Perceived Risk and Trust Associated with Purchasing at Electronic Marketplaces

Understanding consumer behavior is of vital importance to consumer oriented e-business models today. In this paper we report on a study into the relationships between consumer perceptions of risk and trust and the intention to purchase at a C2C electronic marketplace. Distinguishing for electronic marketplace settings is that consumer behavior is subject to perceptions of both selling party and the institutional structures of the intermediary operating the system. Building upon the well-established literature of trust we consider the concepts of institutional trust and party trust. We extend this categorization by introducing the concepts of institutional risk and party risk. Next, we adopt the process of measurement instrument development as put forward by Churchill (1979). We develop measurement instruments for institutional trust (4 items), institutional risk (5 items) and party risk (4 items). All measurement scales contain acceptable alpha’s and are unidimensional. An empirical study is applied to explore the relationships between the risk and trust types and consumer purchase intention. The results reveal significant, direct effects of party trust and party risk. Second order effects of institutional trust and institutional risk are investigated and reported. The paper concludes with general observations and recommendations for further research