Trust and consumers’ buying behavior on internet

erience or knowledge of the other party. Rather it will be based on the willingness of an individual to trust or on institutional signals that encourage one person to trust another without first-hand knowledge. Ongoing trust: positive customer beliefs related to the reliability and integrity of retailers (Kim, 2012; Lee & Choi, 2011), ongoing trust is measured over a given period of time and includes repetitive buying behavior. Trust related behaviors: actions that show a reliance on an online retailer that can leave them at a disadvantage or take risks related to personal information and themselves (Mayer et al, 1995; McKnight, Choudhury, & Kacmar, 2002a; Zand, 1972). According to McKnight et al (2002a), behaviors that express trust in e-commerce include sharing personal information, making purchases, and following website recommendations. Perceived risk: is defined as the consumer’s subjective belief of suffering a loss in pursuit of a desired outcome (Bauer, 1960; Pavlou, 2003). Cheung & Lee (2000) also argue that perceived risk is the awareness of online consumers about the possibility of receiving unexpected results or consequences. Thus risk perception consists of two components that are (1) uncertainty/risk or probability of possible losses and (2) the consequences or importance of the losses. 7 Satisfaction: satisfaction is an outcome of purchase and use resulting from the buyer's comparison of the rewards and costs of the purchase in relation to the anticipated consequence (Churchill & Surprenant, 1982). 2.2. Theoretical framework Figure 2.1 Theoretical Framework for Trust with Online Retailers Buying behavior TRA (Fishbein & Ajzen, 1975) ELM (Petty & Cacioppo, 1986) Buying behavior (Philip Kotler & Armstrong, 2015) TPB (Ajzen, 1991) TAM (Davis, 1985) UTAUT1 &2 (Venkatesh, Morris, Davis, & Davis, 2003; Venkatesh, Thong, & Xu, 2012) Trust in E-commerce CTIS (Cheung & Lee, 2000; Lee & Turban, 2001) EC-Trust (Fung & Lee, 1999) Theory of Trust (Meyer & Goes, 1988) Initial Trust (Kim, 2012; McKnight & Chervany, 2006; McKnight và ctg, 1998; Yang và ctg, 2006) Ongoing Trust (Fang và ctg, 2014; Gefen, 2000, 2002a; Gefen và ctg, 2003; D. J. Kim, 2012) Source: Author’s analysis, 2017 2.3. Consumers’ behavior and buying behavior 2.3.1. Buying decision-making process 2.3.1.1. Buying process Kotler and Armstrong (2012) summarize it into a five-step process that is highly integrated. These steps include (1) need recognition, (2) seeking information, (3) evaluating alternatives, (4) buying behavior, (5) post-purchase behavior. 2.3.1.2. The process of online purchasing In the case of customers buying on the website Laudon & Traver (2014) also provide a 5-step process that emphasizes the customer touch points with the website from unknown to buying behavior and after buying behavior. In each stage, there are some specific behaviors and lead them to the next stage. 2.3.1.3. The changing of the customer path in the digital age Kotler, Kartajaya, and Setiawan (2017) emphasizes the changes in customer behavior and journeys in shopping, whereby they moving from 4A model (Aware, Attitude, Act, Act again) to 5A model (Aware, Appeal, Ask, Act, Advocate) in the connected world. In which attitude formation is separated into the stage of appeal and ask. There are 3 major changes, firstly, brand is influenced by the community and the customer is the final decision maker. Secondly, 8 loyalty demonstrated by repeated purchases but shift now to advocate or the willingness to support the brand. Thirdly, today when customers want to learn about products, they will actively connect. 2.3.2. Theory of reasoned action (TRA) According to TRA, the intention to act is one of the important factors used to predict a purchase. Behavioral intent is influenced by two main concepts: Attitude and Subjective Norm. In particular, attitudes toward behaviors are an expression of individuals expressing their positive or negative beliefs about products, while the concept of subjective norm expresses the impact of social relations on consumer. This theory is the basis for the formation of a research model that assumes that customers have an awareness and intention to buy online, and then form attitudes and behaviors towards online purchases. 2.3.3. Theory of Planned Behavior (TPB) TPB asserts that the intention of behavior is affected by the attitude toward the behavior, subjective norm, also, TPB adds another variable is perceived behavioral control. Thus, compared to the TRA model, the TPB model has one more variable discuss on the ability to control affecting both the intention and the behavior of the subject. This theory will serve as a foundation for analyzing the mechanism that shapes the impact of trust and some other factors on the buying behavior of online users. 