1-s2.0-S1567422310000529-main3

8/11/2019 1-s2.0-S1567422310000529-main3

1/9

Trust factors inuencing the adoption of internet-based interorganizational systems

Ivan K.W. Lai a ,* , Viny W.L. Tong b , Donny C.F. Lai ca Faculty of Management and Administration, Macau University of Science and Technology, Avenida Wai Long, Taipa, Macau, Chinab International Graduate School of Business, University of South Australia, Adelaide, South Australia, Australiac Department of Computer Science, City University of Hong Kong, Kowloon Tong, Hong Kong, China

a r t i c l e i n f o

Article history:Received 2 November 2009Received in revised form 1 July 2010Accepted 1 July 2010Available online 6 July 2010

Keywords:TrustInformation systemsElectronic supply chain managementInternet-based interorganizational systems

a b s t r a c t

This study aims to empirically examine the trust factors that affect the adoption of Internet-based inter-organizational systems (IIOS). A trust model with ve trust factors is constructed. The model is testedusing data gathered from 295 practitioners. Conrmatory factor analysis is used to validate the model,and structural equation modelling is used for data analysis. The adoption of IIOS is inuenced by trustfactors including usability, reliability and availability, audit and verication mechanisms, and interoper-ability, while security is insignicant in this case. The generalization of the ndings is currently limited,as the subjects were all Chinese people living in Hong Kong. Future studies could study individualsbelonging to other types of professions, industries, and cultures to test the generalizability of the model.Thestudy provides a trust model to facilitate practitioners for the effective adoption of IIOS. It also adds atrust model to the literature of IIOS in the electronic supply chain context.

2010 Elsevier B.V. All rights reserved.

1. Introduction

The nancial tsunami in 2008 has adversely affected the globaleconomy. It shows that theeffect ofglobalizationis much morepro-nounced than before. Globalization is a strong driving force to theevolution of supply chain management ( Leontiades 2001 ). Manycompanies source and supply their materials or services globally.Globalization requires business partners to be geographically andtemporallydistant fromone another; therefore, deploying informa-tion technologies within a virtual organization (VO) is an obviouschoice for overcoming spatial and temporal boundaries ( Boudreauet al. 1998 ). Consequently, globalisation and information technol-ogy (IT) have become key factors in gaining competitiveness forbusinesses in recent years ( Lee and Lai 2007 ). As a result, it drivesthe adoption of electronic commerce (e-commerce) for managingthe global supply chain. E-commerce has traditionally involvedthe use of electronic data interchange (EDI), in which suppliersand customers computers are able to send formatted messageselectronically (Thatcher et al. 2006). Companies have recentlyadopted Internet-based interorganizational systems (IIOS) to man-age and control their interorganizational activities among supplychain members. Interorganizational activities include not only on-line transactions but also other activities, such as information shar-ing and maintaining business relationships (Zhang and Moussi2007).

IIOS are dened as Internet-based information systems sharedby two or more organizations; examples of these are extranets, vir-tual corporations, Internet-based EDI, and business-to-businesselectronic commerce (B2B e-commerce) ( Grossman 2004 ). Lai(2008) indicated that IIOS provide direct benets not only in termsof reducing costs but also in terms of improving the effectivenessof business processes. Consequently, many companies are planningto implement their IIOS. However, the problems of companiestrust in the IIOS lead to the hesitation to adopt IIOS.

Though there have many studies on the trust issues in the Con-sumer-to-Business (C2B) environment (e.g., Kracher et al. 2005,Srinivasan 2004 ), few studies were found for the electronic supplychain context. Additionally, most articles treat trust as a simpledyadic system between either individuals or a concatenation of individuals responses when examining person-to-group orgroup-to-group trust ( Arnott 2007 ). It is widely understood thattrust is a complex issue and that many factors inuence trust inrelationships ( Khalfan et al. 2007 ). This study focuses on group-to-system trust. System trust is the belief that proper impersonalstructures are in place to enable one to anticipate a successful fu-ture endeavour ( McKnight et al. 1997 ). This study seeks to examinethe trust factors that inuence supply chain partners (referred toas a group) trust in IIOS (referred to as a system).

In this study, a trust model is developed to evaluate the impor-tance of the trust factors on supply chain partners for the adoptionof IIOS. Five hypotheses are set up for testing, and an empirical sur-veyis conducted. This paper explains theresearchmodel andmeth-od of the study, followed by the examination of the model anddiscussion. Then, implications and contributions are presented. At

1567-4223/$ - see front matter 2010 Elsevier B.V. All rights reserved.doi: 10.1016/j.elerap.2010.07.001

* Corresponding author. Tel.: +853 88972373; fax: +853 28880022.E-mail addresses: [email protected] (I.K.W. Lai), [email protected]

(V.W.L. Tong), [email protected] (D.C.F. Lai).

