The Process of Trust Formation in E-Business: Insights from Case Studies of Two Small Firms

Purpose: The purpose of this research is to investigate and theoretically explain the process of trust formation in high risk e-business.

Methodology/approach: The interpretive case-based approach has been used in this study. Inductive analysis of interview data helped to develop the process model of trust formation in the context of business-to-business e-market transactions by two small firms.

Research implications: This research explains how and why trial outcomes influence trust formation. The findings also indicate the importance of the trialing process as a legitimate means of determining trustworthiness of the other party and the e-business platform. These findings add to the existing body of knowledge on trust in e-business and have important implications for further research.

Practical implications: The practical implication is that if sponsors of business-to-business e-markets can support initial trials, it would foster trust and lead to more active usage of e-business methods.

Originality/value/contribution: This research shows that trust formation in high risk e-business is a dynamic process, influenced by changes in risk perceptions from repeated trial outcomes in initial stages, a departure from prior variance studies with assumptions of static perceptions of risk and trust.     

Market orientation and customer-based corporate brand equity (CBCBE): a dyadic study of Indian B2B firms

The relationship between market orientation (MO) and one of its most important consequences – firm performance – has received considerable attention in marketing research. Performance has been largely judged through financial or objective measures. This paper connects assimilation of MO in firms with corporate brand performance since academics have not used judgmental or market-based measures in assessing performance. We have introduced customer-based corporate brand equity to obtain a rounded idea of firm performance. This is achieved through a dyadic study, instead of self-assessment, wherein the marketing chiefs of B2B firms and their respective organisational customers are surveyed to gauge the effects of incorporating MO. We have shown that corporate brand performance is enhanced significantly in the presence of organisational innovativeness. From a practitioner’s perspective, the study details the organisational actions to be taken to assimilate MO and how those can be exploited to enhance corporate brand performance.     

Why customers won't relate: Obstacles to relationship marketing engagement

Due to the challenges associated with reaching consumers using traditional marketing approaches, firms increasingly rely on relational marketing tactics to increase customer patronage with the firm. Yet, consumers often actively avoid relational devices. Thus, firms have a heightened interest in factors that affect customer engagement in relationship marketing efforts. This research provides an empirical test of a model based on equity theory and previous findings regarding psychological engagement. The model predicts whether customers are willing to engage in different relational tactics offered by firms, measured by a formative, actionable Relationship Program Receptiveness (RPR) Index. The results indicate customer perceptions of the inconvenience and anticipated benefits, two factors controlled by the firm, affect RPR. In addition, customer factors, including general privacy concerns, involvement and shopping frequency, affect RPR. Managerially, the results suggest specific actions firms can take to increase the likelihood that consumers engage in relational marketing efforts.     

Internet Usage Within B2B Relationships and Its Impact on Value Creation: A Conceptual Model and Research Propositions

ABSTRACT

The Internet has been described as a major disruptive technology that has changed the face of B2B exchange relationships. This paper considers the Internet and its inherent ability to support value creation within business-to-business relationships. The paper outlines four key characteristics that describe the Internet's attributes relative to value creation and proposes that the Internet's effect depends upon properly aligning these attributes with the economic and relational factors driving value creation. In particular, the paper proposes a contextual relationship between Internet usage, joint action, and the resources shared between exchange partners.     

Why do firms seek to share human resource management knowledge? The importance of inter-firm networks

This study untangles the social processes and inter-firm mechanisms underlying human resource management (HRM) knowledge networks. The research questions serve to advance understanding of why HRM knowledge flows between firms under contractual relationships and in the absence of formal relationships. The study analyzes data from a complete network of 51 high-technology firms located in a science and technology park to report the structural properties and relational dimensions of inter-firm flow of HRM knowledge. The results from this social network analysis show that the firms in the study actively engage in the sharing of HRM knowledge. Specifically, the results not only indicate the preeminence of formal ties but also of relational factors relating to firm legitimacy, prestige, and collaborative interaction. Participation in inter-firm knowledge networks appears to be an effective tool for obtaining HRM knowledge as well as for enhancing legitimacy and prestige between firms and developing trust and reciprocity within collaborative relationships.     

