Perceived risk and trust associated with purchasing at Electronic Marketplaces

Understanding consumer behaviour is of vital importance to consumer oriented e-business models today. In this paper we study the relationships between consumer perceptions of risk and trust and the attitude towards purchasing at a consumer-to-consumer electronic marketplace. Typical for electronic marketplace settings is that consumer behaviour is subject to perceptions of the selling party as well as the institutional structures of the intermediary that is operating the electronic marketplace. 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. We developed measurement instruments for institutional risk and party risk. All measurement scales have acceptable alphas and are unidimensional. An empirical study is conducted to explore the relationships between the risk and trust types and consumer purchase attitude. 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 research and practice.