Electronic Commerce Research and Applications 10 (2011) 8593

Contents lists available at ScienceDirect

Electronic Commerce Research and Applications

j ou rna l home page : www. e l s ev i e r. com/ loca t e / ec r a
http://dx.doi.org/10.1016/j.elerap.2010.07.001mailto:[email protected]:[email protected]:[email protected]://dx.doi.org/10.1016/j.elerap.2010.07.001http://www.sciencedirect.com/science/journal/15674223http://www.elsevier.com/locate/ecrahttp://www.elsevier.com/locate/ecrahttp://www.sciencedirect.com/science/journal/15674223http://dx.doi.org/10.1016/j.elerap.2010.07.001mailto:[email protected]:[email protected]:[email protected]://dx.doi.org/10.1016/j.elerap.2010.07.001

8/11/2019 1-s2.0-S1567422310000529-main3

2/9

the end of the paper, limitations, further research, and a conclusionare provided.

2. Theoretical background

2.1. Factors affecting the adoption of IIOS

The idea of interorganizational systems (IOS) has been dis-cussed since the 1960s. Cash and Konsynski (1985) dened IOSas automated information systems sharing across two or moreorganizational boundaries. IIOS is the use of IOS with Internet-based technology. The initial and maintenance costs of the adop-tion of IIOS are cheaper compared with traditional IOS adoption.IIOS use more open standards such as the eXtensible Markup Lan-guage (XML) data format and the TCP/IP communication standardover public networks ( Zhu et al. 2006 ). IIOS can be various formsincluding extranets, virtual corporations, Business-to-Business(B2B), and electronic commerce ( Lin 2006 ). Spekman et al.(1998) stated that IIOS could increase revenue, improve quality,and create loyalty through closer collaboration between partnersin an entire supply chain. Consequently, more rms adopt IIOS ormigrate to this new platform.

There have been many studies about the factors that have af-fected the adoption or planning of IIOS. Zhu et al. (2003) focussedon factors such as technology competence, rm characteristics,consumer and readiness, competitive pressure, and cultural effects.Lee et al. (2005) examined the inuence of environmental factorsand organizational factors on the success of IIOS planning. Hongand Zhu (2006) identied the integration of technologies, webfunctionalities, web spending, and partner usage as signicantadoption predictors. Lin (2006) proved that two interorganiza-tional variables (competitive pressure and trading partner readi-ness) and three organizational variables (top managementsupport, organizational centralisation, and technology compe-tence) are important in the planning of IIOS adoption. Geri andAhituv (2008) employed the theory of constraints to analyze neces-

sary economic, organizational, and technological capabilities forIIOS adoption. Markus and Christiaanse (2003) pointed out thatrelational characteristics, such as trust, play a signicant role inshaping the adoption of IIOS. However, there is a lack of studieson the trust factors for the adoption of IIOS.

2.2. Trust building in the Internet environment

Trust has been studied from a variety of perspectives over thepast several decades ( Kipnis 1996 ), such as social psychology(e.g., Deutsch 1958, Lewicki and Bunker 1995, Zand 1972 ), eco-nomics (e.g., Dasgupta 1988 , Granovetter 1985 ), marketing (e.g.,Anderson and Weitz 1989 ), inter-disciplinary aspects, and so on.It has been conceptualized as both a behavior and a belief system,

and it has been viewed in terms of interpersonal, inter-group, orga-nizational, and societal relationships ( Kramer and Tyler 1996 ).After the 1990s, there was an increasing amount of literature ded-icated to the study of organizational trust in the context of IT (e.g.,Meier 1995 ) and e-commerce (e.g., Papadopoulou et al. 2001,Srinivasan 2004 ).

In recent years, the TrustCoM Consortium developed a trust andcontract management framework for secure collaborative businessprocessing in VOs ( Wilson 2007 ). The framework employed byTrustCoMdenes concepts for trust, business, and contract models.Crompton et al. (2007) have brought non-technical elements intoTrustCoMs technical architecture, and Schubert et al. (2008) haveshowed the collaborative engineering scenarios for virtual collabo-rations using the TrustCoM system. However, TrustCoMs main

goal consisted of developing web service standards rather thanexamining trust factors for supply chain collaboration.

