Lessons Learned from EDI and Its Impact on Institutional Trust in Electronic Marketplaces

Abstract

Given the uncertainties of e-business, this chapter examines the role of institutional trust, which has been viewed as a key facilitator of electronic marketplaces (Pavlou, Tan, & Gefen, 2003). In doing so, we draw upon the principles of research on traditional electronic data interchange (EDI) via value-added-networks (VANs) to develop a set of theory-driven, institutional trust-building, facilitating conditions, namely, (1) IT connectivity, (2) standards, (3) security, and (4) uniform product descriptions. This study has implications for (1) the nature and role of institutional trust in e-marketplaces, (2) the strategic design of trust-building mechanisms in e-marketplaces, and (3) an extension of the literature on institutional trust.