International Journal of Electronic Commerce

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What Drives Trust Transfer? The Moderating

Roles of Seller-Specific and General Institutional
Mechanisms

Xiayu Chen, Qian Huang, Robert M. Davison & Zhongsheng Hua

To cite this article: Xiayu Chen, Qian Huang, Robert M. Davison & Zhongsheng Hua
(2015) What Drives Trust Transfer? The Moderating Roles of Seller-Specific and General
Institutional Mechanisms, International Journal of Electronic Commerce, 20:2, 261-289, DOI:
10.1080/10864415.2016.1087828

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 What Drives Trust Transfer? The Moderating Roles
of Seller-Specific and General Institutional
Mechanisms

Xiayu Chen, Qian Huang, Robert M. Davison, and

Zhongsheng Hua
ABSTRACT: Trust transfer theory posits that trust can be transferred from the selling
platform to the sellers and has been widely applied in the e-commerce environment.
Downloaded by [University of Nebraska, Lincoln] at 05:29 04 December 2015

However, prior research has overlooked the boundary conditions under which trust can
be transferred. Understanding of the general institutional mechanisms is necessary to
ensure the trust environment underlying e-commerce. The present study identifies two key
moderators that affect the relationships between trust-in-platform, trust-in-seller, and pur-
chase intention in consumer to consumer (C2C) online shopping contexts: perceived
effectiveness of e-commerce institutional mechanisms (PEEIM) and perceived website
quality of the seller (PWQS). Using a sample of 294 online buyers from TaoBao (a
major Chinese C2C portal), we find that trust-in-platform positively affects trust-in-seller;
meanwhile, trust-in-seller positively influences purchase intention. In addition, PEEIM
negatively moderates the relationship between trust-in-platform and trust-in-seller, whereas
it positively moderates the relationship between trust-in-seller and purchase intention.
PWQS positively moderates the relationship between trust-in-platform and trust-in-seller
but negatively moderates the relationship between trust-in-seller and purchase intention.
Our findings complement trust transfer theory by demonstrating how PEEIM and PWQS
have different moderating effects on the trust transfer process. For C2C platform
providers and sellers, the findings suggest that they should strategically build buyers’
trust according to different levels of PEEIM and PWQS in order to promote buyers’
purchasing behavior.

KEY WORDS AND PHRASES: institutional mechanisms, signaling theory, trust, trust
transfer, website quality.

Faced with temporal and spatial separation between online buyers and sellers,
the need for trust is more salient within the consumer to consumer (C2C)
online shopping context [11, 59]. Since two parties are involved in facilitating
buyers to engage in transactions, namely, a platform and sellers, trust is
considered as consisting of two types—platform trust and seller trust [11,
31]. It is thus essential to understand how these two categories of trust affect
buyer purchasing behavior [31]. Prior research indicates that buyers’ trust in a
C2C platform can be transferred to their trust in the sellers on this platform, in
turn facilitating the development of transaction intention [60]. The findings are
consistently reported by some subsequent replications [31], but not by others.

The work described in this paper was fully/partially supported by grants from the
National Natural Science Foundation of China (NSFC: 71201150, 71101136, 71090401,
and 71320107004).

International Journal of Electronic Commerce / 2016, Vol. 20, No. 2, pp. 261–289.
Copyright © 2015 Taylor & Francis Group, LLC.
ISSN 1086–4415 (print) / ISSN 1557–9301 (online)
DOI: 10.1080/10864415.2016.1087828
 262 CHEN, HUANG, DAVISON, AND HUA

For example, Delgado-Márquez, Hurtado-Torres, and Aragón-Correa [16]

propose that the trust transfer process is moderated by the trustor’s expecta-
tions. Van der Heijden, Verhagen, and Creemers [73] also note that trust no
longer triggers people’s online purchase intention when trust reaches a certain
evaluation level. Recently, scholars have called for further exploration of the
various boundary conditions under which trust operates [22, 25]. Following
these calls, a contingency perspective that explores the moderating effects of
boundary conditions on the trust-in-platform–trust-in-seller–purchase inten-
tion (TP–TS–PI) relationship is taken in the current research.
Existing research has largely assumed that institutional context is an impor-
tant moderating factor in the context of online purchasing [22, 25]. The
institutional context is related to the transaction environment that is safe-
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guarded by initiating formal regulative structures [78]. For example, Gefen

and Pavlou [25] propose that the institutional context moderates the effect of
trust on an individual’s behavioral intention. Mayer, Davis, and Schoorman
[48] indicate that the importance of prior transaction performance (manifested
as buyer’s trust-in-platform) on the reevaluation of trust (manifested as
buyer’s trust-in-seller) is still dependent on the context. Fang et al. [20] further
demonstrate that the perceived effectiveness of e-commerce institutional
mechanisms (PEEIM) moderates the relationships between satisfaction, trust,
and repurchase intention. However, our understanding of how the TP–TS–PI
relationship is affected by the e-commerce institutional context is still limited.
PEEIM captures only the general perception of the e-commerce institutional
mechanisms (i.e., seller-independent and platform-independent), which has
led researchers to call for further empirical exploration of PEEIM compared
to more seller-specific mechanisms [20]. The seller’s specific mechanisms
include website design and customer service (i.e., website quality), which
can mitigate social uncertainty and reduce the psychological distance between
online buyers and sellers [44]. Thus, incorporating those sellers’ website
mechanisms that reduce uncertainty can lead to a long-term favorable rela-
tionship between the buyer and the seller [5]. This implies that buyers’ trust
transfer process is not independent from the seller-specific mechanisms.
Considering the general institutional mechanisms alone as a moderator is
insufficient and thus we should also take the local, specific seller’s mechanisms
into account. As such, a more complete understanding of the moderating roles
of both the e-commerce institutional mechanisms and seller’s website mechan-
isms is essential, since appropriate conditions can be provided by these two
mechanisms that mitigate the negative influence of risk and uncertainty in the
environment for online transaction activity. Nevertheless, previous research
has ignored the effects of both the general institutional mechanisms and seller-
specific mechanisms in the C2C online environment.
To address these gaps in the literature, we draw upon signaling theory [18,
68] to explore how institutional context and seller’s website mechanisms serve
as signals that moderate the TP–TS–PI relationship. Signaling theory indicates
that buyers tend to depend on some informational cues to assess product (or
company) quality, especially when facing situations involving difficult deci-
sions about quality and in an environment of information asymmetry [6, 38].
The signals exert an influence on the perceptions, attitudes, and behaviors of
 INTERNATIONAL JOURNAL OF ELECTRONIC COMMERCE 263

individuals [6]. Indeed, recent research identifies how institutional context

explicitly signals a risk mitigation function to online buyers [20]. The seller’s
website mechanisms can also operate as signals that mitigate the negative
effect of low seller visibility and high product uncertainty [44].
PEEIM is a manifestation of the institutional context [20]. PEEIM refers to
an online buyer’s general perception that safeguarding mechanisms in the
e-commerce environment can protect him/her by mitigating potential risks
[20]. According to Fang et al. [20], PEEIM, which operates at the general level
(i.e., independent of any specific online seller or platform), captures the
ability of institutional mechanisms to mitigate contextual risks. PEEIM can
be considered as buyers’ perceptions of signals that their online transaction
activities are protected by institutional mechanisms against any potential
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risks. Perceived website quality of the seller (PWQS) is a manifestation of

the website mechanisms of the seller [20, 40]. PWQS refers to an online
buyer’s evaluation of a seller’s website in terms of whether his/her needs
are met by the website features and whether it reflects the overall quality of
the seller’s website [2]. PWQS, which is defined at the local/specific level
(i.e., where the mechanisms are investigated in the context of a specific online
seller), reflects an online buyer’s assessment of all signals, including informa-
tion, system, and service quality, demonstrated by the seller in designing its
website [17, 32].
This study makes several key contributions to the literature. First, this
study contributes to trust transfer theory by exploring its boundary condi-
tions. Second, by establishing PEEIM and PWQS as moderators, we under-
take comprehensive considerations of how both the general institutional
mechanisms and seller-specific mechanisms can serve as signals. To the
best of our knowledge, this study is among the first to address Fang et al.’s
[20] call to empirically examine PEEIM against more seller-specific mechan-
isms (i.e., sellers’ website quality) in the C2C online shopping context. Third,
with respect to the existing literature describing trust transfer from the C2C
platform to the seller on the platform and purchase intention, we find that
PEEIM and PWQS exert different moderating effects on the relationship
between trust-in-platform and trust-in-seller and the relationship between
trust-in-seller and purchase intention.

