symposium on Emerging Electronic Markets

20 R. Walczuch, J. Seelen and H. Lundgren Appendix 2 Constructs measured by the questionnaire Hypothesis Construct No. of References items H1 Extraversion 8 Benet-Martinez, 1991 H1 Neuroticism 8 Benet-Martinez, 1991 H1 Agreeableness 9 Benet-Martinez, 1991 H1 Conscientiousness 9 Benet-Martinez, 1991 H1 Openness to Experience 10 Benet-Martinez, 1991 H2 Reputation 7 Doney and Cannon, 1997; Javenpaa and Tractinsky, 1999; Ganesan, 1994; some created by authors H2 Information from consumer dominated 2 Created by authors sources H2 Information from neutral sources 2 Created by authors H2 Lack of information from marketer 3 Created by authors dominated sources H2 Perceived investment 4 Doney and Cannon, 1997; Javenpaa and Tractinsky, 1999; Smith and Barclay, 1997; some created by authors H2 Perceived similarity 4 Doney and Cannon, 1997; some created by the authors H2 Perceived normality 3 Created by the authors H2 Perceived control 4 Created by the authors H2 Perceived familiarity 4 Carbirino and Johnson, 1999; some created by the authors H3 Duration of experience 3 Doney and Cannon, 1997; Milne and Boza, 1999; Ganezan, 1994 H3 Satisfaction 3 Garbarino and Johnson, 1999; Ganesan, 1994 H3 Communication of expectations, 6 Ganesan, 1994; some created by the intentions, retaliation, absolution 3 authors 5 2 H4 Knowledge of information practices 5 Created by the authors H4 Knowledge about security technology 4 Created by the authors H5 Attitude towards the Internet & 3 Jarvenpaa and Tractinsky, 1999; some Computers created by the authors H5 Attitude towards shopping 4 Jarvenpaa and Tractinsky, 1999; some created by the authors 20 Eighth Research Symposium on Emerging Electronic Markets 2001

21 Psychological Determinants for Consumer Trust in E-retailing Appendix 3: Constructs with corresponding Cronbach s alpha values Construct Items Alpha Trust Extraversion Neuroticism Agreeableness Conscientiousness Openness to experience Propensity to trust Reputation Information consumer dominated sources: Word of mouth Friend/relatives 1 1 Not applicable Not applicable Information neutral sources 2 Not applicable Information marketer dominated sources 2 Not applicable Investment Similarity Normality Control Familiarity Knowledge of information practices 4 Not applicable Knowledge of security technology 3 Not applicable Attitude towards internet and computers Attitude towards shopping Duration of experience Satisfaction Communication indep. of buying process Communication of expectations Communication of intentions Communication of retaliation Communication of absolution Eighth Research Symposium on Emerging Electronic Markets