Theoretical Background

Definitions of Trust

There is no unambiguous definition of trust, probably because there are several approaches to it, such as psychological, social psychological, economic, sociological and philosophical. The definitions of trust given in this section are primarily based on sociological conceptions.

Two related definitions of trust are given by the sociologists Giddens and Luhmann. Giddens (1990) defines trust as "confidence in the reliability of a person or system regarding a given set of outcomes or events, where that confidence expresses a faith in the probity or love of another or in the correctness of abstract principles." Luhmann (1979) states that trust reduces complexity and discloses possibilities for action, which would have remained unlikely and unattractive without trust, and that trust is only possible in a familiar world because it needs history as a reliable background. Meyerson, Weick and Kramer (1996) point out that risk is a fundamental element of trust.

Usually, trust is associated with willingness to cooperate and benefiting from such cooperation. For example, Hosmer (1995) states that trust is the reliance by one person, group or firm upon a voluntarily accepted duty on the part of another person, group or firm to recognize and protect the rights and interests of all others engaged in a joint endeavour or economic exchange.

Trust in E-Commerce

Consumers' attitudes towards e-commerce and trust have been a significant topic of research during the recent years (Cheskin Research, 1999; Jarvenpaa and Tractinsky, 1999; Hoffman et al., 1999). Different models of consumer trust have also been presented (e.g., Tan and Thoen, 2002). Kini and Choobineh (1998) define trust related to a system as an individual's belief in the competence, dependability and security of the system under conditions of risk. As discussed earlier, risk is seen as an important component of trust, because an individual's decision to trust is relevant only when there is some risk of negative outcomes. In electronic commerce, trust is important whenever financial transactions or important personal information are involved. Nielsen (2002) defines trust in e-commerce as the users' willingness to risk time, money and personal data.

The elements that communicate trust in online shops and additional consumer perspectives were explored in Cheskin Research (1999). As a result, the following six components that communicate trust were identified: seals of approval (symbols, "security brands," which are designed to reassure the visitor that security has been established), brand, navigation (the ease of finding what the user seeks), fulfillment (e.g., the site clearly indicates how orders will be processed), presentation (e.g., design), and technology (e.g., functionality and speed of the site).

In a study carried out in Finland, the results indicated that consumers considered it important that the vendor was already familiar and reliable and were not eager to make purchases from unfamiliar vendors. Shopping in foreign online shops aroused reserved feelings, and the respondents reported shopping more willingly in domestic online shops (Uusmedia kuluttajan silmin, 1998). As this study was conducted in Finland, its results are a useful point of reference for the results of our pilot study.

Well-known brand was found important in another Finnish study on usability testing of 12 Finnish commercial sites (Hirvasniemi, Kaleva and rni, 2002). The eight test users who participated were divided into two subgroups based on their e-shop experiences: half of the test users had experiences of shopping on the web, while the other half were novices in this respect. The rationale for using only a small number of test users is that most usability problems are found with the first few users. For example, Landauer and Nielsen (1993) state that seven participants are sufficient to guarantee optimal results when evaluating small systems. For those having shopped on the web, trust in the brand was the most significant reason for choosing a given online shop, while the price of the product had the second biggest effect. Issues concerning design were mentioned as signals of the trustworthiness of the store: poorly designed websites (meaning complicated or amateurish design) suggest a nontrustworthy online shop (Hirvasniemi et al., 2002). The participants in the usability tests pointed out several issues that affected their perception as to whether the online shop was trustworthy or not (Hirvasniemi et al., 2002). These observations can be classified into five critical issues:

1. Ease of use — The buttons and other elements of the site must work faultlessly and predictably. The information of products and delivery terms must be clear and easy to find.

2. Data security — Issues concerning the data security of the site are important, especially in view of credit card payments.

3. Familiarity — A store that you know beforehand from other connections is more trustworthy than one you have never heard about before.

