Beyond Institution-Based Trust: Building Effective Online Marketplaces with Social Mechanisms

Researchers have devoted considerable efforts to design effective online marketplaces, especially with respect to the institutional structures believed to establish buyer trust in the community of sellers. Comparatively speaking, the effectiveness of social mechanisms, although practically evidenced as important, has received much less attention in e-commerce research. In the current study we explore the contribution of social mechanisms–specifically IT-enabled instant messaging, the message box, online community and informal coalition programme–to effective online marketplaces. We propose that these mechanisms facilitate social relationships and trust building processes during transactions, in addition to the existing institutional structures. When consumerto-consumer (C2C) transactions are considered risky, the buyer-seller social relationship is more critical for buyers when forming their transaction intentions. The research model is largely supported by a pilot study of 104 buyers of TaoBao.com, China’s C2C leading marketplace. We discuss the findings, implications, and our preparations for a large-scale study.