Trust in Online Customer-Firm Interaction: A Literature Review and Directions for Research

Trust in Online Customer-Firm Interaction: A Literature Review and Directions for Research

Sandro Castaldo (SDA Bocconi School of Management, Italy), Monica Grosso (SDA Bocconi School of Management, Italy), Charles Hofacker (Florida State University, USA) and Katia Premazzi (SDA Bocconi School of Management, Italy)
DOI: 10.4018/978-1-61520-901-9.ch018

Abstract

Trust is a key element in developing customer-firm relationships in the virtual marketplace. The peculiarities of the online setting, however, threaten firms’ capability to exploit opportunities derived from such environments. This can lead to customers mostly using the online setting as an information source rather than as a place to conduct transactions. Trust is a key antecedent of online transactions. In this chapter, the authors focus on trust’s role in the virtual marketplace by reviewing a series of relevant studies and proposing directions for future research.
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Threats And Opportunities In The Virtual Marketplace: The Critical Role Of Trust

At the turn of the century, the development of technologies and the consequent increase in the use of electronic channels led to an excessively positive forecast of the virtual marketplace’s short-term potential. In turn, this led to the now well-known ‘Internet bubble’ phenomenon and its subsequent crash. Following that collapse, many studies investigated its causes. Their results converged, revealing that online transaction problems are mainly due to the high level of risk and uncertainty characterizing this marketplace and the lack of trust that might otherwise have overcome this. Customers seem to increasingly rely on the Internet as an information tool, but do not actually purchase anything (MacGraw, 1999; Everard and Galletta, 2005).

For online retailing to succeed, firms must receive extremely sensitive customer information, including names, street addresses, and credit card numbers. Furthermore, data on customers and their habits are frequently required to provide them with quality service. Indeed, customers almost always need to assist with the service production process. This assistance often originates from information that customers provide. If a client, for example, orders an item of clothing, such as a dress, she has to provide details of her dress size, taste, and so on. Customization – whether the classic version or mass-customization – requires even more detailed information.

Marketing theory increasingly emphasizes the strategic management of customer relationships (e.g., Payne and Frow, 2005), which requires a strong flow of information, specifically from the customer to the firm. The information and communication technologies (ICT) evolution has provided firms with the opportunity to acquire a huge quantity and variety of data from Web visitors and shoppers (Cespedes and Smith, 1993; DeCew, 1997). However, the ease with which data can be acquired and disseminated across the Web, and the peculiarities of the electronic setting, have led to growing concerns about consumer privacy (e.g., Culnan, 1993; Milne and Gordon, 1993; Milne, 2000; Phelps, Novak and Ferrell, 1999).

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