The integrated use of social media,digital, and traditional communication tools in the B2B sales process of international SMEs

Social media and digital tools are gradually changing the way firms market themselves. Understanding how these communication tools are used by sales functions within business-to-business (B2B) markets could clarify the dynamics underpinning the sales process in an increasingly technology-mediated world. This paper explores how social media, digital, and traditional sales communication tools are leveraged during the three main phases of the B2B sales process within international SMEs.The article’s grounded-theory approach illustrates that social media can be particularly helpful in engaging international prospects. Digital communication tools seem to be most prevalent in the persuasion phase, whereas more traditional communication tools still prevail in customer relationship management. However, there seem to be some important potential boundary conditions, including relationship culture, location proximity, technology innovation/resources, and strategic importance of the customer that affect the way international SMEs use different communication tools during a sales process. We develop a framework for understanding the B2B sales process flow with sales communication tools included for international SMEs.     

The impact of individualism on buyer–supplier relationship norms,trust and market performance: An analysis of data from Brazil and the U.S.A.

This study focuses on the impact of the cultural dimension of individualism, face-to-face communication and the effect of relational norms such as supplier involvement and trust on the market performance of buyer firms. We use the culture literature and social exchange theory to test hypotheses using a sample of Brazilian and US manufacturing firms. The data were analyzed using variance-based structural equation modeling, employing nonlinear partial least squares regression. Our findings indicate that individualism is negatively related to the involvement of suppliers in the production process but is not associated with trust in suppliers. In addition face-to-face communication seems to have a positive effect on supplier involvement and trust.     

A model of consumer relationships with store brands,personnel and stores in Spain

Abstract

Relationship Marketing is an important approach to the study of exchanges. This approach puts emphasis on the development of trust, satisfaction and relational norms to obtain parties' commitment. However, there are very few studies that consider the different levels the consumer relates with. Moreover, a limited number of marketing studies include variables that are often used in economic approaches such as signalling theory, which can enrich the understanding of commercial relationships. Therefore, the proposed multidisciplinary model relates economic variables—the signals that firms send to the market—and key relational variables—satisfaction and trust—considering three relationship levels of trust and satisfaction—store brands, personnel and stores. Results show a transference process among the three levels of trust and confirm that satisfaction and signals are important antecedents of each trust level.     

The moderating influence of brand image on consumers' adoption of QR-code e-wallets

In a post-pandemic era marked by thriving digital payments and e-commerce transactions due to physical distancing norms, the growth of mobile payments or E-wallets is expected to expand in tandem with the global trend toward cashless payment solutions. However, it is unclear whether this momentum would be sustained for over-the-counter (OTC) retail payments, particularly QR-code E-wallets, that are more affordable and accessible to merchants and customers than NFC-based (near field communication) systems in emerging markets. This study aims to model the interaction effects of brand image in shaping consumers’ E-wallet usage intentions. Incorporating a consumer-brand relationship element (i.e., brand image) should improve the understanding of consumers’ digital service experiences in proximity-based retail encounters. The research model was empirically tested using 305 responses from QR-based E-wallet users in the Klang Valley, Malaysia. Statistical analysis was performed using structural equation modeling (SEM) to test the hypotheses. An empirical examination of the model revealed effort expectancy, social influence, hedonic motivation, and perceived value as significant positive predictors of consumer usage intention. Furthermore, brand image was found to significantly strengthen the positive effect of perceived value and weaken the positive impact of hedonic motivation on the outcome. The study’s key contributions include reaffirming the crucial contingent role of brand image in consumer technology adoption studies and investigating consumer perceptions of QR-based E-wallets, which are expected to gain traction, especially in emerging markets. E-wallet providers should reinforce their value propositions by providing seamless, engaging, and easy-to-use experiences that improve users' brand perceptions.     

Paradoxical Relationships Between Cultural Norms of Particularism and Attitudes Toward Relational Favoritism: A Cultural Reflectivity Perspective

We examined how the cultural dimension of universalism–particularism influences managers’ attitudes toward relational favoritism (such as favoring friends or relatives in HR decisions). Paradoxically, we found in a survey study that Brazilian and Chinese managers perceived more negative consequences of relational favoritism than did American managers—even though the Brazilians and the Chinese perceived stronger particularistic cultural norms in their countries than Americans did in the United States. We attribute this pattern of results to “cultural reflexivity”—the ability of people from transforming economies to be culturally self-critical during a period of dramatic societal change. This pattern of results also emerged in a scenario study in which we asked these same Brazilian, Chinese, and American participants to assess managerial succession decisions made by a General Manager. We varied the scenarios so that the promoted manager was either a colleague with no pre-existing relation with the GM or a colleague who was a relative, a close friend, from the same town, or from the same school. Consistent with the results of the survey study, we found that perceived cultural norms of particularism were negatively related to perceptions of fairness. In other words, Brazilians and Chinese, even while living in more particularistic cultures, were more harsh in judging relational favoritism. We conclude with a discussion on the implications of these paradoxical relationships.     