Theoretical Foundations
Trust Transfer Theory

Trust is a subjective belief that the trusting party believes that the trusted
party will behave by exhibiting integrity, ability, and benevolence [48, 60].
Trust plays an important role between the trusting party and the trusted
party, due to its ability to facilitate risk-taking behavior when opportunism
and uncertainty emerge [37, 53]. Indeed, it has been asserted that a trade
between two parties will not be initiated without sufficient trust [34, 37]. In
particular, convincing a buyer to engage in a transaction with an unknown
online seller is a formidable challenge, because a sufficient level of initial
 264 CHEN, HUANG, DAVISON, AND HUA

trust needs to be induced by the seller [34]. Therefore, to enhance online

buyers’ judgments on the trustworthiness of the seller and engender ade-
quate initial trust toward the seller, the unknown online seller should offer
opportunities for trust production to buyers [50, 54].
The trust transfer process can solve the trust-building problem in the
e-commerce context [39, 74]. The trust transfer process is a cognitive process
in which one’s trust in a familiar target can be transferred to another target
by virtue of certain associations [36, 70]. Pavlou, Liang, and Xue [61] indicate
that the main functions of the electronic marketplace are collecting, proces-
sing, and spreading information through Internet-based technologies in
order to increase trust between online buyers and sellers. A reliable and
safe trading environment provides fair and open rules that support the
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transaction process on an online shopping platform, which can restrict

problematic sellers [60]. Prospective buyers could then form the belief that
the transaction environment is well managed and that sellers there are
trustworthy.
The trust transfer process involves three actors, namely, the trustor, the
trustee, and a third party [70]. The trustor is a person who assesses whether
to trust others; the trustee is the one who is judged by the trustor based on
the trustworthiness; a third party serves as the broker [69, 74]. The under-
lying logic among these three actors is that “when the trustor trusts in the
third person and there is a close relationship between the trustee and the
third person, the trustor’s trust in the third person will be transferred to the
trustee” [74, p. 1396]. Following the same logic, previous research argues that
a buyer’s trust can be transferred from a C2C platform to the seller, which in
turn enhances a buyer’s purchase intention [60].
However, the existing literature on the trust transfer process assumes a
direct relationship through the TP–TS–PI sequence, ignoring the boundary
conditions. Gefen, Benbasat, and Pavlou [22] indicate that it is necessary to
explore how trust operates differently under different kinds of boundary
conditions. Delgado-Márquez, Hurtado-Torres, and Aragón-Correa [16]
further demonstrate that trust transfer is a dynamic process, suggesting
that a trustor’s expectations negatively and weakly moderate trust transfer
from a trustor to a trustee. Hence, investigating the trust transfer process by
incorporating boundary conditions is necessary.

Signaling Theory

Signaling theory explains how people assess product (or company) quality
under various circumstances, particularly when the quality is impossible or
difficult for people to directly observe [6, 68]. Signaling theory is widely
applied in information economics with the premise that information asym-
metry makes different influences on the relationship among the parties [38].
Information asymmetry in buyer–seller relationships is characterized by the
difficulty that buyers experience in precisely evaluating products and sellers
prior to purchase [56], which exacerbates uncertainty in the transaction
environment. When facing unobservable quality and in such asymmetric
 INTERNATIONAL JOURNAL OF ELECTRONIC COMMERCE 265

information situations, buyers tend to depend on informational cues to

evaluate the product (or company) quality [38]. The less buyers know
about the product and the more difficult it is for them to evaluate quality,
the more likely buyers will depend on these cues to infer the quality of the
product (or company) [6].
Informational cues can be categorized as intrinsic or extrinsic cues [34].
Intrinsic cues cannot be easily changed and are features of the product itself
(e.g., ingredients), whereas extrinsic cues can be altered and are reflected
through product-related attributes (e.g., various assurances from indepen-
dent third parties) [34, 75]. However, given the very nature of online shop-
ping, it is unlikely that online buyers can touch or smell products; they can
only view a product’s image [63]. This means that few intrinsic cues are
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available to buyers, who will thus tend to rely more on extrinsic cues [63].
Richardson, Dick, and Jain [63] also note that a buyer’s shopping confidence
can be enhanced by extrinsic cues because extrinsic cues can be assessed
without any particular knowledge of the product or expertise. Thus, buyers
tend to depend more on extrinsic cues to evaluate the trustworthiness of the
online seller. More recent empirical research has also suggested that PEEIM
and PWQS act as extrinsic signals of risk or uncertainty mitigation in the
e-commerce environment [20, 75].

Research Model and Hypothesis Development

Based on the above discussion, a research model is developed to investigate

the moderating roles of PEEIM and PWQS on the TP–TS–PI relationship.
Based on trust transfer theory, we first examine how trust-in-platform can
enhance trust-in-seller, and consequently affect purchase intention. Drawing
upon signaling theory, we then examine how PEEIM and PWQS moderate
the relationships between TP–TS–PI. The research model is shown in
Figure 1 and the corresponding hypotheses are explained below.

Figure 1. Research Model

 266 CHEN, HUANG, DAVISON, AND HUA

Trust in Platform, Trust in Seller and Purchase Intention

According to Pavlou and Gefen [60], trust-in-platform is defined as an online

buyer’s belief that a C2C platform will institute regulations and enforce
appropriate rules and penalties with integrity, competently, and reliably in
order to restrict seller opportunistic behavior on the platform. Like trust in
any target, Pavlou and Gefen [60] further indicate that an online buyer’s trust
in a C2C platform can also arise from familiarity with the platform (e.g., the
buyers’ expectations can always be fulfilled), the reputation of other similar
platforms, and the benevolent behavior of the platform (e.g., the platform
often replies to the buyer’s e-mail with a caring response).
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Trust transfer theory suggests that people’s trust can be transferred from
known targets to unknown targets because of their associations with one
another [70]. In the context of online transactions, trust transfer can also
occur between one organization and another by virtue of their linked Web
pages [39]. Following the trust transfer logic [19, 62, 70], we propose that
buyers who trust the C2C platform should also trust the sellers on the
platform because of their perceived associations between the platform and
sellers. Indeed, when a C2C online shopping platform is set up, the platform
provider will always institute platform-level restrictions to prevent opportu-
nistic transaction behavior [45, 60]. For example, any sellers’ opportunistic
behavior may result in serious consequences, such as sellerships taken away,
monetary penalties, and legal actions that could be taken by the platform on
behalf of the online buyers. By participating in a trusted C2C platform, the
seller demonstrates to its buyers its own trustworthiness [60, 66]. In this
respect, it is suggested that buyers’ trust in a C2C platform can also be
transferred to any seller on this platform. Specifically, when buyers develop
strong trust toward a C2C platform, they will view this platform as a place
where it is safe and secure to do business or to engage in transactions. Thus,
a favorable perception and attitude toward a C2C online platform will be
automatically transferred to any seller on this platform; the seller will there-
fore be viewed as a trustworthy transaction partner. Furthermore, previous
research has also demonstrated that buyers’ trust-in-platform can be trans-
ferred to their trust-in-seller [31, 60]. For example, Hong and Cho [31] found
that trustworthiness factors have a significant effect on a buyer’s trust-in-
platform, and trust-in-platform can readily be transferred to trust-in-sellers,
which in turn affect purchase intentions and attitudinal loyalty in a business-
to-consumer (B2C) e-marketplace. Pavlou and Gefen [60] indicate that buyers
who trust the transaction platform should also trust the community of sellers
and so perceive a lesser degree of risk in such an online marketplace. Given
these arguments, we hypothesize that:

Hypothesis 1: A buyer’s trust in a platform will have a positive effect on

his or her trust in a seller.

