Trust and Loyalty: A Cross-Cultural Comparison Carole Bonanni and Dianne Cyr Simon Fraser University Vancouver, Canada Contact: (
[email protected])
ABSTRACT This research examines how website trust differs across cultures (using a four-country sample that includes Canada, the U.S., Germany, and Japan). More specifically, the research looks at institutional-based trust (McKnight et al, 2002) and addresses: (1) how consumer attitudes towards security, privacy, legitimacy of the online vendor, and quality assurance differ across cultures in the context of e-commerce, (2) how consumer attitudes affect website trust (3) how website trust and e-loyalty (the latter defined as intent to return to the site to purchase) differ across cultures, and (4) how website trust results in e-loyalty. Implications of the research are relevant for academics and practitioners who seek empirical understanding of how to better address cultural issues related to website trust. A review of the literature is presented, including hypotheses for testing. Preliminary results are presented.
General Terms Management, Trust, Experimentation
Keywords Trust, Culture, Loyalty, E-commerce
INTRODUCTION "Trust is like the air we breathe. When it's present, nobody really notices. But when it's absent, everybody notices." (Warren E. Buffett) In 2004, there are 736.6 million people with Internet access (Global Reach, 2004) and hence access to online consumer products. Of those Internet users the primary language is English (35.6%), followed by Chinese (12.2%), Japanese (9.5%), Spanish (8%), and German (7%). This increasing multinational dimension of Internet shopping necessitates a better understanding of how website trust and e-loyalty differ across cultures in online consumer shopping. Trust is the prerequisite for many online interactions (Dagusta, 1988; Gambetta, 1988; Gulati, 1995; Moorman et al, 1992). According to Gefen et al (2003) “[T]rust is especially important in an online environment when all consumers have to go by a computer system embedded in Web pages.” (p. 1) Lack of trust is a key factor for not purchasing from an online vendor (Bhattacherjee, 2002). According to Hoffman, Novak and Peralta (1999), “consumers simply do not trust most Web providers enough to engage in relationship exchanges with them.” (p. 82) Hoffman and Novak further concluded 95% of Web users
surveyed decline to provide personal information over the Internet. Various studies have identified the antecedents of website trust. Both Bhattacherjee (2002) and Grabner-Krauter and Kaluscha (2003) provide extensive reviews of empirical studies on trust in e-commerce. However these studies do not consider the element of culture related to trust. Instead, research has generally examined customer trust in an online environment regarding how technology and business practices can affect initial trust formation, as well as sustain the continuous development of trust (Chen and Dhillon, 2003; Donney and Cannon, 1997; Lee and Turban, 2001). Based on Hofstede’s (1980) extensively used work on cultural differences, and focusing on the model of trust developed by McKnight et al (2002), the aim of this research is to measure differences across cultures in institutional-based trust. According to McKnight et al, institutional-based trust is defined as an individual’s perception of how safe and secure is the online environment (termed structural assurance,) and how trustworthy is the online vendor (termed situational normality). In our model institutional-based trust includes one’s beliefs that Internet transactions are secure, personal information is kept private, the online vendor is legitimate, and information is reliable.
TRUST AND CULTURES
E-LOYALTY
ACROSS
Figure 1 outlines the elements of the proposed model of website trust and e-loyalty across cultures. The model is based on the Theory of Reasoned Action (TRA) as outlined by Fishbein and Ajzen (1975). According to TRA, attitudes lead to behavioral intentions, which further result in a specified behavior. In our model, the behavior is e-loyalty and the behavioral intention is website trust. Attitudes include: attitude towards using online transaction payment [Security], attitude towards providing personal information online [Privacy], attitude towards legitimacy of the online merchant [Legitimacy], and attitude towards quality assurance [Assurance]. There is considerable literature that supports these factors. Hoffman, Novak and Peralta (1999), Belanger et al (2002), and Olivero and Lunt (2004) note the importance of information privacy [Privacy] as it relates to building customer trust. Hoffman et al suggest “lack of trust arises from cyber consumer’s perceived lack of control over the access others have to their personal information during the online e navigation process.” (p. 2) Company reputation is likewise important, as signaled in both traditional as well as online transactions (Lunt, 1999; Corritore et al, 2003). Reputation is the guarantee of legitimacy. People are unlikely to doubt the legitimacy [Legitimacy] of a well-known vendor. Quality assurance [Assurance] is a factor affecting website trust. While shopping in a physical store, quality can be
evaluated by looking at the product. In an online environment, buyers are obliged to rely on the information provided on the website to evaluate the quality of goods or services. Chau (2002) argues the type of information presented on the Internet impacts buyer intentions. Simon (2001) claimed information rich websites reduce ambiguity and assist consumers to purchase with lower levels of dissonance, resulting in enhanced website trust. The last institutional factor affecting website trust is attitude towards payment transactions [Security]. Ratnasingham (1998) found that online credit card fraud was a major concern to online shoppers. Collectively these institutional factors are predicted to generate a high level of intrinsic trust in e-commerce as represented in Figure 1. Further, attitudes about the Web are expected to be differently related to website trust and e-loyalty across cultures. As stated by McKnight et al (2002) “people with a higher level of trust in e-commerce are more likely to participate in e-commerce” (p.337 ).
METHOD Participants 120 individuals, 30 from each from the U.S., Canada, Germany and Japan participated in the study. The sample was comprised of a stratified sample of employees in a high technology company. The sample included 41.5% females and 58.5% males, with a mean age of 35 years.
