Initial online trust formation: the role of company location and web assurance

Purpose – Prior research suggests that significant impediments to the growth in electronic commerce exist, particularly in relation to international exchanges. This paper aims to investigate the respective roles of vendor location (domestic vs international) and web assurance seals in the development of initial trusting beliefs about a vendor's web site, and to determine whether these beliefs ultimately influence online purchase intentions. Design/methodology/approach – A model is developed and tested using a controlled laboratory experiment in which 181 subjects are randomly allocated to one of six web site treatments corresponding to two possible locations of the web site vendor (domestic vs international) and three web assurance states (no Web seal vs TRUSTe seal vs WebTrust seal). Data are analysed using ANCOVA and multiple regression analysis. Findings – As hypothesised, the results suggest that geographical location does appear to influence the formation of initial trusting beliefs (perceived trustworthiness) about a vendor's websites. In contrast, web assurance seals, in general, were found to have little influence on trusting beliefs; and accountants' seals, in particular, were found to be equally ineffective as those issued by other providers. Overall, trusting beliefs were seen to strongly influence online purchase intentions. Research limitations/implications – Future research aimed at evaluating the relative effectiveness of various trust‐building mechanisms applicable to international vendors is warranted, as is research advancing the understanding of why assurance seals appear to be ineffective as trust‐building mechanisms. The implications of using students as surrogates for online consumers and other limitations inherent in experimental analyses ought to be considered in interpreting the study's findings. Practical implications – The study's findings indicate that international vendors ought to consider implementing targeted trust‐building mechanisms to compensate for being at a competitive disadvantage to their domestic counterparts. Suggested strategies are discussed in the paper. In relation to assurance seals, results suggest that the accounting profession can no longer assume to successfully leverage off its reputation for trustworthiness and integrity in extending its claims to expertise into new markets. Originality/value – No previous study has examined the role of vendor location in the development of initial trusting beliefs. In relation to web assurance, previous studies have produced conflicting results and employed a range of research models. This study attempts to address these concerns through the use of a comprehensive and integrated theoretical model.