Trust transfer theory further indicates that buyers’ trust in the platform
can be transferred to their trust in the seller, which in turn enhances purchase
 INTERNATIONAL JOURNAL OF ELECTRONIC COMMERCE 267

intention [31, 60]. Online buyers are confronted with social uncertainty: they
do not know what other parties will do [60]. Trust is a key mechanism
reducing social uncertainty, which prompts buyers to begin a rational assess-
ment of a situation [24]. In other words, trust allows buyers to rule out,
subjectively, any undesirable behaviors from the party they trust, and thus
their perceptions of risk can be reduced to a more manageable level [26, 48].
Trust can govern exchange relationships characterized by vulnerability,
uncertainty, and dependence [20]. Shankar, Urban, and Sultan [65] argue
that by exhibiting honesty, consistency, reliability, and trustworthiness,
online sellers can build and maintain buyers’ relationship commitment and
repeat purchases. As such, buyers’ trusting beliefs toward a specific seller are
associated with intention to purchase from the seller [60]. It is well estab-
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lished that buyers’ trust-in-seller is positively related to their purchase inten-

tion [24, 60]. Therefore, we hypothesize:

Hypothesis 2: A buyer’s trust in a seller will have a positive effect on his

or her purchase intention in the same seller.

Perceived Effectiveness of E-Commerce Institutional

Mechanisms

Perceived effectiveness of e-commerce institutional mechanisms (PEEIM) is

defined as an online buyer’s subjective perception that online safeguarding
mechanisms exist in the e-commerce environment to protect him/her against
potential risks [20]. This definition of PEEIM views the influence of these
institutional mechanisms largely in buyers’ perceptional terms [20]. Common
online safeguarding mechanisms include privacy protection, escrow services,
and online credit card guarantees [52, 60]. For example, escrow services (e.g.,
PayPal, Alipay) can protect buyers in order fulfillment by authorizing pay-
ment only after the buyers approve the goods [33, 60]. Online credit card
guarantees provide a means to compensate buyers against sellers’ potentially
fraudulent behavior [60]. C2C e-commerce involves a variety of buyers, each
of whom may have their own perceptions about the effectiveness of e-com-
merce institutional mechanisms [60]. According to Fang et al. [20], these
mechanisms are generic, not party-specific or transaction-specific. The effec-
tiveness of these mechanisms delivers a signal to buyers that their online
transactions are protected by safeguards.
As discussed earlier, buyers who trust the platform can trust the seller by
virtue of buyers’ perceived association between the platform and the seller
[60, 70]. Buyers’ perceptions of this association rely on the certainty of the
institutional context. When PEEIM is high, this association should be posi-
tively strengthened, given that such high PEEIM can function as a risk-
mitigation signal [20]. Specifically, a high level of PEEIM can protect the
transaction environment to reduce uncertainty [20]. This means that buyers’
fears can be overcome under such a certain environment [50]: they are more
likely to believe that the seller’s trustworthiness is associated with the trust-
worthiness of the platform. As such, buyers will conveniently borrow the
 268 CHEN, HUANG, DAVISON, AND HUA

trustworthiness, which is reflected by the platform, and develop trust-in-

seller. Furthermore, when PEEIM is high, buyers’ confidence can be
enhanced during the transaction process because effective mechanisms are
in place to protect them against potential risks. With a stronger confidence
level, buyers would be more likely to have positive perceptions that any
unknown seller on this platform is related to the platform and will thus not
behave opportunistically. This implies that buyers do not need to judge all
sellers on this platform, but instead need to depend on their trust in this
platform.
In contrast, when the level of PEEIM is low, buyers perceive a signal
with regard to the uncertainty of the e-commerce environment and their
automatic trust in the platform can be interrupted by situations of uncer-
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tainty. Thus they will question whether the trustworthiness of the platform
can be used to determine the trustworthiness of the current transaction
situation. Low PEEIM induces buyers to look for and collect new transac-
tion information to infer the seller’s trustworthiness, rather than depend-
ing on their trust of the platform. In other words, the trustworthiness of
the seller needs to be reevaluated in such an uncertain context [51]. As a
consequence, the influence of buyers’ trust-in-platform on trust-in-seller is
weak.

Hypothesis 3: PEEIM positively moderates the relationship between

trust-in-platform and trust-in-seller.

We further argue that the influence of trust-in-seller on buyers’ purchase

intention should vary under different levels of PEEIM. The typical function
of trust is to mitigate uncertainty [57], which is related to an individual’s
inability to predict something accurately [55]. If a buyer’s perception of risk
is lower than the level of perceived trust, then trust exerts a more significant
influence on buyers’ risk-taking behavior (e.g., purchase intention) [20, 48].
Fang et al. [20] indicate that in situations of low uncertainty, trust-in-seller is
not a determined factor of behavioral intention. Indeed, when buyers’ have
perceptions of low risk (i.e., high PEEIM), trust-in-seller plays a weak role in
facilitating purchase intention [20, 64]. When people perceive the environ-
ment to be slightly uncertain, clear and useful signals enable people to assess
others’ behavior, and thus trust-in-seller plays a lesser role in such situations
[13, 20]. As contextual uncertainties can be reduced by high levels of PEEIM
through explicit regulatory assurances, a less risky transaction environment
may be created and the importance of trust-in-seller in promoting purchase
intention will decrease [20, 64].
In contrast, when people perceive the environment to be characterized by
high uncertainty (i.e., low PEEIM), they will rely more heavily on trust-in-
seller to infer purchase intention because no useful signals will exist to enable
them to judge others’ behavior [13, 20]. In other words, if PEEIM is low,
additional assurance is needed to increase buyers’ confidence in purchasing
from the online seller [20]. To obtain the additional assurance, buyers tend to
rely more on trust-in-seller [48].
 INTERNATIONAL JOURNAL OF ELECTRONIC COMMERCE 269

Hypothesis 4: PEEIM negatively moderates the relationship between

trust-in-seller and purchase intention.