Procedure The 9 items used for this paper are derived from a 65-item questionnaire developed to measure e-loyalty. Items are measured on a five-point Likert scale. The survey was translated and back translated for each language required. Data collection was on site in each country. In addition, interview questions were constructed that parallel the survey. Interviews were tape recorded, and conducted with the assistance of a local interpreter as necessary.
Research Task For the research task, participants responded to a local version of the Samsung website, and a foreign version (which was the Hong Kong site in each case).1 Initially participants viewed the home page, and then were requested to navigate the site to choose a cell phone they would hypothetically purchase.
Security
Privac Website Trust
Eloyalty
Legitimac
Assurance Figure 1 E-loyalty Model None of these elements has been compared across cultures. In one study consumer trust was investigated across cultures in an Internet store (Jarvanpaa et al, 1999). Using Hofstede’s dimensions to compare collectivist and individualistic cultures, the researchers expected that consumers from individualistic cultures would exhibit higher trust in an Internet store. Contrary to this hypothesis no strong cultural effects were found regarding antecedents of trust. This research likewise examines culture and trust on the Internet. Specific hypotheses for testing include: H1: There are differences across cultures related to attitude towards payment security, perceived company legitimacy, preference for quality assurance, and attitude towards privacy.
ANALYSIS Qualitative data analysis: Key participant responses were recorded and relevant quotes were produced verbatim. Once all individual responses had been extracted, a within-group analysis using accepted protocol was carried out for each country. The final stage of the analysis consisted of a between-group analysis for all countries. Once content analysis was completed, an independent reviewer considered the data from a different perspective to validate the findings. Initial results were confirmed.
Statistical analysis Mean scores and t-tests were calculated to determine statistical significance across countries. We then used a linear regression to measure the relationship between institutional trust variables with trust and e-loyalty.
1
The local sites are: Canada (http://www.samsung.ca/cgibin/nasecabc/init_seca.jsp), USA (http://www.samsungusa.com/cgibin/nabc/home/b2c_home_samsungusa.jsp),
H2: Attitude towards security, legitimacy, quality assurance and privacy lead to website trust.
Germany (http://www.samsung.de/), and Japan (http://www.samsung.co.jp/)
H3: Website trust and e-loyalty differ across cultures.
The Hong Kong site can be found at http://www.samsungelectronics.com.hk/ .
H4: Website trust results in e-loyalty.
RESULTS AND DISCUSSION Some differences exist between countries related to attitude towards payment security, company legitimacy, attitude towards online privacy, and quality assurance. Interview data suggests Japanese are more risk averse and concerned about online payment security [Security]. T-tests support these findings. Differences exist between the four countries related to company legitimacy. American and Canadian respondents are more confident that the online vendor is legitimate [Legitimacy] than are Germans and Japanese. Interview data suggest Americans and Canadians are more prone to seek information on their own to find out more about a company’s credibility. Concerning assurance [Assurance], t-tests are significant for comparisons between the U.S. and Japan, as well as between Canada and Japan, and Germany and Japan. Finally, privacy [Privacy] differences are reported between Japan and the other three countries, as well as between Germany and Canada. This finding is supported by the interviews. Providing personal information is a major concern for Japanese and German participants. A German participant noted, “For example if you download something and you have to give your e-mail address I don’t like it, because you can be sure you’ll get spam.”
trust factors uniquely important in each culture. This finding reinforces the complexity of online consumer attitudes resulting in website trust and e-loyalty – a complexity compounded by culture. As such, this research area is in a nascent stage, and ripe for further investigation.
ACKNOWLEDGMENTS This research is part of a three year project titled “Managing ELoyalty through Experience Design” generously funded by a Social Sciences and Humanities Research Council of Canada grant under the special category Initiative on the New Economy.
REFERENCES Belanger, F.; Hiller, J. and Smith W. (2002). Trustworthiness in electronic commerce: the role of privacy, security and site attributes, Journal of Strategic Information Systems, 11, 245-270.
Battachherjee, A (2002). Individual trust in online firms: scale development and initial test. Journal of Management Information Systems, 19, 1, 211-241.
Regarding differences in trust and e-loyalty across cultures, no statistically significant differences are reported between Canadians, Americans and Germans for the local website. Japanese participants report statistically significant lower levels of trust and e-loyalty for the Japanese Samsung website. When examining the same foreign (Hong Kong) Samsung website, Japanese report some differences in website trust, however their level of loyalty is similar to the other countries. In conclusion, North Americans display higher levels of trust in e-commerce, and report highest levels of intended e-loyal behavior. It is therefore expected that high levels of institutional trust should result in trusting intention to a specific website, and also e-loyal behavior to the website.
Chen, S.C., and Dhillon, G. S (2003). Interpreting dimensions of consumer trust in e-commerce. Information Management and Technology, 4.
From the regression data, trust in a website is one factor related to loyalty to a website, however it does not seem to be the only factor. In this investigation low r2 values were calculated for both local and foreign websites concerning the trust to e-loyalty link. Cyr et al (2004) demonstrated satisfaction strongly influences eloyalty, and which is not part of the current model. Thus, satisfaction may an important precursor to e-loyalty that requires additional investigation across cultures. Further, none of the institutional factors influence trust in the local Samsung website. This is counter to the results found by McKnight et al (2002). However, when a modified model was tested some of the institutional factors influenced website loyalty directly. This occurred more for the foreign website than the local website.
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SUMMARY As indicated by this research, and contrary to expected, highlevels of trust in e-commerce may not be the only condition necessary to generate e-loyalty. Other variables such as satisfaction may also need to be considered. The addition of culture, and how it intersects with institutional factors to result in trust and e-loyalty is an extension of previous work by McKnight and al. (2002). The differences in institutional-based trust across cultures indicate that companies should focus efforts in building
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