Trust has been illustrated as a complex concept in the literature,one that plays a key role in supply chain relationships ( Sahay2003 ). Among the different dimensions of trust, the denitionidentied by Hoffman et al. (2006) was commonly cited in thestudies of trust in the IT context. They dened trust as the expec-tation that a service will be provided or a commitment will be ful-lled ( Hoffman et al. 2006, p. 96 ). Today, companies areprogressively using IIOS to perform their supply chain collabora-tion. With the trend of globalization, it is difcult to establish trustfor supplychain partners located in remote locations and operatingbusinesses under different legal systems ( Jones and Morris 1999 ).Therefore, companies face new threats and challenges during IIOSadoption. The subject of trust in IIOS becomes more important asthe digital economy takes hold and competition becomes ercer(Grossman 2004 ). There are many studies on the trust issues onC2B environment. However, few studies focusing on the contextof Internet-based supply chains were found. This study tries todetermine the importance of trust factors to the supply chain part-ners for the successful adoption of IIOS.

2.3. Research model and hypotheses

To examine the importance of the trust factors on the supplychain partners towards the adoption of IIOS, a research modelincluding ve trust elements is developed as shown in Fig. 1 . Thisresearch model is extended from Hoffman et al.s (2006) trustmodel, which was proposed in the study of general C2B and elec-tronic government (E-government) public applications. Althoughthey have not put it into practice, the concept is widely studiedand accepted. They also advised that the elements of their modelcan differ between different applications. In this study, interopera-bility is added as a specic trust element on the adoption of IIOS.The ve trust elements include security, usability, reliability andavailability, audit and verication mechanisms, and interoperabil-ity. Based on the research framework, ve hypotheses areestablished.

Security (S) is always a critical issue with which consumers areconcerned ( Lee and Lai 2007 ). Regarding developments in e-com-merce, Nasir et al. (2007) stated that the initial concerns regardingonline trust focussed on the issues of security and privacy on theInternet. Cheung and Lee (2001) indicated that perceived securitycontrol and perceived privacy control are critical characteristicsof online transactions, affecting the development of online con-sumers condence in e-commerce. Security is extremely impor-tant in users trusting that computer-based technology willperform their intended and requested functions ( Hoffman et al.2006 ). Trust and trust metrics have primarily focussed on dataon public key authentication and e-commerce ( Manchala 1998 ).The goal of security is to protect the condentiality, integrity,and availability of data and systems ( Charney 2008 ). OReilly and

Finnegan (2005) have pointed out that the usage of the latest secu-rity technologies is crucial to improve the level of trust. Bus (2005)highlighted infrastructure security, secure identication, electronicauthentication, and secure digital asset management as crucial forthe trust of users towards Internet-based systems. Therefore, sup-ply chain members should consider the security of the IIOS beforeadopting IIOS. In the study, security refers to the ensuring of (a1)the authentication of parties in transaction, (a2) data access con-trol, and (a3) data integrity.

Hypothesis 1 (The Security Hypothesis ). Security has a positiveinuence on trust in the adoption of IIOS.

Usability (U) is an important element determining whetherusers trust technology ( Fogg andTseng 1999 ). Users need to ensure

that trust-buildingmechanisms and the ease of use of web sites arein place to facilitate buying and selling on the Internet ( van der

86 I.K.W. Lai et al. / Electronic Commerce Research and Applications 10 (2011) 8593

8/11/2019 1-s2.0-S1567422310000529-main3

3/9

Heijden et al. 2003 ). To build up the trust of consumers towardsthe web site, navigation and presentation are important ( Bartet al. 2005 ). Usability is (b1) the perception of users toward a sys-tem, (b2) the accessibility of the system by users, and (b3) the sys-tems interaction design. Therefore, supply chain members willconsider the usability of the IIOS before adopting the IIOS.

Hypothesis 2 (The Usability Hypothesis ). Usability has a positiveinuence on trust in the adoption of IIOS.

This is often true regarding our trust in people or our trust in thereliability of our mechanical devices (e.g., cars, coffee markers)(Charney 2008 ). Reliability refers to measures used to preventand detect the faults, such as measures that detect data corruptionand try to correct it, if possible, or else it would stop and report thefault. Availability is the percentage of time when a system is oper-ating. A reliable and fail-safe system that provides continuous ser-vice with absence of errors is essential for enterprises to keepbusiness running efciently ( Bart et al. 2005 ). A highly availablesystem can disable the malfunctioning portion and stay opera-tional, though it may be reduced in terms of its capability. In the

studies dealing with the trust framework, resilience, protectionagainst malicious attacks and recovery from attacks were high-

lighted ( Bus 2005 ). When an unexpected system failure occurs, itwill affect the supply chain operations. Therefore, supply chainmembers will consider the reliability and availability of the IIOSbefore adopting the IIOS. The reliability and availability elementconsists of (c1) vulnerability to denial-of-service attacks, (c2) con-nection to the Internet, (c3) quality of service and performance cri-

teria specic to the application, and (c4) use of fault tolerancetechniques.