Perceived Website Quality of the Seller

Perceived website quality of the seller (PWQS) refers to an online buyer’s

assessment of the features of a seller’s website meeting his/her needs and
reflecting the website’s overall excellence [2]. Website quality includes cues
like information, system, and service quality [17]. Buyers’ perceptions and
expectations of website quality are evaluated primarily on these three dimen-
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sions [17, 40]. Specifically, information quality is defined as buyers’ percep-

tions of information available on a seller’s website [49]. System quality is
related to a seller’s website as perceived by buyers in terms of its overall
performance, which can be reflected via the degrees of user friendliness [32].
Service quality refers to the extent to which buyers evaluate the service
delivered by the seller through its website [32, 42]. The success of an online
transaction between buyers and sellers is dependent on the sellers’ website
quality. In this view, a seller’s website quality represents seller-specific
signals designed to promote buyers’ online shopping behavior.
We expect that the relationship between trust-in-platform and trust-in-seller
can be positively strengthened by high PWQS. When the level of PWQS is high,
buyers’ initial impressions are solidified by first experiencing the seller’s pre-
sence [52]. Following signaling theory, Benlian and Hess [6] note that informa-
tion technology (IT)-supported cues of a website (e.g., website quality) can
influence users’ perceptions through providing functionalities or visual signals.
With a higher level of PWQS, buyers would be more likely to have a positive
perception of the association between the platform and the seller because their
initial perception of the platform is further confirmed by high PWQS. In addi-
tion, high PWQS can also mitigate online buyers’ anxiety by providing reliable
information and services [35]. Less anxious buyers will be more willing to feel
certain about the consistency between the platform and seller in terms of
reliability. Thus, in situations of high PWQS, the trustworthiness of the platform
can be applied by buyers to infer the seller’s trustworthiness on this platform. In
this view, PWQS serves as a reliable signal to strengthen the relationship
between buyers’ trust-in-platform and trust-in-seller.
On the contrary, when PWQS is low, the influence of buyers’ trust-in-
platform on trust-in-seller is reduced because low PWQS causes doubts in
buyers’ minds about the applicability of a platform’s trustworthiness to a
new seller. If PWQS is low, buyers may fear that the seller engages in
opportunistic behaviors [40]. Buyers may need to search for additional
information to judge the trustworthiness of the seller, rather than inferring
from the trustworthiness of the platform. This implies a weaker effect of
buyers’ trust-in-platform on trust-in-seller.

Hypothesis 5: PWQS positively moderates the relationship between

trust-in-platform and trust-in-seller.
 270 CHEN, HUANG, DAVISON, AND HUA

We expect that the influence of buyers’ trust-in-seller on their purchase

intention is diluted by high PWQS. When PWQS is high, the likelihood of a
mismatch can be reduced and information search can be facilitated [44].
Buyers, consequently, experience a useful signal through website quality,
which is demonstrated by the seller. Wells, Valacich, and Hess [75] argue
that website quality influences buyers’ online shopping experiences. The
need for trust will decrease with experience [23], indicating that buyers
may depend less heavily on their trust-in-seller to form a purchase intention
when buyers experience a seller’s high website quality. Furthermore, signal-
ing theory also suggests that high website quality can alleviate uncertainty
[6, 75]. Mayer, Davis, and Schoorman [48] and Fang et al. [20] indicate that
trust is needed for people only in an uncertain situation. Because high PWQS
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can reduce uncertainty, the need for buyers’ trust-in-seller in facilitating their
purchase intention is reduced.
On the contrary, if PWQS is low, buyers might give a negative appraisal
of their experience of the seller’s website. In this situation, buyers must rely
more heavily on trust-in-seller to increase their purchasing confidence.

Hypothesis 6: PWQS negatively moderates the relationship between

trust-in-seller and purchase intention.

Furthermore, it is known that perceived website quality positively affects

trust [35, 50, 77] and trust-in-platform has a direct effect on purchase inten-
tion (e.g., [31]). Therefore, although these known relationships are not
hypothesized, in order to ensure the theoretical completeness they are still
included in our research model (see Figure 1).

Research Methodology
Measurement Development

All the measurement items used in this study were adapted from prior
validated scales. In order to ensure that those scales fit the current research
context, some minor changes were made. We used a five-point Likert scale,
ranging from “strongly disagree” to “strongly agree,” to measure all items.
The items in the questionnaire are shown in Table 1. Specifically, trust-in-
platform was measured using a three-item scale adapted from Qu, Pavlou,
and Davison [59]. Trust-in-seller was assessed with seven items adapted from
Fang et al. [20]. Purchase intention was measured with three items adapted
from Pavlou and Gefen [60]. In addition, PEEIM was assessed with a three-
item scale adapted from Fang et al. [20]. Moreover, according to the existing
literature [32], PWQS is a second-order construct encompassing the dimen-
sions of information quality, system quality, and service quality. To measure
the three dimensions, twelve items were adapted from Zhou [77], with four
items each for information quality, system quality, and service quality.
Given that this research was conducted in China, following Van de Vijver
[72], we translated the English questionnaire into Chinese. A professional
 INTERNATIONAL JOURNAL OF ELECTRONIC COMMERCE 271

Table 1. Measurement I tems.

Constructs and measurement Loading

Trust in Platform
1. As an auction host/intermediary, TaoBao can be trusted at all times. 0.834
2. As an auction host/intermediary, TaoBao has a high level of integrity. 0.838
3. TaoBao is a competent and knowledgeable auction host/intermediary. 0.725
4. As an auction host/intermediary, TaoBao can be counted on to do what is right*.
Trust in Seller
1. I believe that this seller is consistent in quality and service. 0.753
2. I believe that this seller is keen on fulfilling my needs and wants. 0.807
3. I believe that this seller is honest. 0.722
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4. I believe that this seller wants to be known as one that keeps promises and commitments. 0.812
5. I believe that this seller has my best interests in mind. 0.837
6. I believe that this seller has high integrity. 0.786
7. I believe that this seller is dependable. 0.798
Purchase Intention
1. Given the chance, I predict that I would consider buying products from this seller on TaoBao 0.903
in the future.
2. Given the opportunity, I intend to place an order from this seller on TaoBao. 0.912
3. It is likely that I will actually buy products from this seller on TaoBao in the near future. 0.815
Perceived Effectiveness of E-Commerce Institutional Mechanisms
1. When buying online, I am confident that there are mechanisms in place to protect me 0.821
against any potential risks (e.g., leaking of personal information, credit card fraud, goods
not received, etc.) of online shopping if something goes wrong with my online purchase.
2. I am sure that I cannot be taken advantage of (e.g., leaking of personal information, credit 0.865
card fraud, goods not received, etc.) as a result of conducting purchases online.
3. I believe that there are other parties (e.g., your credit card company) who have an 0.863
obligation to protect me against any potential risks (leaking of personal information, credit
card fraud, goods not received, etc.) of online shopping if something goes wrong with my
online purchase.
4. I have confidence in third parties (e.g., SafeTrader, TRUSTe) to protect me against any
potential risks (e.g., leaking of personal information, credit card fraud, goods not received,
etc.) of online shopping if something goes wrong with my online purchase.*
Perceived Website Quality of the Seller
- Information Quality
1. The website of this seller provides me with information relevant to my needs. 0.810
2. The website of this seller provides me with sufficient information. 0.837
3. The website of this seller provides me with accurate information. 0.850
4. The website of this seller provides me with up-to-date information. 0.778
- System Quality
1. The website of this seller quickly loads all the text and graphics. 0.833
2. The website of this seller is easy to use. 0.878
3. The website of this seller is easy to navigate. 0.877
4. The website of this seller is visually attractive. 0.739
- Service Quality
1. The website of this seller provides on-time services. 0.869
2. The website of this seller provides prompt responses. 0.826
3. The website of this seller provides professional services. 0.774
4. The website of this seller provides personalized services. 0.738
*Items were removed from further analyses due to low loading.
 272 CHEN, HUANG, DAVISON, AND HUA

translator who was unfamiliar with our study was hired to translate the
questionnaire from Chinese back to English. When we compared the trans-
lated questionnaire with the original English version, no semantic discrepan-
cies were found. In order to assess the content validity, four information
systems (IS) Ph.D. students who had online shopping experience on TaoBao
were also invited to review and critique the measurement items.
In addition, some demographic variables that might affect trust-in-seller
and purchase intention were included in our model as control variables.

