Cognitive and institutional predictors of initial trust toward an online retailer

Abstract

Purpose: Via an initial trust‐building model, the purpose of this paper is to examine consumers' initial trust in an unfamiliar online retailer, considering cognitive perceptions of the retailer and institutional beliefs about the online environment.Design/methodology/approach: A random sample of 2,000 US households, resulting in 477 usable responses, was surveyed by assigning subjects to one of the two shopping scenarios portraying an online insurance retailer with a weak or strong reputation.Findings: Structural equation modelling revealed that second‐hand cognitive and first‐hand institutional information have comparable and contrasting effects on purchase intent through formation of initial trust.Research limitations/implications: Results imply that consumers form initial trust using a combination of cognitive perceptions about the online retailer and consumers' institutional beliefs regarding the online environment. Ways in which researchers and online retailers can shape initial trust formation via these antecedents are suggested.Originality/value: The influence of an institutional belief, situational normality of the online environment, on initial trust has not been previously investigated by simultaneously assessing relative influences of institutional beliefs and cognitive perceptions of the online retailer.