Howard Rosenbaum <hrosenba@indiana.edu> "Your Vulnerability in CyberSpace - FBI and IU perspectives on Internet security, intellectual property, and privacy issues" Ecommerce and the importance of trust: A social informatics perspective Howard Rosenbaum <hrosenba@indiana.edu> 2.27.02 http://www.slis.indiana.edu/hrosenba/www/Pres/uits_02/

Ecommerce and the importance of trust: Ecommerce and the importance of trust: A social informatics perspective Social informatics is the interdisciplinary study of the design and uses of ICT that takes into account their interactions with people, and institutional and cultural contexts The “context” Mutual shaping

“There is … need to understand the psychological and social dimensions of “trust” since trust is a critical component of any sort of commercial transaction” National Research Council (1998) Trust is “crucial wherever risk, uncertainty, or interdependence exist. These conditions … certainly exist in the relationship between e-commerce vendors and customers. As conditions become more uncertain because business complexity increases through computer-mediated commerce, the need for trust grows McKnight and Chervany (2001; 1)

From an SI perspective, we learn that trust Does not reside in integrated circuits or fiber optic cables Although it involves the exchange of information, trust is not reducible to information Secure networks and the encrypted transmission of information may contribute to trust in the pipeline, but a lack of trust in the people or organizations at the other end means that people will not engage in or complete the transaction (Fukuyama, 1999, 1995)

We learn that: Trust is constituted, maintained, managed, broken, and repaired in a process of social construction that typically develops over time The formation of trust, then, involves at least one and more likely a series of sustained interactions between an individual (trustor) and a locus of trust (trustee) The interactions take place in a specific social and/or organizational context in which the formation process unfolds

Decomposing the problem of trust in ecommerce The first step is to understand how trust is formed and managed in digital markets How do people who regularly engage in online transactions with a range of companies develop trust in these companies? What is it about ecommerce web sites that helps or hinders people as they decide whether they trust the company enough to engage in transactions with it? How can ecommerce web sites be designed to maximize the probability that people will decide that the companies can be trusted?

One view of trust in ecommerce Locus of trust Perception of trust Intentional construction of trust Formation of swift trust Site as artifact: Trust formation, maintenance and repair

Vulnerabilities Personal information Financial information Official information Work information Threats Unauthorized use Profiteering Data mining Security breaches Identity theft Concerns Security Privacy Lack of vendor info Lack of recourse

Security Encryption Trusted 3rd parties Remedies National and international privacy policies Data protection Consumer protection Technological Legislative Social Seal programs Screening sites Online arbitration Full disclosure

Individual trust is a “willingness …to be vulnerable to the actions of another …based on the expectation that the other will perform [an] action important to the trustor, irrespective of the ability to monitor or control that other party” (Mayer, Davis, and Schoorman, 1995; 712) Social trust is an “expectation that arises, within a community, of regular honest and cooperative behavior, based on commonly shared norms, on the part of other members of that community” (Fukuyama 1995; 26).

Psychological or behavioral trust Having confidence that the other will carry thorough on their obligations; can also be a learned behavior based on prior knowledge and experience Interpersonal trust An expectation that others will behave in a predictable way and a willingness to be vulnerable during the trust relation Organizational trust The belief that an organization will carry through on its obligations

Legal trust A belief in the power of contracts and other statutory instruments to regulate the fulfillment of obligations Situational trust: Based on cues and clues in the immediate social environment (swift trust is a special case) Product trust A buyer's belief that goods and services will perform their functions as claimed by the seller Technology trust A belief that ICTs will perform reliably and will not be used for untoward purposes such as surveillance