Impact of Trust on Consumer Behavior

Introduction

Customer trust issue has been studied by psychologists, management, and marketing boffins. Increasing use of the World Wide Web as a mercantile tools caused Consumer trust become related to Information Systems (IS) research topic. (Koufaris & Hampton-Sosa, 2002)

Beside of many benefits of e-Commerce, many customers still hesitate when they want to use online shopping. This hesitation occurs because of the lack of trust issue in online environment. This concept can be understood better by means of comparing electronic commerce and traditional commerce. Lack of face-to-face communication and virtual environment of a web store can affect the customer trust building. For example, it is not possible for consumer to check product physically before buying. In addition to that, hacking into online shopping sites database can be another element which destroys costumer trust (Koufaris & Hampton-Sosa, 2002). Other problems such as credit card fraud is primary concern for consumers, although it is very rare. consumers fear that online shopping will compromise their privacy and personal details. Privacy is another major problem for online transactions and smart card schemes (Argy & Bollen, 1999)

This dissertation examines consumer trust and its determinants in the context of Internet shopping in Middle East.

Research aims and objectives

The overall aim of this research is to investigate the impact of trust on consumer behavior and identify factors that have influence on trust.

This section clarifies how this goal can be achieved by these research objectives:

• To identify the current Internet usage in Middle East.
• To define factors that affect trust issue.
• To identify trust in a vendor.
• To outline barriers to the structure of trust.
• To examine the effect of trust on consumer behavior in online environment.

Literature review

The nature concept of trust

What is the meaning of ”Trust”? According to the Cambridge Dictionary Online (2011) trust is defined as “to have belief or confidence in the honesty, goodness, skill or safety of a person, organization or thing”. Since existence human beings and social communication, the trust is existed. Many feature of human life is based on the trust. It is considered the crucial part of humanity and it is part of every friendship, love, and any other kind of relationship in society. (Wang & Emurian, 2005)

Trust is an individual idea which means honesty and sincerity of other people can be relied on. Trust is separated into two divisions: the first one is personal trust and the second is social trust. Personal trust is related to your interact with people, such as your friends, your colleague or your spouse. In other words, this concept evolves between people characteristics, names, appearances, and feeling and must be actively achieved. Social trust is form of trust which is in society environment, for instance, the military, the government or the health system. Social trust against the personal trust does not have power over human feelings, instead it develop between organization and person. Social trust is often inherited and inactive. (Fugelli, 2001.)

Trust in E-Commerce

The existence of online shops may lead to elimination of the concept of local store. The positive point of Internet can be overcoming some limitations such as time and geographical location. It has made possible for shops to have customers from anywhere at any time. (Klang, 2001). Dyer Wujin Chu (1997) indicates that the transaction cost is reduced by trust and contrariwise enhance the information sharing between supplier and customer relationship.

Trust is a key factor in uncertainty conditions. As a new form of marketing, Internet shopping is more risky than the traditional kind of shopping; the reason may be that Internet shopping is less well known to buyers.(t9) If people trust e-Commerce environment, they eventually could prefer online shopping over local markets to some extent. (t17) In virtual environment, it may be hard to predict consumer behaviors. Moreover, it is hard to overestimate the importance of trust in e-commerce. Many studies have argued that, trust is a fundamental factor which can help developing Internet shopping.(t9)

McKnight and Chervany (2001) and Pavlou (2003) state that a high level of trust is not only meeting consumer satisfaction in Internet transactions. but also, being able to disappear uncertainty and risky condition and hesitation in most online commercial environment. (initial trust). Gefen and Straub (2004) indicate that the level of consumers trust involve directly to help suppliers to retain buyers.(initial trust)

Trust in different disciplines

In philosophy, trust is a way of understanding human nature. Ancient Greek philosophers believed trust will be created when people fear about the consequences of stealing and fraud. Also, they discovered that sympathy and love can bring more trust. (Wang & Emurian, 2005)

On the other hand, modern philosophers focused on trust relationships. Describing trust as three-place predicate. A is trusting B, and B is valuing C. Baier (1994) [Baier, A. C. (1994). Moral prejudices: Essays on ethics. Cambridge: Harvard University Press.

] explains trust as ‘‘accepted vulnerability to anotherÕs possible but not expected ill will toward one”. Baier believes that A have to know how much power to give for making decision. whereas, B have discretionary powers over entrusted C, A (trustor) is taking the risk of power abuse of the trustee with granted power.

In the discipline of psychology, the focus is on interpersonal aspect of trust with different approach. Psychologists believe that trust (especially interpersonal trust) is fundamental part of personality development (Erikson, E. H. (1963). Childhood and society (2nd ed.). New York: W.W. Norton.). One of the most cited definition of trust was given by Rotter (1967) [Rotter, J. B. (1967). A new scale for the measurement of interpersonal trust. Journal of Personality, 35, 651–665.] who interpreted trust as ‘‘an expectancy held by individuals or groups that the word, promise, verbal, or written statement of another can be relied on” (p. 651). Researchers agree on the fact that every individual is different in interpersonal trust. They also approved the positive effect of trust on people and society in general. (Wang & Emurian, 2005)

Marketing discipline has been researched on distribution channels. One specific area is maintaining a long-term relationship in that channel with taking the cost of changing suppliers is expensive. Kumar (1996) [Kumar, N. (1996). The power of trust in manufacturer–retailer relationships. Harvard Business Review, 74, 92–106.] agreed that trust is the key factor in returning more profit, instead of long-term contracts.