Relational Contracting and Distribution Channel Cohesion

This study attempts to test a relational contracting model of distribution channels in the context of the international salmon industry, using data from three successive channel levels. Relational contracting norms were found to be positively associated with channel cohesion, as defined by convergent perceptions across channel levels. Channel formalization was found to correlate positively and channel centralization correleated negatively with relational contracting norms of reliance, solidarity and mutuality. A contracting framework consistent with a political economy model is suggested for future channel studies.     

Country-of-origin effects and antecedents of industrial brand equity

Does the country-of-origin effect matter to industrial brand equity in international business-to-business (B2B) markets? The effect of a product's country-of-origin (COO) on both industrial buyers' and consumers' perceptions and evaluations has been one of the most widely studied phenomena in the fields of international business, marketing, and consumer behavior since the 1960s. Although many country-of-origin studies focus on consumer behavior in developed countries and acknowledge that the processes and stages of economic development by which consumers use COO information may differ in developing countries, the fact that there has been little research to investigate the effects of COO could explain the variations in international buyers' evaluations of industrial brand equity in the newly-industrialized economies, such as Taiwan. Taiwanese firms are now formidable global B2B market players by successfully transforming themselves from manufacturing mainly low-value and labor-intensive goods to producing many high value-added products that require advanced technology, equipment and significant business expertise. With the adoption of advanced technology and equipment, an important question is whether unique and innovative fastener products from Taiwan have generated the country-of-origin effects in international B2B buyers' minds. The main finding is that the country-of-origin of fasteners has not yet become an important antecedent of industrial brand equity in the case of the fastener industry in Taiwan.     

A process leading to strategic alliance outcome: The case of IT companies in China,Japan and Korea

Although theories and research have provided valuable information on strategic alliance, it still seems difficult for practitioners to overview the process and subsequent outcomes of strategic alliance in a single frame. This is because the conditions of alliance are different from one alliance to another, which makes it difficult for practitioners to apply existing research findings to their own cases. One of the ways to overcome such difficulties in practical application would not be focusing on alliance processes with unique or idiosyncratic features of each alliance but instead focusing on elements that exist in most alliances. To find out the process that leads to the outcome in strategic alliance that is easily applicable for practitioners, the current study measured the behavioral direction and relational outcomes of strategic alliance based on benefit and risk perception in information technology (IT) companies in China, Japan and South Korea. Results show that firms set the direction and the intensity of their participation in alliance based on benefit and risk perception. Specifically, while perceived benefits promoted active participation in alliance, perceived risks increased protective participation in alliance. Also, these behavioral directions predicted the relational outcome in strategic alliance such that while active behavioral orientation predicted commitment to the relationship with the partner firms, protective behavioral orientation led to dissolution of the relationship. The present study provides useful insights for strategy associates, and evoke more various and detached academic approaches in the field of strategic alliance discussions.     

Unfairness in consumer services: Outcomes of differential treatment of new and existing clients

In a consumption context, there is a growing interest in understanding unfair behaviour of firms towards customers. Our research focuses on unfairness perceptions driven by differential treatment, particularly through price discrimination, i.e. the practice of charging differential prices to different customers. Our purpose is to investigate the consequences of these practices for unfairness perceptions, satisfaction, trust and patronage, showing a dual perspective: the perceptions of new vs existing clients when they face the advantaged or disadvantaged conditions. A survey-based experimental design approach was used. We conclude that unfairness perception is stronger for existing than for new clients, prompting negative attitudinal and behavioural consequences when the former are exposed to disadvantaged conditions in relation to the latter. Our study aims to provide marketers with a perspective on the pitfalls related to differential treatment between present and prospective clients, with implications in terms of design and implementation of customer management strategies.     

