Li, Dahui

Lin, Zhangxi

Yadav, Surya

English

AIS Electronic Library (AISeL)

Association for Information SystemsAIS Electronic Library (AISeL)AMCIS 2001 Proceedings Americas Conference on Information Systems(AMCIS)December 2001Exploring the Role of Privacy in Programs on InitialOnline Trust FormationDahui LiTexas Tech UniversitySurya YadavTexas Tech UniversityZhangxi LinTexas Tech UniversityFollow this and additional works at: http://aisel.aisnet.org/amcis2001This material is brought to you by the Americas Conference on Information Systems (AMCIS) at AIS Electronic Library (AISeL). It has been acceptedfor inclusion in AMCIS 2001 Proceedings by an authorized administrator of AIS Electronic Library (AISeL). For more information, please contactelibrary@aisnet.org.Recommended CitationLi, Dahui; Yadav, Surya; and Lin, Zhangxi, "Exploring the Role of Privacy in Programs on Initial Online Trust Formation" (2001).AMCIS 2001 Proceedings. 147.http://aisel.aisnet.org/amcis2001/147754 2001  Seventh Americas Conference on Information SystemsWeb Site OrganizationPeerConsumerConsumerFigure 1.  Interactions among Actorsin an Online TransactionEXPLORING THE ROLE OF PRIVACY PROGRAMS ONINITIAL ONLINE TRUST FORMATIONDahui LiTexas Tech Universitydali@ttacs.ttu.eduSurya B. YadavTexas Tech Universityyadav@ba.ttu.eduZhangxi LinTexas Tech Universityzlin@ba.ttu.eduAbstractLittle research has been done on the complex relations between different actors in the development of Internetconsumers initial trust toward an unknown Web site. With social network analysis, we have built a conceptualmodel and developed research hypotheses based on the theory of strength of weak ties. Empirical study isoutlined and potential problems are described.IntroductionOrganizations have been initiating various solutions for Internet users’ privacy concern when these users conduct onlinetransactions. Government agencies such as US Department of Commerce have implemented privacy regulations and laws.Industry associations have built technical frameworks like Privacy Preferences Project (P3P) from W3C.org. Online businesseshave also developed different privacy programs. We define privacy program as any rule, tool, and mechanism by which a website helps consumers to identify the web site’s concern for consumer privacy, to check the web site’s reliability, and to evaluatethe web site’s trustworthiness. While Web sites like Amazon.com have only self-regulation statements and notices, other Websites like eBay.com have integrated privacy programs such as self-regulation statements, consumer feedback forum, escrowservice, and assurances from third party organizations.Figure 1 is a diagram showing interactions among various actorsinvolved in an online transaction. There are three types of actorsinvolved in the model: a consumer, a Web site, and third parties.The consumer is the Internet user who is going to do onlinetransactions. The Web site is a business site that supplies a certaintype of service. The third parties are any other Internet users ororganizations that are referred by the Web site. Researchers haveinvestigated the role of different privacy programs in consumer’strust toward an unknown Web site. Resnick et al. (2000)investigated feedback forum as a mean for potential consumers tolook at peer consumers’ past experience; Benassi (1999) andNöteberg et al. (1999) studied the influence of third-party icons likeTRUSTe on the likelihood of consumers’ purchase. McKnight et al.(2000) also generalized the effect of third-party referrals based onthe model of initial trust formation (McKnight et al. 1998). Previous studies have not viewed the complex social relationsbetween the three types of actors shown in Figure 1. We have notseen any conceptual and empirical studies showing the effect of thesocial relations and the interplay of these relations on trustdevelopment. Little research has been done on the effect of the strength of the relations between those actors. One exception isStewart’s study (1999) on the transference of trust, which is based on cognitive balance theory (Heider 1958).  However, thistheory assumes a strong relation between the consumer and the third party, and another strong relation between the Web site andthe third party, which is not always true for the relations between the three types of actors.Li et al./The Role of Privacy Programs2001  Seventh Americas Conference on Information Systems 755ConsumerWeb SiteConsumer/PeerConsumerPeerConsumerOrganizationOrganization/Web SiteConsumer/WebsitePeer Consumer/Web SiteConsuper/OrgnizationConsumer GroupBusiness Group Third-Party GroupTrustFigure 2. A Conceptual Model for Online Trust FormationThe present study adopts the embeddedness position taken by Granovetter (1985) who emphasized the role of “personal relationsand structures (or ‘networks’) of such relations in generating trust…” (p.490). According to Granovetter, social relations are moreresponsible for generating trust than “institutional arrangements or generalized morality” (p.491). Using social network analysismethod, this study will investigate how the strength of relations between the three types of actors affects Internet consumers’initial trust.BackgroundGranovetter’s Strength of Weak Ties Theory (1973) proposed that the degree of two individuals’ friendship networks is relatedto the strength of the tie (relation) between them. The strength is a function of the amount of time, emotional intensity, intimacy,and reciprocal services between the two actors, which can be interpreted asStrength = (time, intensity, intimacy, reciprocity)Based on different combinations of time, emotional intensity, intimacy, and reciprocity, the strength might vary from strong toweak. Strong ties share many, frequent and intimate exchanges while weak ties involve fewer, occasional and less intimateexchanges. “This overlap in their friendship circles is predicted to be least when their tie  is absent, most when it is strong, andintermediate when it is weak” (Granovetter, 1973 p. 1362). This assertion illustrates the innate relationship between trust and thestrength of ties. Other social relation scholars also agree that individual behavior is affected more by the relations in which theindividual is involved than by the individual’s norms and attributes (e.g., Lewicki and Bunker 1996).Research Model and HypothesesFigure 2 is a conceptual model we have developed to describethe complex relationship between social relations and trustformation. There are three groups of actors in the model:consumer group, third-party group, and business group.Consumer group includes a consumer and peer consumer(s).Third-party group includes peer consumer(s) and referralorganization(s). Business group includes the Web site andorganization(s). We will focus on three social relationsbetween them, a dyadic relation—consumer/Web site, atriadic relation of consumer/peer consumer and peerconsumer/Web site, and another triad of consumer-organization and organization-Web site.The Dyadic Relation Between Consumer and Web SiteThe dyadic relation between the consumer and the Web sitewithout any third-party referral is private (Burt and Knez1996). Initially, there is no tie. Trust is very limited becauseof the absence of interaction history between the two actors.The Web site might specify its privacy regulation and rule inself-guaranteed statements (McKnight et al. 1998).Hypothesis 1. When initially going to an unknown Web site, a consumer will have more trust toward the Web site withprivacy policy programs than the Web site without privacy policy programs, controlling other factors constant.The Triadic Relation with Third Party as IntermediaryTrust is rarely private but embedded by third parties (Burt and Knez 1996). Third parties build alternative ties between theconsumer and the Web site. If the consumer trusts the third party and there is a strong tie between the Web site and the third party,the trust can be transferred (Heider 1958). However, balance theory cannot explain the weak tie issue. Granovetter (1973)Electronic Commerce756 2001  Seventh Americas Conference on Information Systemsproposed that weak ties allow information diffusion from one group to another in a social network. Hence, a weak tie betweena consumer and a third party enables the flow of information about the unknown Web site. The information might be about theWeb site’s competence, benevolence, and integrity and thus influence trust (Mayer et al. 1995). A weak tie at least enables somedegree of transference of trust from a third party.Hypothesis 2.a. When initially going to an unknown Web site, a consumer will have more trust toward the Web site witha known third-party referral than the Web site with no or unknown third-party referral, controlling other factorsconstant.Further, if the third party is unknown to the consumer, this is the same as the dyadic relation between the Web site and theconsumer as described above. Hypothesis 2.b. The degree of trust belief is not different between  the Web site with unknown third-party referral andthe Web site with no third-party referral, controlling other factors constant.The Prestige of Unknown Web SitePrestige measures the prominence or importance of an actor in a social network. A prestige actor is the recipient of ties (in-degree). We propose that the degree of prestige of a Web site will influence the consumer’s trust belief.  We use degree centrality,the number of ties directed to an actor, to measure prestige. High degree centrality indicates high reputation. Hypothesis 3. When initially going to an unknown Web site, a consumer will have more trust toward the Web site withmore third-party referrals than the Web site with fewer third-party referrals, controlling other factors constant.The Distance Between Consumer and Third PartyDistance (Euclidean distance), the length of the shortest path between two members in the network, is a measure of the closenessof members within a group.  