2.3.4. Theory of Technology acceptance model (TAM) Technology Acceptance Model (TAM) by Davis (1985) explains the acceptance of computer use/technology and computer user behavior/technology. Based on the TRA theory, the TAM model examines exogenous variables such as perceived ease of use and perceived usefulness and their impact on attitudes and intentions to use the technology. However, the starting point of TAM theory is to explain the acceptance and application of technology by organizations to achieve better performance in business, and its focus on two components including usefulness and easy to use. While in the context of online shopping it is not only about the usefulness but also about hedonic. Moreover, many companies often use websites templates that have common standards and payment process. In addition, consumer is currently familiar with many technologies and applications, hence it is not too difficult for them to access the website. On the other hand, some of the elements of website quality such as navigation or information and website design is considered as perceived usefulness and ease of use, thus encourage consumers to accept and use the website as an effective tool for shopping online. 9 2.3.5 Unified theory of acceptance and use of technology (UTAUT) The TAM theory and the UTAUT theory are often integrated into research model on the topic of buying behavior, but these models are suitable for explaining behaviors using technology but not considering risk factors in shopping, not considering repeat purchase behavior, nor mentioning the concept of trust in shopping. However, these theories suggest other important concepts and mechanisms that explain behavior such as the impact of gender, shopping experience, and social interaction (e.g. reputation and market trends). 2.3.6. Elaboration likelihood model (ELM) Petty and Cacioppo (1986) suggested that there are two ways to convince the target audience (1) to persuade along the central route, (2) to persuade along the peripheral route. The differences between these two routes are based on (1) the amount of information and the level of awareness needed to process it, (2) the ability to process and evaluate related information. Central route persuasion is activated when customer considers and cares about issues related to key characteristics of the product/service. While the peripheral route persuasion is triggered when the customer relies on other secondary "signals" and does not want to spend too much effort learning about the characteristics of the product/service. Thus, the motivation and ability to evaluate are two factors that determine which route will be activated by the customer. This theory is used to explain why customers have no experience with online retailers or have not enough information related to retailers and products but still build trust through the peripheral route with other "signals" such as third party certification or reputation. When customer first approach to retailer's website, they can activate the central route if they have ability and motivation to evaluate the website's information about products/services, or may activate peripheral routes by using other signals such as third party certification, reputation, or relevant certificate qualifications. 2.4. Theory of Trust 2.4.1. Theory of trust and its important Trust is very important in transactions, and the relationship between buyers and sellers especially when potential risks occur during online shopping (Gefen et al, 2003; Reichheld and Schefter, 2000). Trust is the expectation that the chosen partner will not take advantages of other, but consider interdependent relationships (Kumar et al., 1995a), ethical actions (Hosmer, 1995), and following social norms (Gefen et al., 2003; Zucker, 1986). Moreover, trust is the belief that the partner will fulfill his/her obligations (Gefen et al., 2003; Luhmann, 1979; Rotter, 1967) even though the trustor is overly dependent and take a lot of risks in the situation (Gefen et al, 2003; Meyer and Goes, 1988; Rousseau et al., 1998). Previous studies have established the concept of trust as (1) a set of beliefs related to partners' benevolence, integrity and competence (Doney and Cannon, 1997; Ganesan, 1994; Gefen and 10 Silver, 1999; Giffin, 1967; Larzelere and Huston, 1980) or (2) a general belief that partners are trustworthiness and the willingness to depend on trustee, also known as intent to trust (Gefen, 2000; Gefen et al, 2003; Hosmer, 1995; Mayer et al, 1995; McKnight et al, 1998; Moorman, Zaltman, and Deshpande, 1992; Zucker, 1986). Thus, the concept of trust should be a higher order construct including trusting beliefs and trusting intention in which trusting beliefs form a foundation for trust and trusting intention lead to behaviors that express that trust. Therefore, trust can be considered as a construct which consists of two components: belief and trusting intention, where trust belief is measured through three components: competence, benevolence and integrity. 