Hypothesis 3 (The Reliability and Availability Hypothesis ). Reliabil-ity and availability have a positive inuence on trust in theadoption of IIOS.

Using an audit and verication mechanism (A) is the way toachieve the integrity and quality of the data as claimed. Audit logsrecord activities that take place on the IIOS, which include theinformation that is accessed. A series of audit logs can be studiedto determine anyaberrant behavior such as criminalactivity ( Char-ney 2008 ). Because there will be large amount of audit data to beprocessed, an electronic audit trail can be used for easy recordingand retrieval instead of manual or paper audit trails. The verica-

tion of the audit logs is based on cryptography techniques. Atrusted agent is a standalone application that can be used to audit

H3

H4

H5

H2

H1

a1. Authentication of parties in

transaction

a2. Data access control

a3. Data integrity

b1. Perception issues

b2. Accessibility

b3. Interaction design issues

c1. Vulnerability to

denial-of-service attacks

c2. Connection to the Internet

c3. Quality of service/performance

criteria specific to the

application

c4. Use of fault tolerance

techniques

d1. Cryptographic methods used to

verify data integrity

d2. Electronic audit trails

d3. Use of trusted agents

S e c u r i

t y

U s a

b i l i t y

R e l

i a b i l i t y a n

d A v a

i l a

b i l i t y

A u

d i t a n

d V e r

i f i c a

t i o n

e1. Product reputation

e2. Prior user

experience

e3. Knowledge of

technology

e4. Confidence in the

trusted agents

f1. Compatibility of infrastructure

and communicationf2. Smooth integration of

application and processes

I n t e r o p e r a b

i l i t y

Overall Trust

toward IIOS

Fig. 1. Trust model for IIOS adoption.

I.K.W. Lai et al. / Electronic Commerce Research and Applications 10 (2011) 8593 87

8/11/2019 1-s2.0-S1567422310000529-main3

4/9

and verify the transaction. Systems managed by software agentsare trustable ( Altman 2001 ). Therefore, trusted agents becomethe target of trust. Supply chain members will consider the auditand verication mechanism of the IIOS before adopting the IIOS.The audit and verication mechanism includes (d1) cryptographicmethods used to verify data integrity, (d2) electronic audit trails,and (d3) the use of trusted agents.

Hypothesis 4 (The Audit and Verication Hypothesis ). Audit andvericationhavea positiveinuence on trust in theadoptionof IIOS.

Interoperability (I) is critical to achieve smooth data ow andbusiness operations among different organizations and from differ-ent geographical locations. However, it may be difcult due totechnical reasons, different business processes in organizations,or human or cultural issues ( Chalmeta and Grangel 2005 ). Theexpectation of the partners toward the possibility to integrate allthese and the willingness to make all the necessary changes forit could lead to hesitation in the planning and implementation of IIOS (Bus 2005, Dai and Kauffman 2002, Jones et al. 2000 ). The is-sue of interoperability was one of the key topics examined in thestudies by the European Commission for Trust and Security of the Information Society Technologies Priority ( Bus 2005 ). The needfor interoperability had been considered an important item for thedevelopment of e-business in other studies ( Dai and Kauffman2002, Jones et al. 2000 ). Interoperability in terms of (f1) the com-patibility of infrastructure and (f2) communication, as well as thesmooth integration of application andprocesses, is an element crit-ical to IIOS. Therefore, supply chain members will consider theinteroperability of the IIOS before adopting the IIOS.

Hypothesis 5 (The Interoperability Hypothesis ). Interoperabilityhas a positive inuence on trust in the adoption of IIOS.

Hoffman et al.s (2006) stated that trust is the expectation of the system. User expectation highlights the knowledge and con-dence in the technology of the systems used as well as the trustbuilding due to the positive experience with the systems. Bartet al. (2005) stated that the brand strength is highly intangiblebut promotes trust in information, performance, and quality. Thereputation of IIOS affects user expectation on the systems. Atrusted agent is an external consultant or an internal managementand technical team who are involved in the adoption of IIOS. Thetrusted agent is an essential element needed to ensure the perfor-mance of the systems ( OReilly and Finnegan 2005 ). User expecta-tion includes users experience with computer systems in generalor, more specically, with the IIOS prior to the adoption of IIOS.Therefore, overall trust toward IIOS (T) is composed of (e1) productreputation, (e2) prior user experience, (e3) knowledge of technol-ogy, and (e4) condence in the trusted agents.