Trust building

Kim, Song, Braynov, and Roa (2001) categorized multi-discipline determinants of online trust into six part, information content, transaction, technology, institutional, and consumer-behavior. These aspects then broken down to sub-categories or properties and assembled a ‘theoretical framework’ (Wang & Emurian, 2005) for online trust exposing different steps that user goes through to finish an online transaction. Kim et al. (2001) suggested that trust can be built before, during, or after user made the transaction. The researcher goes further and different stages of transaction are connected to different determinants of trust. (Wang & Emurian, 2005)

According to Lee and Turban (2001), there are four factors influencing customers trust in online commerce, trustworthiness of Internet for online shopping, infrastructure factors such as third party certificate or digital signature, trustworthiness of Internet merchant, and other antecedents (e.g. company size). Most of researchers ignored the importance of consumer trust in Internet and computers as medium of online shopping. However, Lee et al. (2001) argue that customer’s perception of Internet is key factor in Internet shopping trust. (Wang & Emurian, 2005)

Human beings are living in a lawful society. It’s not possible to separate law and human social life. Therefore, it worth discussing law and legal aspect of trust in consumers behaviours. Human kind use law to have peace of mind and feel secure when doing a business. Laws and regulations are here to reduce risks. However, sometimes having a lawful action is expensive (e.g. contract disputes among companies). additionally, it can slow the process and make it inconvenient (Bolton, G.E & Katok, E. (2004). “How effective are electronic reputation mechanisms? An experimental investigation”. Management Science, 50 (11), 1587-1602.). According to Young and Wilkinson (1989) those who have more legally strict contract experience more legal problems in contrast to trust-related issues. Young et al. (1989) conclude “more powerful firms on the other hand, emphasised their own trustworthiness2 in dealing with trading partners.”

Methodology

In this chapter, the details of methodology and the reason of choosing that will be discussed. Then the methods for collecting data will be introduced. In this dissertation many methods for data collection will be employed.

Research approaches

There are two methods which the researcher use them in their research. They are inductive and deductive approaches. Each of them has own definition. Deductive approach starts the study with a wider concept and narrows it towards a specific examination. Whereas, inductive approach begin the research with more distinct inspection, in order to assemble more generalise hypothesis. This approach is well-known as “bottom-up”.

In this dissertation the deductive approaches will be applied. The other term for this approach is “top-down” approach. This study will be started with literature review and follows by a questionnaire and then according to the result and the patterns, solutions to trust issues in Middle east will be suggested.

In addition, the quantitative method adopted for this research. This adoption is based on the research aim and objectives.

Methods of investigation

In this research project, different methods for gathering data will be utilized, including literature review, questionnaire, and interviews. Because of time limitation and cost, the scope of investigation is limited to five countries in Middle East.In literature review, the knowledge background of research will be introduced and help to answer the following questions:

• What are the factors determining trust in e-commerce in Middle East culture?
• To what extent trust issue can affect the Middle Eastern thoughts in area of online shopping?
• How to solve the trust issue in Middle East?
• How to modify the Middle East consumer attitudes on trust issue of electronic commerce in the future?

In addition, in this research the quantitative research method is considered in the course of the survey questionnaire to collect opinions and trust levels of online shopper in Middle East. This study requires so many people to gain the aims and objective, so survey is the best method to achieve the goal. Then, by using quantitative method, the results can be analyzed.

In the first step, the survey questionnaire will be handed to a small group of Middle Eastern people for sample (n=20) as a pilot study in order to examine the practical issues. designing questions should help achieving the aims and objectives of research study. for instance for this study, the questions should state the attitude of Middle Eastern consumers about the online shopping.

After gathering data from the survey, analysing the data for advanced investigation. The data from each question will be precisely analyzed. All the answers from questions will be analysed one by one. Subsequently, the results will be examined as percentages or values and after that shown in the graphical design.

Ethical aspects

This research is classified as a low risk dissertation. This classification is assigned to project which human participation involve the project. But, It means that, this participation is not dealing with sensitive issues or vulnerable people.(slide 30)

One of the aspect of ethical issue is anonymity of respondents. In this project, all respondents and the data which belongs to respondent remained anonymous in according to Data Protection Act1998 (DPA). (slide 24)

I will inform every features of my research to whom make a decision to involve herself/himself in my project. Thereby, I will give details of all aspects of my project and the main aim of this research. In addition, I will ensure for participants the protection of their personal information and their rights such as withdrawing and refusing their participation in the project any time they want, confidentially, securely and safely.

Practicalities

Location

The scope of this study is limited to the Middle East due to time constraint and limited resources. consequently, the survey participants will be from Middle East. The reason for that is psychological and cultural aspect of trust. Moreover, participants nationality is not as important as where they live and grew up. However, because of limited time and sources, the participants have been selected among Middle Eastern students who are studying in Sheffield. Practically, they grew up and lived in Middle East for a long time, which makes them ideal candidates.

Cost

As mentioned above, the most significant cost of this project would be data collection software

plus other small costs such as paper, postage, print and binding.

Feasibility

The outcome of this research project could be effected by the willingness of the participants to fill the survey and be involved in the interviews.

this project could be effected by the data availability on e-commerce (e.g. statistical data, Internet usage, etc.) in all nineteen countries.

Achievability

Due to number of countries in Middle East and extensive amount of data to analyse, a group of five countries will be selected for this study. Moreover, it is dependent on participants available from Middle East as well.

Time

As mentioned before, this study needs extra ordinary resources in terms of time and geographical limitation. For those reason and the vast number of countries covered by this dissertation, it has been decided to narrow them down to five countries with the best statistical data availability and access to participants for survey.

Timetable