2.4.2. Trust bases 2.4.2.1. Experience 2.4.2.2. Cognition 2.4.2.3. Institution 2.4.2.4. Personality 2.4.2.5. Economic/Calculative 2.4.3. Cognitive trust and affective trust Trust is based on a cognitive process which discriminates among persons and institutions that are trustworthy, distrusted, and un-known. In this sense, we cognitively choose whom we will trust in which respects and under which circumstances (Lewis and Weigert, 1985). Moreover, according to Lewis and Weigert (1985) the sociological foundation of trust is also constructed on an emotional base that is complementary to its cognitive base. This affective component of trust consists in an emotional bond among all those who participate in the relationship. Therefore, a violation of trust can seriously affect the emotional and relationship between the parties. 2.4.4. Trust lifecycle Kim (2012) summarized the process of trust and separate into initial trust and ongoing trust in which the act of first purchase is a turning point to classify trust as initial or ongoing trust. The key to building ongoing trust is satisfaction after first purchase if the consumer is not happy they lose trust. Ongoing trust is the continued belief in the online retailer's ability and commitment. 2.4.5. Initial trust McKnight et al. (2002b) defined initial trust as a state in which consumers trust online retailers without firsthand knowledge. Therefore, initial trust is not based on prior experience, and so initial trust is temporary and has a short live (Euijin and Tadisina, 2007). Thus it is special form of trust but different from the ongoing trust which based on secondary information and 11 other signals to assess the party while ongoing trust based on prior experience and interaction with e-retailers. 2.4.6. Ongoing trust Ongoing trust is a trust that refers to beliefs based on different sources of information to build trust, which is based on the past experience, and history of interaction (firsthand knowledge) to assess the retailer's ability, benevolence, and integrity. Ongoing trust is formed after customers make their first purchase with the e-retailer. It is consumer’s belief about retailer's reliability and integrity (Kim, 2012; Lee and Choi, 2011), ongoing trust is observable interactions over time, and leads to repeated buying behavior. Ongoing trust shows the importance of strengthening and maintaining relationships among the parties, and finally build customer loyalty (Gefen, 2000, 2002a; Kong and Hung, 2006; Wu, 2013). Therefore, ongoing trust is reinforced by the beliefs related to competence, benevolence, and integrity over time. The concept of ongoing trust is close to the concept of loyalty, but focus more on attitude and belief about e-retailer which increases when consumers are satisfied and happy with previous shopping experience. Thus, satisfaction should have significant impact over ongoing trust. 2.4.7. Trust in online shopping/purchasing Based on the buying process in consumer behavior, integrated with theories of trust and customer behavior in e-commerce, the author proposes a conceptual framework about customer's online purchase process in which showing the role of online trust (see Figure 2.11) Source: Author proposed, 2017 Figure 2.11 Conceptual framework of trust and online buying behavior Need recognition Searching Information + Search engine + Friends and relatives + Social networks W eb Design Navigation Information Perceived Risk Initial Trust Reputation First Buy/Try Satisfaction Ongoing Trust Repeat Purchase Do not trust/do not feel safe/unsatisfied Refuse to purchase/switch to another option 12 2.5. Risk perception 2.5.1. Perceived risk Perceived risk means that the person believes that there are negative consequences if he or she makes the wrong decision. The greater the risk if the product is more expensive and complex. Moreover, there is risk when others know one’s choice and he/she will feel ashamed if the choice is incorrect (Solomon, 2017). Perceived risk is strongly correlate with that of consumer behavior because consumers often find ways to avoid mistakes rather than maximize the usefulness of shopping (Mitchell, 1998). The perceived risk of online shopping is higher than that of traditional trasaction (Cheung and Lee, 2000). Peter and Ryan (1976) suggest that perceived risk has two components including uncertainty or probability of loss and the consequences or severity of losses. 