4. Contact information — There must be telephone numbers or other ways to reach the shop; email is not enough.

5. Trademarks — The products sold in the shop also matter as a way of building trust. Widely known trademarks were regarded as more trustworthy than unfamiliar ones.

Jarvenpaa and Tractinsky (1999) hypothesised that consumers from individualistic cultures would exhibit higher trust and lower perception of risk in specific Internet stores. Furthermore, they assumed that the size and reputation of the web store would have a greater effect on trust in an individualistic culture than in acollectivist one. Respondents in Australia, Israel and Finland were asked questions about their trust and willingness to buy from online shops. It turned out that no major cultural effects were found regarding the antecedents of trust. Consumers seemed to have relatively similar perceptions of the sites. Instead, the results tentatively suggested that greater experience with the web is associated with lower trust in a particular merchant and a higher expectation of risk. Jarvenpaa and Tractinsky (1999) came to the conclusion that these results might be due to, for example, sampling bias, the insensitive measures of culture in their study, or the narrow measurement of trust.

Hoffman et al. (1999) identified the connection between web experience and trust in their study by showing that the negative perceptions regarding security and privacy for individuals who do not shop online increased along with their level of online proficiency. In their study, the respondents' greatest online shopping concerns were control over information privacy. Sixty-two percent of the respondents who refused to provide personal information to websites stated that this is because they did not trust those who were collecting the data or because the sites provided no information about how the data would be used.

Miyazaki and Fernandez (2001) found out that sharing personal information with other companies, tracking personal shopping habits or being contacted by the company without providing consent also worried the respondents. The participants were also concerned about the possible fraudulent behaviour of online retailers. However, more abundant Internet experience and the use of other remote purchasing methods were related to perceptions of lower risk regarding online shopping. In Miyazaki and Fernandez (2001), perceived risk seemed to decline along experience, but on the other hand privacy was a greater concern for consumers with longer periods of experience. The results suggested that the accumulation of such experience might lead to more concerns regarding privacy issues.

Threats of Trust in E-Commerce

The threats of trust in e-commerce include factors connected to the security issues concerning information exchange and paying online, the uncertainty of making a purchase without seeing the purchased goods, possibly insufficient communication channels between the customer and the vendor, fear of fraudulent behaviour and the lack of legal norms or unawareness of them in e-commerce. Grabner-Kraeuter (2002) claims that uncertainty concerning ecommerce is due to potential technical problems and the lack of legal norms. The studies reported earlier in this chapter highlighted security questions, especially concerning payment online and the use of personal data required by web services. These studies showed that consumers do not trust e-commerce enough to engage themselves in situations that require exchange of money, disclosure of their credit card number and personal information through the web. Consumers want to know the purposes for which the information they give about them is used. In ordinary shops, consumer's consuming habits are quite difficult to combine, whereas on the Internet it is quite easy for service providers to collect personal data, including electronic addresses, the specific history of goods and services searched for and requested and other Internet sites visited. (Hoffman et al., 1999; Uusmedia kuluttajan silmin, 1998; Hirvasniemi et al., 2002.)

Some inconveniences of online shopping, such as the inability to touch, feel or see the actual goods to assess quality, the general difficulties and hassles of online shopping, or the potential problems and costs of returning undesired goods, also seemed to puzzle the respondents of the Grabner-Kraeuter (2002) study. The quality assessment is often more difficult in electronic markets than in traditional markets.

E-commerce is still unknown to most consumers. Its technology is unfamiliar to them, and there are several non-transparent elements in e-commerce, which cause uncertainty and, consequently, mistrust in e-commerce, especially regarding financial transactions. All this is emphasised when a foreign vendor is in question. Additionally, technical facts about e-commerce sites are quite hard to understand for non-experts (e.g., Konrad, Fuchs and Barthel, 1999). Thus, people who do not have personal experience of using online shops believe in the media and the public image of e-commerce.