Research Design
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We chose TaoBao as our research context because it is the dominant C2C

online shopping platform in China and Chinese buyers are familiar with it
[76]. Although TaoBao and eBay offer similar functionality, some notable
differences exist between them [58]. For instance, TaoBao provides a variety
of product listings in the home page of the platform. When buyers transact
with sellers at TaoBao, buyers need to visit the platform first and then choose
the specific sellers based on the product listings provided by the platform.
However, in the case of eBay, the entire transaction is finished in the eBay
platform: there is no need to visit the seller’s website. Furthermore, TaoBao
allows sellers to design their own website, so different sellers are distinct in
terms of their website quality, with different interface navigation and pro-
duct formats. In addition, Chinese online buyers like to query the qualities
and details of the merchandise and negotiate prices with sellers before
making a deal [4]. By using WangWang, an instant messenger (IM) tool
embedded in TaoBao’s platform [58], sellers can provide prompt and profes-
sional responses to the buyers’ inquiries.
We employed an online survey for data collection. During a three-month
period (March to May 2014), the survey was promoted by distributing a banner
with a hyperlink of our online survey to a number of popular social network
sites and virtual communities in China. Individuals who had prior experience of
shopping on TaoBao and had bought products or services for personal use were
invited to complete the questionnaire. In addition, in order to increase the
participants’ response rate, a payment of RMB 30 (approximately US$4.85)
was provided as an incentive for fifty randomly selected respondents. In the
questionnaire, the first page explained the purpose of our research and ensured
confidentiality. The respondents were asked to recall their most recent online
shopping experience at TaoBao. In all, 318 questionnaires were returned. Among
them, 24 were incomplete or invalid after initial examinations, resulting in a total
of 294 valid questionnaires for data analysis. The demographic information of
those respondents is shown in Table 2. We further followed Armstrong and
Overton’s [3] suggestions by comparing the early and late responses to test
nonresponse bias. Two-tailed t-statistics across all the constructs were used to
compare responses between the first 25 percent and last 25 percent of respon-
dents. No significant differences were identified among all construct means,
indicating that non-response bias is not a concern for this study.
 INTERNATIONAL JOURNAL OF ELECTRONIC COMMERCE 273

Table 2. Demographics of Respondents (N = 294).

Percentage

Gender
Male 53.7
Female 46.3
Age
16–20 4.8
21–30 85.0
31–40 9.9
41 and above 0.3
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Education
High school or below 2.4
Two-year college 3.1
Bachelor 45.9
Masters or above 48.6
Monthly individual income in RMB (US$1 = RMB 6.18)
Under 1,000 49.7
1,001–3,000 18.7
3,001–5,000 12.2
5,001–10,000 13.9
10,001 or above 5.4
Online shopping frequency (times in a month)
1–3 62.9
4–6 26.9
7 or above 10.2
Internet experience (in years)
1–3 48.3
4–6 40.5
7 or above 11.2

Common Method Bias

Furthermore, since all the data collected were perceptual and from a single
source at the same time, we also tested for common method bias. First, we
followed Harman’s single-factor method to test common method bias [9].
The results showed that three constructs have eigenvalues higher than 1.0,
explaining 61.73 percent of the total variance. Meanwhile, the first construct
accounted for 24.31 percent of the variance. Hence, the results are unlikely to
be contaminated by common method bias.
Second, we included in the partial least squares (PLS) model a common
method factor associated with all the principal constructs’ indicators by follow-
ing the suggestions of Liang et al. [41]. We then calculated each indicator’s
variances explained by the substantive constructs and the method factor. As
Table 3 shows, the average substantively explained variance of the indicators
was 0.686, and the average method-based variance of the indicators was 0.006.
 274 CHEN, HUANG, DAVISON, AND HUA

Table 3. Common Method Bias Analysis.

Substantive factor Method factor

Construct Indicator loading (R1) R12 loading (R2) R22

TP TP1 0.800*** 0.640 0.043 0.002

TP2 0.882*** 0.778 –0.055 0.003
TP3 0.714*** 0.510 0.014 0.000
TS TS1 0.708*** 0.501 –0.015 0.000
TS2 0.888*** 0.789 –0.126 0.016
TS3 0.679*** 0.461 0.010 0.000
TS4 0.807*** 0.651 –0.049 0.002
TS5 0.926*** 0.857 –0.163 0.027
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TS6 0.817*** 0.667 –0.079 0.006

TS7 0.887*** 0.787 –0.121 0.015
PI PI1 0.842*** 0.709 0.087 0.008
PI2 0.953*** 0.908 –0.058 0.003
PI3 0.837*** 0.701 –0.031 0.001
PEEIM PEEIM1 0.761*** 0.579 0.089 0.008
PEEIM2 0.874*** 0.764 –0.013 0.000
PEEIM3 0.911*** 0.830 –0.072 0.005
IQ IQ1 0.751*** 0.564 0.069 0.005
IQ2 0.936*** 0.876 –0.115 0.013
IQ3 0.787*** 0.619 0.073 0.005
IQ4 0.802*** 0.643 –0.028 0.001
SQ SQ1 0.863*** 0.745 –0.037 0.001
SQ2 0.826*** 0.682 0.065 0.004
SQ3 0.869*** 0.755 0.010 0.000
SQ4 0.776*** 0.602 –0.047 0.002
SerQ SerQ1 0.864*** 0.746 0.007 0.000
SerQ2 0.812*** 0.659 0.018 0.000
SerQ3 0.717*** 0.514 0.074 0.005
SerQ4 0.820*** 0.672 –0.105 0.011
Average 0.825 0.686 –0.020 0.005
*p < 0.05; **p < 0.01; ***p < 0.001.

The ratio between the average substantively explained variance of the indica-
tors and the average method-based variance of the indicators was very large. In
addition, there were no significant method factor loadings, suggesting that
common method bias is not a significant issue with the data.

Data Analysis and Results

Measurement Model

Confirmatory factor analysis (CFA) was applied to examine the validity and
reliability of the constructs. The results revealed that the fit between the data
set and the measurement model was satisfactory (χ2 = 886.45 on 329 d.f.,
RMSEA = 0.076, CFI = 0.968, IFI = 0.968, NFI = 0.95, NNFI = 0.963). The
 INTERNATIONAL JOURNAL OF ELECTRONIC COMMERCE 275

Table 4. Results of Confirmatory Factor Analysis.

Cronbach’s Composite
Construct Indicators alpha reliability AVE

Trust in Platform (TP) 3 0.719 0.842 0.641

Trust in Seller (TS) 7 0.896 0.920 0.622
Purchase Intention (PI) 3 0.850 0.909 0.770
Perceived Effectiveness of E-Commerce 3 0.807 0.886 0.722
Institutional Mechanisms (PEEIM)
Second-order Perceived Website Quality of the 0.859 0.914 0.780
Seller (PWQS)
Information Quality (IQ) 4 0.836 0.891 0.671
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System Quality (SQ) 4 0.849 0.901 0.695

Service Quality (SerQ) 4 0.813 0.879 0.645

loadings of all items were above 0.7 [8] (see Appendix A). As shown in
Table 4, The AVEs of all constructs were higher than 0.6, all above the
recommended value of 0.5 [21]. In addition, following Fornell and Larcker
[21], we used composite reliability and Cronbach’s alpha to test construct
reliability. The values of Cronbach’s alpha ranged from 0.719 to 0.896, which
were above the benchmark value of 0.7 [21]. Composite reliability sores
ranged from 0.842 to 0.920, which were also above the recommended value
of 0.7 [21]. Thus, the results demonstrated a good convergent validity of our
measurement model.
Furthermore, we assessed discriminant validity by comparing the square
root of the AVE of each construct and the correlations among constructs [12].
As shown in Table 5, the largest correlation between constructs was 0.665,
less than the recommended level of 0.71 [46]. Also, the square roots of the
AVEs for all constructs on the diagonal were larger than the interconstruct
correlations, suggesting good discriminant validity.
Considering that several interconstruct correlations were higher than
the recommended value of 0.6 in our study, we further examined the poten-
tial multicollinearity issue. We employed the variance inflation vactors (VIF)

Table 5. Means, Standard Deviation, and Correlations.