2.5.2. The propensity to trust and risk The propensity to trust and distrust growth and co-exists within each individual as they cope with different situations in life. Over time, a person develops a propensity to trust/doubt others and they use this experience to evaluate new relationships (Rotter, 1971). Although this propensity is relatively stable as a habit, it may also change (Mayer et al., 1995) when experiences, beliefs/distrust become more negative or more positive through events in that personal life. 2.6. Satisfaction Oliver (1997) states that satisfaction is the reaction of consumers to the satisfied needs and wants. In other words, the satisfaction is when customer use the products/services and comparing the consumption results with their expectations. According to disconfirmation theory, when experiencing products, consumers will compare results or experiences with that of the expectations. If consumers' expectations are greater than the performance, they will feel unsatisfied, if the results are matched they will feel satisfied, and in the case of great results than what they expected they will be surprised, and delighted. 2.7. Cultural and personal traits 2.7.1. Cultural Hofstede (2001) defined culture as a program set in the minds of individuals in one group and distinguishing members of one group from another. 2.7.2. Personal traits Personal characteristics of consumers include age, gender, shopping experience, education, etc. These characteristics are often considered as important segmentation criteria in Marketing that helps businesses to group consumers into important segments so that they have different 13 marketing strategies and campaigns. Moreover, via analyzing individual characteristics the study can achieve specific results for each target group. Therefore, the author also put in personal characteristics to explore the differences in research results among group of customers. 2.8. Develop a research model and hypotheses 2.8.1. The impact of website quality on trust and perceived risk H1: Website interface design positively affects consumers' initial trust. H2: Website navigation positively affects consumers' initial trust. H3: Website information positively affects consumers' initial trust. H4: Website information negatively affects perceived risk. 2.8.2. The impact of reputation on trust, perceived risk, and satisfaction H5: Website reputation positively impacts consumers' initial trust. H6: Website reputation negatively affects consumer’s perceived risk. H7: Website reputation positively impacts consumers' satisfaction. 2.8.3. The impact of perceived risk on buying behavior H8: Perceived risk negatively impacts consumers’ buying behavior. H9: Perceived risk negatively impacts consumers’ repeat purchasing behavior. 2.8.4. The relationship between satisfaction and trust H10: Initial trust positively affects consumer satisfaction. H11: Satisfaction positively affects consumers' ongoing trust. 2.8.5. Trust, buying behavior and satisfaction H12: Initial trust positively affects consumers' first try/first purchase. H13: Ongoing trust positively affects consumers’ repeat purchases. H14: Consumers’ initial purchase positively affects consumers’ satisfaction. H15: Satisfaction positively affects consumers’ repeat purchasing behavior. 2.8.6. Culture, personal factors, and original trust H16a: Gender moderate the relationship between perceived risk and initial purchase. H16b: Gender moderate the relationship between trust and initial purchase. H16c: Uncertainty avoidance moderate the relationship between risk and initial purchase. H16d: Uncertainty avoidance moderate the relationship between trust and initial purchase. H16e: Experience moderate the relationship between perceived risk and initial purchase. H16f: Experience moderate the relationship between trust and initial purchase. 2.8.7. Compare the proposed model with previous studies The hypotheses H8, H9, H11, H12, H13, H14, H15 & H16 are new contributions in the research model. 14 Figure 2.12 Proposed research model Source: Author proposed, 2017 CHAPTER 3: METHODOLOGY 3.1. Research process Figure 3.1 Research process Source: Author proposed, 2017 3.2. Qualitative research 3.3. Quantitative research CHAPTER 4: QUALITATIVE RESEARCH AND FINDINGS 4.1. Results from an in-depth interview In short, the online buying process is quite similar to the traditional purchasing process, but trust plays an important role in the consideration stage and focuses more on building trust on the internet. The author synthesizes, summarizes, and illustrates customer trust building process or online shopping process through Figure 4.1, in which potential customers seek H15 H16(a,b,c,d,e,f) H7 Design Navigation Information Reputation Perceived Risk Initial Trust First Buy/Trial Satisfaction Repeat Purchase Ongoing Trust