Certification in Digital Transactions : Determinants of Effectiveness in the Context of Information Asymmetry

Digital transactions enable individual consumers and organizations to exchange goods and services in an easy and flexible manner, driving market dynamics and promoting new business models. Increased speed in transactions and volatility in market participants, however, come at the downside of frequent evaluations of transaction partners and the need for deliberate decision-making in the light of growing product and service complexity. Digital environments make it harder to inspect products or services, which may rely on critical platforms or infrastructure that are completely hidden from transaction partners but are substantial to service quality. In consequence, information is distributed unequally between transaction partners and measures have to be adopted to overcome this asymmetry to build trust and foster transactions. Certifications are a means to signal true quality between transaction partners by providing information, to which regard specific requirements are fulfilled. In the certification process, an evaluation against a predefined set of criteria is performed and official documentation by a third-party certification authority is provided. By inspecting this documentation, potential transaction partners are provided with introspection into otherwise unobservable aspects of product or service quality. Hence, certifications can help to bridge information asymmetry prior to transactions. While they have been adopted in various contexts and were subject to prior research, understanding about their inner workings is limited and findings on their effectiveness remain inconclusive. The focus of prior research has been on the effect of mere presence vs. absence of certifications. While the findings of these studies helped to understand the effect of certifications as unitary cues, they did not investigate how the particular design of certificates in terms of their assurances influences their effect. Moreover, the results were ambiguous as some could find significant influences on the formation of trust and the intention to transact, while others could not. Besides, another important aspect was hardly covered: the embedding of certification in its environment. This includes characteristics of the transaction parties that perceive a certification, their prior relationship, and the context, in which the certification is used. To contribute to a better understanding of certification effectiveness, incorporating its internal characteristics and external embedding, four research studies have been conducted. The first study provides a literature review on the theoretical frameworks used in existing research on certifications in Information Systems. Study two focuses in detail on certifications and their content, investigating differences in relative importance of assurances between customers and providers in the context of cloud service certifications. Shifting the focus from its content to characteristics of recipients, the third study analyzes how the effect of certification changes, depending on prior experiences in a customer-provider relationship. An online scenario experiment was conducted, simulating e-commerce purchase decisions at different qualities and quantities of prior shopping experience. The fourth study investigates a particular form of certification in the context of the sharing economy. In an online experiment, the role of certification of users’ identity on the formation of trust and intentions to engage in a transaction was analyzed. The findings of these studies enrich the theoretical understanding of certifications in Information Systems in different aspects. Shifting the focus of investigation from certification as a unitary cue to a bundle of assurances, it becomes apparent that one certification can be perceived differently depending on recipient characteristics and the relative importance of assurances. Moreover, the certification’s environment plays an important role towards its effectiveness. Influencing factors as industry, the prior experiences in a provider-customer relationship or the transaction context were identified. Besides, on a research level, the theoretical lenses used to study certification varied in prior research, which may partly explain for ambiguous findings. Overall, this thesis finds that a more fine-grained, context-aware analysis of certifications in Information Systems is beneficial to understand their influence on market participants and to enable better prediction of their effectiveness in practice