Variable Mean S.D. 1 2 3 4 5 6 7 8

1. TP 3.435 0.678 0.801

2. TS 3.324 0.721 0.614 0.789
3. PI 3.803 0.743 0.622 0.437 0.878
4. PEEIM 3.213 0.818 0.501 0.561 0.343 0.850
5. PWQS 3.537 0.616 0.665 0.580 0.601 0.524 0.883
6. Gender NA NA -0.056 -0.023 -0.085 -0.063 0.002 NA
7. Age NA NA -0.123 -0.051 0.014 -0.136 -0.059 -0.049 NA
8. Internet Experience NA NA -0.002 0.088 0.044 -0.017 -0.042 0.271 0.045 NA
Note: The shaded numbers in the diagonal row represent the square roots of AVE.
 276 CHEN, HUANG, DAVISON, AND HUA

to detect collinearity using the guideline suggested by Mason and Perreault

[47]: multicollinearity exists when VIFs are greater than 10. The results
indicated that the highest VIF was 2.419. Thus, multicollinearity was not a
significant issue in the present research.
In this study, we treated PWQS as a second-order reflective construct. To
examine whether the second-order construct was reflected by all first-order
dimensions, a second-order CFA by using the extracted first-order dimen-
sion was employed. The results showed that the higher-order measurement
model had adequate fit (χ2 = 182.64 on 51 d.f., RMSEA = 0.094, CFI = 0.971,
IFI = 0.971, NFI = 0.961, NNFI = 0.963). Although the RMSEA value of
PWQS was slightly higher than the cutoff score of 0.08, it is still acceptable
according to the criterion suggested by Liu et al. [43] (i.e., RMSEA ≤ 0.1).
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The results indicated that the loadings of each dimension on PWQS were
positive and significant (p < 0.001). Their correlations were also significant at
the level of p < 0.001, suggesting these first-order dimensions converged on
the common underlying construct of PWQS. Finally, we used SPSS to test the
reflective factors. The average values of the first-order dimensions were used
to construct the values of PWQS to examine the structural model [43].

Structural Model

Hierarchical regression analysis, specifically, ordinary least squares (OLS)

regression, was used to test our structural model. Hierarchical regression
was chosen as the preferred analysis for several reasons. First, using struc-
tural equation models (SEMs) to test moderations is problematic [15]. In
comparison with other approaches (e.g., SEM), hierarchical regression ana-
lysis is more appropriate for models with multiple moderating effects and
multiple moderators [71]. Second, Goodhue, Lewis, and Thompson [27]
indicate that when conducting interaction analysis, regression analysis with
the product of the sum of indicators is more appropriate than partial least
squares with the product of indicators (the strength of relationships is over-
estimated and their significance is underestimated in partial least squares).
Third, it is one of the most popular approaches for examining hypotheses
about interaction effects [71].
As shown in Table 6, to minimize the possibility of multicollinearity, we
mean-centered the independent variables and moderator variables [1]. We
tested three models separately. We included the control variables in step 1,
followed by including the independent variables and moderators in step 2.
We added the interaction effects in step 3. Furthermore, in all regression
models, a heteroskedasticity robust variance estimator was used to assess the
robustness of the significance tests of estimates [29].
Table 6 shows that the model accounted for 51.04 percent of the variance
in trust-in-seller and 40.48 percent of the variance in purchase intention. The
results showed that the relationship between trust-in-platform and trust-in-
seller was positive and significant (β = 0.315, p < 0.001). The relationship
between trust-in-seller and purchase intention was also positive and signifi-
cant (β = 0.148, p < 0.05). Hence, both H1 and H2 were supported.
 INTERNATIONAL JOURNAL OF ELECTRONIC COMMERCE 277

Table 6. Hierarchical Regression Results.

DV—Trust in Seller DV—Purchase Intention

Model Model
Variables 1a Model 2a Model 3a 1b Model 2b Model 3b

Control variables
Gender –0.056 0.035 0.027 0.005 0.040 0.030
Age –0.054 –0.013 –0.007 –0.102 –0.102* –0.106*
Internet Experience 0.104 0.103** 0.096* 0.070 0.081 0.091
Main Effects
Trust in Platform 0.324*** 0.315***
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Trust in Seller 0.119 0.148*

PEEIM 0.278*** 0.274*** –0.007 –0.009
PWQS 0.206*** 0.214*** 0.516*** 0.508***
Moderating effects
Trust in Platform X -0.106*
PEEIM
Trust in Platform X 0.121*
PWQS
Trust in Seller X 0.129*
PEEIM
Trust in Seller X –0.110*
PWQS
R2 1.35% 49.79% 51.04% 1.21% 38.80% 40.48%
ΔR2 48.44% 1.25% 37.59% 1.68%
F(p-value) 1.508 36.165*** 34.311*** 1.124 32.805*** 34.428***
Effect size (f 2) 0.965 0.026 0.614 0.028
Notes: The number of respondents = 294. Heteroskedasticity robust variance estimator used. Reported
values are standardized regression coefficients.
*p < 0.05; **p < 0.01; ***p < 0.001.

Meanwhile, we found a negative moderating effect of PEEIM on the

relationship between trust-in-platform and trust-in-seller (β = –0.106, p <
0.05). As such, H3 was not supported. The moderating effect of PEEIM on
the relationship between trust-in-seller and purchase intention was positive
(β = 0.129, p < 0.05), rejecting H4. The results indicated that the positive
moderating effect of PWQS on the relationship between trust-in-platform
and trust-in-seller was significant (β = 0.121, p < 0.05), which supported H5.
Furthermore, the negative moderating effect of PWQS on the relationship
between trust-in-seller and purchase intention was significant (β = –0.110, p <
0.05), supporting H6. We summarize the findings of the hypothesis testing in
Table 7. To advance our interpretations, we plotted the moderating effects of
PEEIM and PWQS on the relationships between trust-in-platform, trust-in-
seller and purchase intention, respectively. A score one standard deviation
below or above the mean was used to indicate a low or high level of PEEIM
or PWQS [1]. The moderating effect of PEEIM on the relationship between
trust-in-platform and trust-in-seller was plotted in Figure 2, showing that the
 278 CHEN, HUANG, DAVISON, AND HUA

Table 7. Summary of Hypothesis Testing Findings.