Uncertainty avoidance, Internet usage experience, gender H1 H2 H3 H4 H5 H6 H11 H9 H8 H13 H10 H12 H14 STEP 2 QUALITATIVE RESEARCH STEP 3 QUANTITATIVE RESEARCH STEP 4 CONCLUSION AND IMPLICATIONS Develop measuring scale In-depth interview (n=30) Literature Review Build a questionnaire Preliminary survey (n=250) Scale reliability check EFA Analysis Refine questionaire Primary survey Testing research model CONCLUSION IDENTIFYING PROBLEMS AND OBJECTIVES STEP 1 REVIEW THEORIES AND RELATED DOCUMENTS 15 product information from sources such as social networks, search engines, family, or friends and display ads. Then visit the retailer's specific website, if the retailer's website appears to be a trustworthy site that makes an initial impression then they will buy for the first time after considering the risk factor. If they are satisfied with the shopping experience the first time they will come back to buy more products or other products from this site, the process will continue over and over again, if they are not satisfied with experience or product in a previous purchase, they may turn to other retailer's websites or choose a different form of shopping. As such, the first purchase is important and after trusting the retailer's competence, the retailer needs to maintain the trust of the customer at a later stage by showing that he/she is a responsible supplier and integrity because they have already proven their capability on the first purchase. Figure 4.1 The process of building customer confidence Source: From qualitative research, 2017 4.2. Modifying scales for constructs As presented for the qualitative research design in Chapter 3, in which several experts and subjects were selected (including 10 respondents in the interview and 5 experts see Annex D) adjust the questionnaire. These discussions were made after the in-depth interview that mentioned above (some participants were selected from the interview). Other discussion for experts were taken place in offices, cafes, or at their home. After collect and consolidate the opinions and comments of the interviewees related to the suggested scale, the author adjusted and added some questions after the process of learning about the online purchasing behavior of consumers. Twenty-two of these were excluded because these statements were not clear when translated from the original scale, some of them confusing and obscure, and not knowing how to answer, some answered find it hard to observe and evaluate or hard to remember for evaluation. Twenty-one statements need to be adjusted in terms of sentences and ideas to make them easier to understand and suitable for the surveyed object. Nineteen statements are kept unchanged. There are 16 added statements to the questionnaire to compensate to items that have been eliminated. Trust building factors Reputation Branded Products Friend & family suggestions Web design/interface Warranty Policies Customers’ Reviews Online supports Retailer’s Website Source of information Social Network Search Engines Display ads/email Family and friends Trust building and reinforcement process First time order/ Trial Satisfaction Repeat purchase Perceived Risk Dissatisfaction Switch 16 CHAPTER 5: QUANTITATIVE RESEARCH AND FINDINGS 5.1. Preliminary research results 5.2. Statistics and summary of data Table 5.1 Sample characteristics Group F % Income (million) F % N 595 100 <5 272 45,7 Age 5-10 166 27,9 <19 20 3,4 10-15 69 11,6 19-24 365 61,3 15-20 40 6,7 25-30 125 21,0 20-25 23 3,9 31-40 66 11,1 25-30 8 1,3 >40 19 3,2 >30 17 2,9 Marital Status Occupation Single 492 82,7 Students 239 40,2 Married, without children 19 3,2 Staff 171 28,7 Married, with children 84 14,1 Freelancers 69 11,6 Education Teachers 47 7,9 Primary & Secondary 2 0,3 Entrepreneurs 25 4,2 High School 25 4,2 Managers 23 3,9 Undergraduates 462 77,6 Vendors 7 1,2 Graduates 101 17,0 Factory workers 6 1 Others 5 0,8 Homemakers 2 0,3 Place of Residence Engineers 2 0,3 Ho Chi Minh 525 88,4 Retired 2 0,3 Ha Noi 23 3,9 Others 2 0,3 Hue – Da Nang 6 1 Gender Others 40 6,7 Male 209 35,1 Female 386 64,9 Source: Author’s analysis, 2018 Figure 5.1 Frequency of purchase value (first time) Source: Author’s analysis, 2018 100; 7,2% 150; 4,5% 200; 16%300; 9,1% 500; 9,4% 1000; 2,7% 0 20 40 60 80 100 20 80 120 189 260 350 545 900 2700 10000 Frequency O rd er V al ue (u ni t: th ou sa nd do ng s) 17 Figure 5.2 Frequency of purchase value (highest value repetition) Source: Author’s analysis, 2018 Table 5.2 Average value of online shopping orders N Lowest Highest Mean S.D. ORD1 595 20.000 75.200.000 1.191.818 4.683.257 ORD2 595 0,00 204.700.000 2.845.326 11.226.999 Source: Author’s analysis, 2018 5.3. Scale Measurement and Structural Equation Model 5.3.2. Cronbach’s alpha 5.3.3. Initial trust (a third order construct)