We argue that the distance between a consumer and a peer consumer is closer than that between theconsumer and a third-party organization. The consumer tends to share more common norms, values, and goals with peerconsumer(s) than with organization(s). A reasonable consumer will cognitively categorize her/him into consumer group andperceive a higher intimacy towards peer consumers, which leads to a strong tie.Hypothesis 4. When initially going to an unknown Web site, the consumer will have more trust toward the Web site withother consumers as third-party referrals than the Web site with organizations as third-party referrals, controlling otherfactors constant.The Symmetry Between Web Site and Third PartyIf consumers find a third-party referral on the unknown Web site, they might go to the third party’s Web site to check. If the third-party’s Web site also refers the unknown Web site, the tie is symmetric. Otherwise, the tie is asymmetric. Asymmetric relationis an intermediate state of relationship that will move towards more stable, reciprocal, and mutual relationship (Heider 1958).Granovetter (1973) also proposed that high reciprocity lead to strong tie. The relationship between a Web site and an assuranceorganization is symmetric because the assurance company has an online auditing document for the Web site.Hypothesis 5. When initially going to an unknown Web site, a consumer will have more trust toward the Web site if theWeb site and the third-party organization refer each other mutually than the Web site is not referred by the third-partyorganization, controlling other factors constant.Research Method and DesignWe will conduct a laboratory experiment for this study. The experimental task is to buy a  laptop computer from virtual stores.We are going to measure subjects’ perception of the trust toward these sites. Within-subject experiment design will be adoptedto control the variability of subjects’ trust disposition. 150 students from a public university will be recruited.Li et al./The Role of Privacy Programs2001  Seventh Americas Conference on Information Systems 757The virtual Web sites will follow the typical style of online stores. General features of online e-stores will be maintained acrossdifferent Web sites. To test our hypotheses, we will modify the content of those Web sites. Students will be instructed on howto shop for the computer. They will have enough time to experience the difference of Web sites. After doing the shopping, theywill evaluate their trust perception for each Web site based on a 1-7 Likert scale.ConclusionWe have contributed to online trust research by building a model showing how privacy programs are different in terms of thesocial relations between different parties. Further, we have made explicit how social relationship influences the formation of trustin a framework, which has not been done before. We have investigated the role of different types of privacy programs in the initialonline trust formation. Relevant hypotheses are proposed.  However, the potential problem with our study is the uni-dimensional treatment of trust. We agree with the notion ofmultidimensional trust. Our empirical result  might be biased because of uncontrollable factors. To increase the validity of thestudy, we will conduct a field study in the future and introduce new mechanisms to cater for the multidimensional issue.     ReferencesBenassi, P., “TRUSTe: An Online Privacy Seal Program,” Communications of the ACM (42:2), 1999, pp. 56-59. Burt, R. S., and Knez, M., “Trust and ThirdParty Gossip,” in T. R. Tyler and R. M. Kramer (eds.), Trust in Organizations:Frontiers of Theory and Research, Thousand Oaks, CA: Sage Publications, 1996, pp.68-89.Granovetter, M., “Economic Action and Social Structure:  The Problem of Embeddedness,” American Journal of Sociology (91),1985, pp. 481-510.Granovetter, M., “The Strength of Weak Ties,” American Journal of Sociology (78), 1973, pp.1360-1380.Heider, F., The Psychology of Interpersonal Relations , New York: John Wiley and Sons, 1958.Lewicki, R. J., and Bunker, B. B., “Developing and Maintaining Trust in Work Relationships,” in T. R. Tyler and R. M. Kramer(eds.), Trust in Organizations: Frontiers of Theory and Research, Thousand Oaks, CA: Sage Publications, 1996, pp. 114-139.Mayer, R. C., Davis, J. H., and Schoorman, F. D., “An Integrative Model of Organizational Trust,” Academy of ManagementReview (20), 1995, pp. 709-734.McKnight, D. H., Cummings, L. L., and Chervany, N. L.,  “Initial Trust Formation in New Organizational Relationships,”Academy of Management Review (23:3), 1998, pp. 473-490.McKnight, D.H., Choudhury, V., and Kacmar, C., “Trust in  E-Commerce Vendors: A Two-Stage Model,” Proceedings of the21st International Conference on Information Systems, W. J. Orlikowski, S. Ang, P. Weill, H. C. Krcmar, and J. I. DeGross(eds.), Brisbane, 2000, pp. 532-536.  Nöteberg, A., Christiaanse, E., and Wallage, P., “The Role of Trust and Assurance Services in Electronic Channels: AnExploratory Study,” Proceeding of the 20th International Conference on Information Systems, P. De and J. I. DeGross (eds.),Charlotte, NC, 1999, pp. 472 -478. Resnick, P., Kuwabara, K., Zeckhauser, R., and Friedman, E., “Reputation Systems,” Communications of the ACM (43:12), 2000,pp 45-48. Stewart, K.J., “Transference as a Means of Building Trust in World Wide Web Sites,” Proceeding of the 20th InternationalConference on Information Systems, P. De and J. I. DeGross (eds.), Charlotte, NC, 1999, pp. 459-464.

Exploring the Role of Privacy in Programs on Initial Online Trust Formation

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Exploring the Role of Privacy in Programs on Initial Online Trust Formation

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