Trust and Loyalty in Electronic Commerce: An Agency Theory Perspective

Trust and Loyalty in Electronic Commerce: An Agency Theory Perspective

Trust and Loyalty in Electronic Commerce: An Agency Theory Perspective

Trust and Loyalty in Electronic Commerce: An Agency Theory Perspective

Synopsis

Karake-Shalhoub uses agency theory to ground her empirical analysis of more than 100 e-commerce firms in this highly readable examination of trust in e-commerce relational exchanges. The timeliness of this study--the first of its kind--and its unique agency-theory perspective allow for an analysis of the appropriateness of e-business and e-commerce for certain businesses.

Excerpt

The making of commercial contracts involving financial payment over the Internet requires trust. For repeat business, customer loyalty is necessary as well. As trust and customer loyalty are necessary for the long-term viability of any electronic commerce (e-commerce) application, a better understanding of customer preferences is needed. Additional tools of evaluation are sought as the demand for insight into consumer attitudes builds. In Trust and Loyalty in Electronic Commerce, Professor Zeinab Karake-Shalhoub addresses the basic issues of consumer trust and brand loyalty in e-commerce and, in so doing, helps us prepare for the improvements needed to expand its use.

Focusing on the electronic business-to-consumer market, she starts with a theoretical framework based upon the microeconomist’s established agency theory literature. Zeinab identifies the variables of organization, behavior, and incentive systems to address the analysis of what governs customer loyalty and trust. The evolving nature of information technology (IT) is introduced by illustrating the progressive advancement of the chief information officer within organizations. As organizational assignments do indeed reflect influence, authority, and behavior, her illustration signals the increasing importance of technology in business. IT management control systems are designed to ensure that staff and business procedures operate as planned (i.e., as a means of assuring operating behavior). In fact, management control systems have proven so effective that a more advanced development, business process management (in the form of digital rights management), is now beginning to provide business process management systems superior to established internal corporate systems. Zeinab intro-

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