The role of external and internal signals in E-commerce

Online markets present a challenging environment to evaluate experience products, especially products sold by unknown online sellers. To alleviate this problem, unknown online sellers may choose to signal quality using website signals. However, signals are not useful unless buyers notice these signals and believe that these signals are true. In this study, we evaluate the effect of the believability of external and internal website signals on the buyer's evaluation of seller and product quality and purchase intentions when interacting with unknown online sellers. The results suggest that external and internal signals, if believable, have a significant effect on buyer perceptions. While both types of signals are important, buyers find external signals more salient than internal ones. These results enhance our understanding of signals in e-commerce because they help online sellers to refine their digital business strategies and inform online buyers about the importance of website signals. We enhanced the literature review by adding discussion on trust and website signals.We strengthened the theoretical part of the paper by integrating trust and signaling theories by including trust transference theory and relating the theory to external signals.We revised the theoretical implications by including additional discussion on the role of external and internal signals and believability.We improved the research design and modified the model by adding the relationship between trust and perceived deception.We included post hoc analyses to demonstrate the differences by believability among respondents.

[1]  Scott B. MacKenzie,et al.  Common method biases in behavioral research: a critical review of the literature and recommended remedies. , 2003, The Journal of applied psychology.

[2]  M. Spence.  Consumer Misperceptions, Product Failure and Producer Liability , 1977 .

[3]  Trevor T. Moores,et al.  Do consumers understand the role of privacy seals in e-commerce? , 2005, CACM.

[4]  Joseph P. Cannon,et al.  Understanding the Influence of National Culture on the Development of Trust , 1998 .

[5]  Joseph S. Valacich,et al.  An Alternative to Methodological Individualism: A Non-Reductionist Approach to Studying Technology Adoption by Groups , 2010, MIS Q..

[6]  David Gefen,et al.  Managing User Trust in B2C e-Services , 2003 .

[7]  Junghoon Moon,et al.  Exploring the effect of e-WOM participation on e-Loyalty in e-commerce , 2013, Decis. Support Syst..

[8]  Paul A. Pavlou,et al.  Consumer Acceptance of Electronic Commerce: Integrating Trust and Risk with the Technology Acceptance Model , 2003, Int. J. Electron. Commer..

[9]  Naresh K. Malhotra,et al.  Common Method Variance in IS Research: A Comparison of Alternative Approaches and a Reanalysis of Past Research , 2006, Manag. Sci..

[10]  Wynne W. Chin.  The partial least squares approach for structural equation modeling. , 1998 .

[11]  Detmar W. Straub,et al.  Trust and TAM in Online Shopping: An Integrated Model , 2003, MIS Q..

[12]  Bo Sophia Xiao,et al.  Do actions speak louder than voices? The signaling role of social information cues in influencing consumer purchase decisions , 2014, Decis. Support Syst..

[13]  Wolfgang Jank,et al.  Getting the most out of third party trust seals: An empirical analysis , 2015, Decis. Support Syst..

[14]  Anindya Ghose,et al.  Internet Exchanges for Used Goods: An Empirical Analysis of Trade Patterns and Adverse Selection , 2008, MIS Q..

[15]  Andrea Everard,et al.  Online ads in familiar and unfamiliar sites: effects on perceived website quality and intention to reuse , 2009, Inf. Syst. J..

[16]  Ke Wang,et al.  Understanding online purchase decision making: The effects of unconscious thought, information quality, and information quantity , 2012, Decis. Support Syst..

[17]  Guido Lang,et al.  The Effect of Positive and Negative Signals on Perceived Deceptiveness of Websites in Online Markets , 2015, J. Theor. Appl. Electron. Commer. Res..

[18]  Liang Chen,et al.  Will video be the next generation of e-commerce product reviews? Presentation format and the role of product type , 2015, Decis. Support Syst..

[19]  Richard T. Watson,et al.  WebQual: An Instrument for Consumer Evaluation of Web Sites , 2007, Int. J. Electron. Commer..

[20]  Sirkka L. Jarvenpaa,et al.  Perils of Internet fraud: an empirical investigation of deception and trust with experienced Internet consumers , 2000, IEEE Trans. Syst. Man Cybern. Part A.

[21]  P. Ekman.  Telling lies: clues to deceit in the marketplace , 1985 .

[22]  Geoffrey M. Maruyama,et al.  Basics of structural equation modeling , 1997 .

[23]  B. J. Fogg,et al.  What makes Web sites credible?: a report on a large quantitative study , 2001, CHI.