Hypothesis no. Result

H1: A buyer’s trust in a platform will have a positive effect on his or her trust in a seller. Supported
H2: A buyer’s trust in a seller will have a positive effect on his or her purchase intention in the Supported
same seller.
H3: PEEIM positively moderates the relationship between trust-in-platform and trust-in-seller. Unsupported
H4: PEEIM negatively moderates the relationship between trust-in-seller and purchase intention. Unsupported
H5: PWQS positively moderates the relationship between trust-in-platform and trust-in-seller. Supported
H6: PWQS negatively moderates the relationship between trust-in-seller and purchase Supported
intention.
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Figure 2. The Moderating Effect of PEEIM on the Relationship Between

Trust-in-Platform and Trust-in-Seller

gap (the effect of trust-in-platform on trust-in-seller) is larger in low PEEIM

than in high PEEIM. The moderating effect of PEEIM on the relationship
between trust-in-seller and purchase intention was delineated in Figure 3,
showing that the gap (the effect of trust-in-seller on purchase intention) is
larger in high PEEIM than in low PEEIM. Similarly, we delineated the

Figure 3. The Moderating Effect of PEEIM on the Relationship Between

Trust-in-Seller and Purchase Intention
 INTERNATIONAL JOURNAL OF ELECTRONIC COMMERCE 279
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Figure 4. The Moderating Effect of PWQS on the Relationship Between

Trust-in-Platform and Trust-in-Seller

moderating effect of PWQS on the relationship between trust-in-platform

and trust-in-seller in Figure 4, indicating that the gap (the effect of trust-in-
platform on trust-in-seller) is larger in high PWQS than in low PWQS. In
addition, we delineated the moderating effect of PWQS on the relationship
between trust-in-seller and purchase intention in Figure 5, showing that the
gap (the effect of trust-in-seller on purchase intention) is larger in low PWQS
than in high PWQS.
To confirm the significance of the moderating effects of PEEIM and
PWQS, we also examined the results of the interaction effects of R2 changes
[10]. The results revealed that trust-in-platform significantly increased the R2
of trust-in-seller by 48.44 percent (F = 36.165, p < 0.001), indicating a large
effect size (f 2 = 0.965).1 PEEIM and PWQS with trust-in-platform signifi-
cantly increased the R2 of trust-in-seller by 1.25 percent (F = 34.311, p <
0.001), which indicated that the effect size was small (f 2 = 0.026). In addition,
trust-in-seller significantly increased the R2 of purchase intention by 37.59
percent (F = 32.805, p < 0.001), indicating a large effect size (f 2 = 0.614). When
including the interaction effects of PEEIM and PWQS, the R2 of purchase

Figure 5. The Moderating Effect of PWQS on the Relationship Between

Trust-in-Seller and Purchase Intention
 280 CHEN, HUANG, DAVISON, AND HUA

intention was significantly increased by 1.68 percent (F = 34.428, p < 0.001),

indicating that the effect size was small (f 2 = 0.028). Therefore, the F-test
results indicated the significantly increased R2 of the interaction effects,
suggesting that the moderating effects were significant [10].

Discussion and Implications

Discussion
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This study examines how PEEIM and PWQS exert different moderating
effects on the relationships between trust-in-platform, trust-in-seller and
online purchase intention. Specifically, our study finds that trust-in-platform
has a positive effect on trust-in-seller and trust-in-seller positively affects
purchase intention. In addition, our study confirms that PWQS positively
moderates the relationship between trust-in-platform and trust-in-seller, such
that the influence of trust-in-platform on trust-in-seller is stronger when
PWQS is higher. This moderating effect implies that the platform’s trust
becomes an important source of the seller’s trust only under the high, but
not the low PWQS condition. However, surprisingly, the current research
finds that PEEIM negatively moderates the relationship between trust-in-
platform and trust-in-seller. A possible explanation is that once buyers visit a
specific online seller’s website, they can apply their direct experience with
the website, including their direct impressions of the seller’s website quality,
to make judgment about the transaction environment of the seller [7]. The
effects of institutional mechanisms assurance will be attenuated by this direct
experience with the website [7, 54]. Indeed, if buyers can acquire the direct
experience with the seller’s website, then the roles of perceived institutional
mechanisms assurance actually will become less profound [7]. This implies
that the effect of trust-in-platform on trust-in-seller is stronger when PWQS is
higher, while weaker when PEEIM is higher.
Furthermore, the results also confirm that PWQS negatively moderates
the relationship between trust-in-seller and purchase intention, such that the
positive effect of trust-in-seller on purchase intention becomes weaker when
PWQS is higher. This moderating effect suggests that if buyers perceive that
the level of website quality is high, it is not particularly significant to cement
trust-in-seller. The interaction plot (see Figure 5) also suggests that trust-in-
seller does not have a significant effect on purchase intention when PWQS is
high.
Contrary to our expectations, the present research finds that PEEIM
positively moderates the relationship between trust-in-seller and purchase
intention. One possible explanation is that the effective institutional mechan-
isms can provide explicit regulatory assurances to buyers, and thus cause
buyers to believe that the transaction environment is less risky [67]. Buyers
will not worry about the problems that occur during or after the transaction
process under this condition. In other words, when enforceable, convenient,
available, and cost-effective recourses are provided by these effective
 INTERNATIONAL JOURNAL OF ELECTRONIC COMMERCE 281

institutional mechanisms [60], buyers who trust the seller are more willing to
form a purchase intention with this seller.

Limitations and Future Research

Though our proposed model is generally supported by the data, several

limitations need to be mentioned as they open up interesting research
opportunities. First, although some sample characteristics variables are con-
trolled in this study, we should also take some other variables into consid-
eration, such as product characteristics and satisfaction. Future research
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could be conducted by examining these control variables.

Second, given that our sample is exclusively composed of active online
buyers, self-selection bias may have influenced our results. Individuals who
had already ceased to purchase from TaoBao might have different percep-
tions about the roles of the effectiveness of the institutional mechanisms and
the seller’s website quality. Thus, the results only explained the behavior of
active online buyers. Although self-selection bias might have affected the
data collection process, prior research indicates that a web-based survey has
the potential to attract participation from a diverse range of respondents, and
is easy to access and answer [14]. Gosling et al. [28] argue that the data
quality provided by a self-selected sample is the same as that offered by
traditional methods. In addition, Hayslett and Wildemuth [30] suggest that
no significant differences exist between a random sample and self-selected
respondents with respect to the demographic background of the respon-
dents. Therefore, the influence of self-selection is not considered to be sig-
nificant in this study.
Third, the respondents who completed the questionnaires were asked to
recall their most recent transaction experience with TaoBao, which may
induce memory recall bias. Hence, future research could consider replicating
the study with other methods, such as experiments.
Finally, our data were collected from buyers on TaoBao, the most impor-
tant C2C online shopping platform in China. Even though it is worth
investigating how online buyers perceive contextual conditions on TaoBao,
given its status as the most well-known C2C online shopping platform in
China, the generalizability of our findings to C2C online shopping platforms
in other contexts requires additional research. In particular, the behavior of
online buyers is likely to vary across cultures. A cross-cultural comparison
between TaoBao and other C2C online marketplaces in other countries
should be undertaken in future research. Such cross-cultural studies may
provide a more holistic explanation of online buyers’ behavior.

Theoretical Implications

This study offers several important implications for theory. First, our study
provides a more fine-grained insight into trust transfer theory in terms of its
boundary conditions. Although trust transfer theory has been used to
 282 CHEN, HUANG, DAVISON, AND HUA

interpret a variety of trust-building mechanisms in the context of e-com-

merce [31, 60], its boundary conditions with respect to how trust can be
transferred in the C2C online shopping context had yet to be tested before
the current study, notwithstanding recent work reporting the dynamic nat-
ure of the trust transfer process [16]. Mayer, Davis, and Schoorman [48] also
argue that in order to achieve a better understanding of trust in a trustee, it is
necessary to consider the contextual conditions under which trust operates.
Hong and Cho [31] call for future e-marketplaces research to explore factors
that facilitate the trust transfer process. To the best of our knowledge, our
study is the first to address this call in the C2C e-commerce literature by
empirically verifying and theorizing the crucial moderating roles in influen-
cing the trust transfer process, which would help develop strategies to
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promote trust transfer production mechanisms.

