What is Relationship Trust

The Internet, a rapidly expanding global computer and communication infrastructure, has facilitated the emergence of digitization and globalization that in turn has permitted businesses to extensively engage in foreign investments. The reasons for using the Internet include: first considerably reducing the coordination costs involved in inter-organizational transactions. Second, business partners from remote locations are able to communicate and coordinate together using Web services and finally, the widespread adoption of open standards on the Web has greatly reduced the complexities thereby providing flexibility in conducting inter-organizational transactions. According to Forrester Research, e-commerce in the U.S. will grow at 19% reaching $230 billion by 2008. Today firms are attempting to attain their value chain goals by offering and selling products and services in an increasingly competitive market environment. Given the uncertainties of online transactions, Web services encourage the creation of institutional structures for online exchange relationships. Building upon the notion of institutional structures, this chapter examines the role of technology trust that develops through governance mechanisms and provides structural assurances that in turn enhance relationship trust thereby reducing and mitigating risks in Web services.