[24]  Andrea Everard,et al.  How Presentation Flaws Affect Perceived Site Quality, Trust, and Intention to Purchase from an Online Store , 2005, J. Manag. Inf. Syst..

[25]  Izak Benbasat,et al.  A Research Agenda for Trust in Online Environments , 2008, J. Manag. Inf. Syst..

[26]  Joel Podolny.  A Status-Based Model of Market Competition , 1993, American Journal of Sociology.

[27]  Paul A. Pavlou,et al.  Understanding and Predicting Electronic Commerce Adoption: An Extension of the Theory of Planned Behavior , 2006, MIS Q..

[28]  Angelika Dimoka,et al.  On Product Uncertainty in Online Markets: Theory and Evidence , 2011, MIS Q..

[29]  Katherine J. Stewart,et al.  How Hypertext Links Influence Consumer Perceptions to Build and Degrade Trust Online , 2006, J. Manag. Inf. Syst..

[30]  Paul A. Pavlou,et al.  Building Effective Online Marketplaces with Institution-Based Trust , 2004, Inf. Syst. Res..

[31]  A. Rao,et al.  No Pain, No Gain: A Critical Review of the Literature on Signaling Unobservable Product Quality , 2000 .

[32]  A. Jain,et al.  Extrinsic and Intrinsic Cue Effects on Perceptions of Store Brand Quality , 1994 .

[33]  Insu Park,et al.  Assurance Seals, On-Line Customer Satisfaction, and Repurchase Intention , 2010, Int. J. Electron. Commer..

[34]  J. H. Davis,et al.  An Integrative Model Of Organizational Trust , 1995 .

[35]  L. Zucker.  Production of trust: Institutional sources of economic structure, 1840–1920. , 1986 .

[36]  S. Grazioli.  Where Did They Go Wrong? An Analysis of the Failure of Knowledgeable Internet Consumers to Detect Deception Over the Internet , 2004 .

[37]  Chun-Ming Chang,et al.  Re-examining the influence of trust on online repeat purchase intention: The moderating role of habit and its antecedents , 2012, Decis. Support Syst..

[38]  M. Spence.  Job Market Signaling , 1973 .

[39]  J. H. Davis,et al.  An integrative model of organizational trust, Academy of Management Review, : . , 1995 .

[40]  A. Rebecca Reuber,et al.  When Nobody Knows Your Name: Country-of-Origin as a Reputational Signal for Online Businesses , 2011 .

[41]  Paul E. Johnson,et al.  Detecting deception: adversarial problem solving in a low base-rate world , 2001, Cogn. Sci..

[42]  Raquel Benbunan-Fich,et al.  Signaling theory and information asymmetry in online commerce , 2012, Inf. Manag..

[43]  Izak Benbasat,et al.  The Effects of Trust-Assuring Arguments on Consumer Trust in Internet Stores: Application of Toulmin's Model of Argumentation , 2006, Inf. Syst. Res..

[44]  John D. Wells,et al.  WHAT SIGNAL ARE YOU SENDING ? HOW WEBSITE QUALITY INFLUENCES PERCEPTIONS OF PRODUCT QUALITY AND PURCHASE INTENTIONS 1 , 2011 .

[45]  Anol Bhattacherjee,et al.  Individual Trust in Online Firms: Scale Development and Initial Test , 2002, J. Manag. Inf. Syst..

[46]  Dan J. Kim,et al.  Self-Perception-Based Versus Transference-Based Trust Determinants in Computer-Mediated Transactions: A Cross-Cultural Comparison Study , 2008, J. Manag. Inf. Syst..

[47]  William Boulding,et al.  A consumer-side experimental examination of signaling theory: Do , 1993 .

[48]  H. Raghav Rao,et al.  A trust-based consumer decision-making model in electronic commerce: The role of trust, perceived risk, and their antecedents , 2008, Decis. Support Syst..

[49]  Paul A. Pavlou,et al.  Understanding and Mitigating Uncertainty in Online Exchange Relationships: A Principal-Agent Perspective , 2007, MIS Q..

[50]  Dan Jong Kim,et al.  Revisiting the role of web assurance seals in business-to-consumer electronic commerce , 2008, Decis. Support Syst..

[51]  Steven Walczak,et al.  Dressing Your Online Auction Business for Success: An Experiment Comparing Two eBay Businesses , 2008, MIS Q..

[52]  T L Stein,et al.  No pain. , 1982, Journal of the American Dental Association.