Contextual antecedents and consequences of relationships between young firms and distinct types of dominant exchange partners

The paper expands our understanding of how exchange partners, particularly customers, can dominate young firms. Using a grounded theory approach, it discovers that young firms operating in different competitive contexts identify three distinct types of dominance: dominance over innovation, dominance over selling and order filling capacity and dominance over total sales. Data analysis suggests that there are different antecedents and consequences of each type of dominance. The paper discusses the implications of the findings and suggests refinements to our current understanding of dominant exchange partners of young firms.     

Market orientation and internet-related cognitions: inside the minds of small business managers

Although both market orientation and the Internet intersect at important strategy implementation areas, surprisingly, these two domains have not been well integrated. With market orientation's focus on the use of information associated with market stakeholders and the Internet's ability to facilitate communication and relationships with both internal and external stakeholders, it makes conceptual and pragmatic sense to explore these two areas in concert. The present research develops and tests a conceptual model explaining relationships among market orientation and Internet-related perceptions for managers in small to mid-sized firms. An examination of the market orientation-Internet usage relationship contributes to understanding the process of how an important strategic orientation – market orientation – translates into a key organisational capability: Internet usage.     

Effects of relational capital and commitment on venture capitalists' perception of portfolio company performance

In this study, we examine how relational capital and commitment affect a venture capital firm's (i.e., VCFs) perception of the performance of its portfolio companies (i.e., PFCs). That is, we examine how perceived performance is affected by the social nature of the relationship between the VCF and PFC. The study's hypotheses are tested by applying quantitative analyses to survey data collected from 298 U.S.-based venture capital firms. The data from the survey are complemented with additional information drawn from secondary data sources and interviews with several venture capitalists. We found that the amount of relational capital embedded in the VCF–PFC dyad and the extent to which the VCF is committed to the PFC are strongly related to perceived performance. We speculate that relational capital and commitment enhance learning, an effect that increases VCFs' perceptions of performance. Further, these perceptions of performance will also be amplified by the positive affect generated by relational capital and commitment. We discuss the limitations and contributions of our findings and provide directions for future research.     

Identifying Client Fairness Criteria in Income Tax Services

Abstract

Organizational justice (i.e., fairness) has been an important construct in the management literature. Employee perceptions of the fairness of outcomes and procedures have been found to have important attitudinal and behavioral consequences. Fairness has more recently been studied in service industries. However, client perceptions of fairness in accounting services have yet to be explored. It is likely that fairness perceptions are particularly salient in income tax return services. In an exploratory study, we sought to identify the types of experiences that trigger these clients' perceptions of fairness. The results suggest some common criteria that can help CPAs and their firms mitigate the potential negative consequences of client perceptions of unfairness. Regression analyses were also used to determine the most significant predictors of client satisfaction with the overall service and global perceptions of fairness.     

Should service firms introduce algorithmic advice to their existing customers? The moderating effect of service relationships

An increasing number of service firms are introducing algorithmic advice to their customers. In this research, we examine the introduction of such tools from a relational perspective and show that the type of relationship a customer has with a service firm moderates his or her response to algorithmic advice. Studies 1 and 2 find that customers in communal relationships are more reluctant to use algorithmic advice instead of human advice than customers in exchange relationships. Study 3 shows that offering customers algorithmic advice may harm communal relationships but not exchange relationships. Building on these findings, Studies 4, 5, and 6 examine how firms can mitigate the potentially negative relational consequences of algorithmic advice. While a fallback option that signals that customers can request additional human advice if needed is effective in preventing relational damages in communal relationships, this same intervention backfires in exchange relationships. These findings have important implications by showing that managers need to consider the relational consequences of introducing algorithmic advice to existing customers.     

B2B or Not to Be: Does B2B E‐Commerce Increase Labour Productivity?

We implement an endogeneous switching‐regression model for labour productivity and firms’ decisions to use business‐to‐business (B2B) e‐commerce. Our approach allows B2B usage to affect any parameter of the labour productivity equation and to properly take account of strategic complementarities between the input factors and B2B usage. Empirical evidence from 1,460 German firms shows that there is a simultaneous relationship between labour productivity and the adoption of B2B. Firms deciding to use B2B e‐commerce employ their input factors more efficiently than non‐B2B users. Conversely, firms refrain from engaging in B2B probably because they expect the cost of B2B adoption will not be sufficiently compensated by productivity gains.