Second and more specifically, by identifying PEEIM and PWQS as mod-
erators, we take the roles of both the general institutional mechanisms and
seller-specific mechanisms into consideration. In doing so, we draw upon
signaling theory and then theorize the important effects of PEEIM and
PWQS. Previous studies have considered either institutional mechanisms or
website quality as moderators [20, 44]; however, researchers seldom recog-
nize that these two perspectives can be combined, not to mention their effects
on the trust transfer process. Indeed, Fang et al. [20] indicated that they only
theoretically differentiate the role of PEEIM from seller-specific mechanisms,
laying bare the possibility that the existence of seller-specific mechanisms
may outweigh the effect of PEEIM. Fang et al. [20] thus called for empirical
examinations of PEEIM against more seller-specific mechanisms, such as
sellers’ website quality in future research. Our study is the first to investigate
this assertion and our findings also advance the scholarly understanding of
the crucial role of PEEIM and PWQS in facilitating buyers’ trust transfer and
subsequent purchase intention. Unfortunately, related studies have only
focused on one perspective, either the general institutional mechanisms or
seller-specific mechanisms, when investigating online buyers’ behavior. In
essence, our study takes a significant step toward theoretical advancement in
the existing literature by demonstrating that both the general level and
specific/local level of mechanisms should be combined to produce addi-
tional influences on the trust transfer process.
Furthermore, this study shows the interesting paradoxical effects of
PEEIM and PWQS on the relationship between trust-in-platform and trust-
in-seller and the relationship between trust-in-seller and online purchase
intention. On the one hand, PEEIM negatively moderates the effect of
trust-in-platform on trust-in-seller, while strengthening the importance of
trust-in-seller in purchase intention. On the other hand, PWQS positively
moderates the influence of trust-in-platform on trust-in-seller, whereas it
negatively moderates the relationship between trust-in-seller and purchase
intention. Given that the cost of monitoring online transactions can be
reduced by trust, online sellers treat trust as a source of competitive advan-
tage [60]. Our findings suggest that this is true when PWQS is low. This
implies that enhancing trust may no longer help sellers to gain competitive
advantage among competitors when PWQS is high, because its role becomes
 INTERNATIONAL JOURNAL OF ELECTRONIC COMMERCE 283

less important at this stage. In addition, previous research argues that

buyers’ trust-in-platform can be easily transferred to trust-in-seller [31].
Our findings indicate that this argument is correct when PEEIM is
ineffective.

Practical Implications

In terms of practicality, this study may provide some valuable guidelines.

C2C platform providers and sellers should have different foci on online
buyers at different stages. First and foremost, an online survey could be
Downloaded by [University of Nebraska, Lincoln] at 05:29 04 December 2015

conducted by the C2C platform to assess buyers’ PEEIM. Then the providers
of the platform should strategically build buyers’ trust according to different
levels of PEEIM. Specifically, for those buyers who perceive that the e-com-
merce institutional mechanism is relatively ineffective, providers need to
exert much more effort to build buyers’ trust-in-platform. For example, the
platform providers can help teach buyers how to select a trustworthy seller
in accordance with buyers’ interest. In addition, the providers should pay
more attention to the provision of customer service: they should provide a
professional level of service to buyers at each of the presales, online-sales,
and post-sales phases. Alternatively, when buyers perceive the e-commerce
institutional mechanism to be relatively effective, no additional costs need to
be invested to maintain buyers’ trust.
Second, the seller should also strategically build buyers’ trust based on
different levels of PWQS. Specifically, when buyers perceive the seller’s
website quality to be relatively low, sufficient attention should be paid to
building buyers’ trust in it. For example, online buyers hope to get more
guarantees and promises from the seller due to high uncertainties during the
online shopping process. Thus, the seller should fulfill his/her commitments
in terms of returns and replacement. An online seller may save costs with
respect to trust maintenance for those buyers who perceive the website
quality to be relatively high. Accordingly, knowing buyers’ PWQS is very
significant for the seller. The seller can directly assess buyers’ evaluation of
the website quality and then study whether their PWQS is related to other
attributes such as purchasing history.

Conclusion

This study is the first to explore the boundary conditions surrounding the
trust transfer process in the C2C online shopping context by simultaneously
considering the moderating roles of PEEIM and PWQS. We found that
PEEIM has a negative effect on the relationship between trust-in-platform
and trust-in-seller but has a positive effect on the relationship between trust-
in-seller and online purchase intention. Furthermore, PWQS positively mod-
erates the relationship between trust-in-platform and trust-in-seller but nega-
tively moderates the relationship between trust-in-seller and online purchase
intention. These findings not only address the call to examine the general
 284 CHEN, HUANG, DAVISON, AND HUA

perception of institutional mechanisms against more local, specific mechan-

isms but also advance our understanding of how to strategically promote
buyers’ trust transfer so as to increase their purchasing behavior. To con-
clude, these interesting findings provide guidance for future research to
further examine the roles of e-commerce institutional mechanisms and web-
site quality in the e-commerce context.

NOTE

1. Effect size f 2 = [R2 of interaction effect model – R2 of main effect model] / [1 – R2

of main effect model]. Following Cohen (1988), f 2 of 0.02–0.14, 0.15–0.34, and above
Downloaded by [University of Nebraska, Lincoln] at 05:29 04 December 2015

0.35 are termed small-, medium-, and large-effect sizes, respectively.

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XIAYU CHEN (cxy1023@[Link]) is a Ph.D. candidate in the Information

Systems Department at the University of Science and Technology of China–City
University of Hong Kong Joint Advanced Research Center. Her research focuses on
the electronic commerce and social media. Her work has appeared in Information
 INTERNATIONAL JOURNAL OF ELECTRONIC COMMERCE 289

Systems Journal (ISJ), proceedings for Americas Conference on Information Systems

(AMCIS) and Pacific Asia Conference on Information Systems (PACIS).

QIAN HUANG (huangq@[Link], Corresponding author) is an associate profes-

sor in the School of Management at the University of Science and Technology of
China (USTC). She received her Ph.D. from USTC and City University of Hong Kong.
Her research focuses on knowledge management and electronic commerce. She has
published in the Information Systems Journal, Asia Pacific Journal of Management,
Information Technology and People, Information and Management, and Journal of Global
Information Management.

ROBERT M. DAVISON (isrobert@[Link]) is a professor of information systems

at the City University of Hong Kong. His current research focuses on virtual knowl-
Downloaded by [University of Nebraska, Lincoln] at 05:29 04 December 2015

edge management and collaboration in Chinese SMEs. He has published over sixty
articles in a variety of journals, including Journal of Management Information Systems,
MIS Quarterly, Information Systems Journal, Information Technology and People, and
Journal of Information Technology. He is the editor -in chief of the Electronic Journal of
Information Systems in Developing Countries, co-editor in chief of Information Systems
Journal and Information Technology and People.

ZHONGSHENG HUA (zshua@[Link]) is a professor in the School of

Management at Zhejiang University. He received his Ph.D. in computer science
from University of Science and Technology of China (USTC). His research interests
include decision analysis, production and operations management, and supply chain
management. His work has been published in Production and Operations Management,
Marketing Science, European Journal of Operational Research, Decision Support Systems,
International Journal of Operations and Management, and International Journal of
Production Research. He has also published three books.