Conceptual Model for Examining the Role of Inter-Organizational Trust in E-Commerce Participation

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Perceived Benefits of E-Commerce

Perceived benefits refer to business value received by organizations that have adopted e-commerce. We identified three types of perceived benefits - perceived economic, perceived relationship-related, and perceived strategic benefits (Doney & Cannon, 1997; Fearson et al., 1998; Ganesan, 1994; Morgan & Hunt, 1994; Nath et al., 1998; Riggins & Rhee, 1998; Senn, 2000; Smith & Barclay, 1997). First, perceived direct or economic benefits are derived from the automated processes that contribute to direct savings in costs and time. Second, perceived relationship-related or personal benefits refer to positive trading partner trust relationships in the form of open communications, information sharing, cooperation, and commitment. Finally, perceived strategic or symbolic benefits refer to closer ties between trading partners, and improved reputation that increases business continuity and organizational performance.

Perceived Risks of E-Commerce

Perceived risks refer to potential weaknesses, barriers and losses faced by organizations that have adopted e-commerce. Risks can either occur internally or externally, by human or nonhuman (e.g., technology-related risks), accidental or intentional, and could be caused by disclosure, destruction, modification of e-commerce transactions, and by denial of service attacks from hackers (Das & Teng, 1996; Jamieson, 1996; Marcella et al., 1998). Ring and Van de Ven (1994) also classified risks as technology-performance related risks versus relational risks. This study identifies three types of perceived risks. First, perceived technology performance-related risks refer to misuse of e-commerce technologies, incompatible infrastructure, and uncertainties of e-commerce operations. Second, perceived relational risks refer to trading partners' lack of knowledge, exercising opportunistic behaviors, conflicting attitudes, and reluctance to change. Third, perceived general risks refer to poor business practices, environmental risks, and lack of standards and policies.

Participation in E-Commerce

Participation in e-commerce is the degree to which an organization is willing to engage in B2B e-commerce and it is measured in two ways. First, an economic view deals with the transaction volume, dollar value, sales, and profit that contribute to tangible business value. Second, a relational view examines the extent of organizational satisfaction and commitment in business relationships that result in intangible business value. The conceptual model (see Figure 1) below aims to examine the impact of inter-organizational-trust in e-commerce participation.

Figure 1: Conceptual Model of Inter-Organizational-Trust in E-Commerce Participation.

The conceptual model above was developed from theories in a multi-disciplinary literature. They include trust in business relationships and inter-organizational-relationship theory that helps to identify situational, structural, and procedural factors, thus contributing to governance mechanisms, perceived benefits, and uncertainties/risks of e-commerce. Similarly, transaction-cost-economics theory focuses on perceived benefits, such as economic advantages from savings in transaction costs, and perceived risks derived from uncertainties, task complexities, and interdependencies of trading partners leading to opportunistic behaviors. Resource dependency theory contributed to perceived risks of e-commerce derived from interdependencies between trading partners that created a situation of imbalance of power leading to conflicts, and finally, trust and security-based mechanisms (technology trust) contributed to perceived benefits of e-commerce derived from best business practices and technical security solutions embedded in the e-commerce technologies. Hence, perceived benefits and perceived risks derived from the above theories help determine the extent of e-commerce participation in the form of e-commerce performance and relationship trust development. The aim of the conceptual model is to provide a comprehensive and complete approach in understanding the importance of inter-organizational-trust in e-commerce participation. The next section outlines the research propositions derived from the conceptual model followed by Table 2, which presents the definitions of the constructs and subconcepts in the conceptual model.

Table 2: Summary of Constructs, Sub-Concepts (Dimensions), Definitions, and Sources.

