The Importance of Trust

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Previous scholars who examined trust in business relationships have identified trust to be a key factor for successful long-term trading partner relationships. For example, trust has been found to increase cooperation, thereby leading to communication openness and information sharing (Doney & Cannon, 1997; Ring & Van de Ven, 1994; Smith & Barclay, 1997). Based on an earlier version of this study we argue that trust is derived from two forms. First, technology trust refers to institutional structural assurances and security mechanisms embedded in e-commerce technologies. Technology trust consists of security services and best business practices that serve as control protective mechanisms. Second, relationship trust refers to the extent the partner is competent, predictable, reliable, and exhibits benevolence in the e-commerce relationships.

Technology Trust in E-Commerce

Technology trust is defined as "the subjective probability by which organizations believe that the underlying technology infrastructure is capable of facilitating transactions according to their confident expectations" (Ratnasingam & Pavlou, 2002:22). In her seminal study, Zucker (1986) suggests that institutional trust is the most important mode of trust and it is created in an impersonal economic environment without familiarity and similarity. She identified two dimensions, namely, third party certifications such as licenses, regulations, and laws used to define trustworthy behaviors, and secondly, escrows. Similarly, McKnight and Chervany (2002) described institution-based trust as part of Internet transactions and identified two dimensions of institutional trust. First, situation normality referring to beliefs that success is anticipated because the situation is normal and secondly, structural assurances such as contracts regulations and guarantees. We adapted this reasoning and proposed the term technology trust to fit the context of B2B e-commerce. Technology trust is derived from trust and security-based mechanisms embedded in the e-commerce technologies including digital signatures, encryption mechanisms (via public key infrastructure), authorization mechanisms (via User IDs and passwords), and best business practices (via regular audit, top management commitment, standards and contingency procedures) (Bhimani, 1996; Jamieson, 1996; Parker, 1995; Marcella et al., 1998). They provide technological, organizational, and relationship benefits from the automated processes that include timely, accurate, complete transmission and receipt of transactions, thereby achieving transaction integrity, authentication, confidentiality, non-repudiation, and availability. Table 2 provides a definition of technology trust and its dimensions applied in this study. Hence, by properly managing these mechanisms and their dimensions, organizations can perceive benefits of e-commerce. Alternatively, with poor business practices such as incomplete, incompatible, insecure systems, together with inadequate backups and a lack of training given to staff operating e-commerce applications, risks of e-commerce may escalate.

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