Information Systems Research, vol. 15, issue 1 (2004)
trust is a buyer's that effective institutional mechanisms perception third-party are in place Institution-based to facilitate transaction success. This paper and economic theories about institution integrates sociological based trust to propose that the perceived effectiveness of three IT-enabled institutional mechanisms—specifically feedback mechanisms, escrow trust in the services, third-party and credit card guarantees—engender buyer of online auction sellers. community Trust in the marketplace intermediary that provides the overarching insti tutional context also builds of sellers. In addition, buyer's trust in the community buyers' trust in the community of sellers (as a group) facilitates online transactions risk. by reducing perceived Data collected from 274 buyers in Amazon's online auction marketplace provide support for the proposed structural model. data collected Longitudinal a year later show that transaction intentions are correlated with actual and self-reported buyer behavior. The study shows that the perceived effectiveness of institutional mecha nisms encompasses both "weak" (market-driven) and "strong" mechanisms. These mechanisms (legally binding) engender trust, not only in a few reputable sellers, but also in the entire community of sellers, which contributes to an effective online The results thus help the inherent that marketplace. explain why, despite uncertainty arises when buyers and sellers are separated in time and in space, online marketplaces are proliferating. Impli cations for theory are discussed, and suggestions for future research on improving IT-enabled trust-building mechanisms are suggested.
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