Constructs	Sub-concepts Dimensions	Definitions	Source
Technology Trust in E-Commerce		the subjective probability by which organizations believe that the underlying technology infrastructure is capable of facilitating transactions according to their confident expectations	Jamieson, (1996); Marcella et al., (1998); Parker, (1995)
	Confidentiality	protection of e-commerce transactions and message content against unauthorized reading, copying, or disclosure via encryption mechanisms	Bhimani, (1996); Jamieson, (1996)
	Integrity	transaction accuracy and assurance that e-commerce transactions have not been altered or deleted via acknowledgment procedures applying digital signatures	Bhimani, (1996); Jamieson, (1996)
	Authentication	trading partner's transaction quality of being authoritative, valid, true, genuine, worthy of acceptance or belief by reason of conformity to the fact that reality is present via digital signatures, User IDs, and passwords	Bhimani, (1996); Jamieson, (1996)
	Non-repudiation	originator of e-commerce transactions cannot deny receiving or sending that transaction via acknowledgement procedures applying digital signatures	Bhimani, (1996); Jamieson, (1996)
	Access Controls	protection of e-commerce transactions against weaknesses in the transmission media and protection of the sender against internal fraud or manipulation via authorization mechanisms such as User IDs and passwords	Bhimani, (1996); Jamieson, (1996)
	Availability	assurance that passes or conveys e-commerce transactions without interruption by providing authorized users with e-commerce systems via authorization mechanisms	Bhimani, (1996); Jamieson, (1996)
	Best Business Practices	policies, procedures and standards that ensure smooth functioning of e-commerce via written policies, procedures and top management commitment	Jamieson, (1996); Marcella et al., (1998)
Relationship Trust in E-Commerce		the subjective probability by which organizations' members believe that their partner will behave according to their confident expectations	Doney & Cannon, (1997); Ring & Van de Ven, (1994); Smith & Barclay, (1997); Mayer et al., (1995)
	Competence Trust	reliance upon the ability, skills, knowledge and competence of trading partners to perform B2B e-commerce correctly and completely	Lewicki & Bunker, (1996); Mayer et al., (1995)
	Predictability Trust	reliance upon the consistent behaviors of trading partners that allows another trading partner to make predictions and judgements due to past experiences	Lewicki & Bunker, (1996) Mayer et al., (1995)
	Goodwill Trust	reliance upon the care, concern, honesty, and benevolence shown by trading partners that allows the other trading partner to further invest in their trading partner relationship	Sako, (1998) Mayer et al., (1995)
Perceived Benefits of E-Commerce		Perceived benefits of e-commerce are gains received by organizations that have adopted e-commerce	Scala & McGarth, (1993); Saunders & Clark, (1992); Premkumar et al., (1994)
	Direct (economic) benefits of e-commerce	Benefits derived from direct savings in costs and time	Scala & McGarth, (1993); Saunders & Clark, (1992)
	Relationship-related (personal) benefits of e-commerce	Benefits derived from open communications, information sharing, cooperation, and commitment	Ganesan, (1994); Gulati, (1995); Ring & Van de Ven, (1994); Smith & Barclay, (1997)
	Strategic (symbolic) benefits of e-commerce	Benefits derived from closer ties between trading partners, and improved reputation, thus leading to business continuity	Scala & McGarth, (1993); Saunders & Clark, (1992)
Perceived Risks of E-Commerce		Perceived risks of e-commerce are the potential weakness, barriers and losses faced by organizations that have adopted e-commerce	Bhimani, (1996); Jamieson, (1996)
	Technology-performance related risks of e-commerce	Risks derived from misuse of e-commerce technology, such as unauthorized access, integrity, viruses, confidentiality, availability	Bhimani, (1996); Jamieson, (1996)
	Relational risks of e-commerce	Risks derived from trading partners' lack of knowledge and training in e-commerce, such as uncertainties, imbalance of power, mistrust, opportunistic behaviors	Parkhe, (1998); Ring & Van de Ven, (1994); Williamson, (1975)
	General perceived risks of e-commerce	Risks derived from poor business practices, environmental risks, standards and audit policies	Marcella et al., (1998)
Participation in E-Commerce		Participation in e-commerce is the degree to which organizations are willing to engage in B2B e-commerce	Doney & Cannon, (1997); Iacovou et al., (1995); Morgan & Hunt, (1994); Smith & Barclay, (1997)
	E-Commerce Performance	Is the volume, dollar value, and types of business transactions exchanged between trading partners	Smith & Barclay (1997); Hart & Saunders(1997)
	Trading Partner relationship development	Is the extent of trading partner satisfaction	Morgan & Hunt, (1994)

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