The Formation of Online Trust

Abstract

This study outlines three trust-building processes (relational, calculative, and institutional) that shape individual trust in online firms and describes how these processes change over time as users gain experience with the online firms. It hypothesizes three alternative belief structures resulting from the above processes as determinants of trust, theorizes the temporal nature of their effects on trust as users observe and learn from the firm’s actual behavior, and then empirically tests the hypothesized associations using data collected from a field survey of online banking users. The results indicate that relational, calculative, and institutional beliefs are indeed significant drivers of trust. However, calculative and institutional beliefs have stronger initial effects than relational beliefs for new consumers of online firms. The effect of calculative belief on trust decreases with time, while that of relational beliefs increases and that of institutional beliefs remains relatively unchanged. Research and practical implications of these findings are discussed.