3. Research method

We used a questionnaire survey. The questionnaire includestwo sections. Section 1 is the contextual general background infor-mation. Section 2 contains six sets of questions related to a total of nineteen items for the six components of the trust model. For eachparameter of the item, respondents are asked for its relative levelof importance to the supply chain partners trust in the adoptionof IIOS. Respondents were asked to rate the questions along a se-ven-point Likert-type scale, with 1 set as very important and 7set as not important.

4. Results and analysis

The survey was conducted from January to March 2008. To im-prove the response rate, the questionnaires were sent out by hand

or through email and then followed up by a phone call. A total of 900 questionnaires were sent out, and 300 responses were re-ceived. The response rate is 33.33%. Of these responses, ve ques-tionnaires were eliminated (e.g., for giving the same rating formost items), and 295questionnaires were retainedfor analysis. Be-cause items of the model are technical, the target respondents areIT and senior staff, who have knowledge on these technical termsand have the authority to determine IIOS purchases. The subjectswere randomly selected from professional institutions such asthe Hong Kong Information Technology Joint Council, the BritishComputer Society (Hong Kong Section), the Institute of Engineeringand Technology, and the Hong Kong Institution of Engineers. Thesubjects were mainly selected during events put on by theseorganizations.

4.1. Sample characteristics

The respondents were IT professionals (49.2%), engineers(26.8%), and managers (17.6%). Most of the respondents were male(79.7%). Of these respondents, 60.3% represented large companieswith over 100 employees, 26.1% represented small companies withless than or equal to 50 employees, and 13.6% represented med-ium-size companies with 51100 employees. Also, of these respon-dents, 78.6% were working for Hong Kong-based rms, 9.2% wereworking for US-based rms, and 6.8% were working for China-based rms. Near half of the respondents companies had adoptedIIOS (44.7%). A summary of respondent characteristics is shown inAppendix Table A1 .

4.2. Validity and reliability assessment

Table 1 shows the means, standard deviation, and reliabilitystatistics of the components. Reliability concerns the measurementaccuracy and reects the extent to which the respondent can an-swer the same questions or close approximations in the same

Table 1

Means, standard deviations, and Cronbachs a s of the components.

Measure Mean Std.Dev.

Cronbachsa

Security (S) 6.45 0.800a1 Authentication of parties in transaction 6.38 .888a2 Data access control 6.44 .779a3 Data integrity 6.53 .759

Usability (U) 5.61 0.759b1 Perception issues 5.74 .936b2 Accessibility 5.69 .987b3 Interaction design issues 5.41 1.042

Reliability and Availability (R) 5.92 0.765c1 Vulnerability to denial-of-service attacks 6.28 .852

c2 Connection to the Internet 5.91 1.100c3 Quality of service/performance criteriaspecic to the application

5.87 .913

c4 Use of fault tolerance techniques 5.60 1.001Audit and Verication (A) 5.66 0.758

d1 Cryptographic methods used to verifydata integrity

5.60 1.053

d2 Electronic audit trails 5.52 1.097d3 Use of trusted agents 5.88 1.128

Overall trust toward IIOS (T) 5.40 0.825e1 Product reputation 5.45 1.035e2 Prior user experience 5.32 1.043e3 Prior user experience 5.33 1.055e4 Condence in the trusted agents 5.51 1.043

Interoperability (I) 5.60 0.891f1 Compatibility of infrastructure andcommunication

5.60 994 .

f2 Smooth integration of application andprocesses

5.60 .991


8/11/2019 1-s2.0-S1567422310000529-main3

5/9

way each time ( Straub et al. 2004 ). The highest Cronbachs a is0.891 for Interoperability. The lowest value is 0.758 for audit andverication mechanism factor. Because the Cronbachs a for allcomponents are higher than 0.6, the reliability of the study is ac-cepted, based on the guidelines of Hair et al. (2010) .

The data were tested using the KaiserMeyerOlkin (KMO)Measure of Sampling Adequacy and Barletts test of sphericity.The KMO value generated from SPSS 16 is 0.878, which is greaterthan 0.6. It shows that the correlations among variables are rela-tively compact. Bartletts test is also highly signicant (approx.v

2 = 2470, d.f. = 171, p = 0.000); therefore, the correlation matrixis an identity matrix.

4.3. Conrmatory factor analysis

The analysis described below is run using the AMOS 8. Conr-matory factoranalysis (CFA) is performed to assess construct valid-ity. The table of unstandardized factor loadings is shown inAppendix Table A2 . The results conrm that all of the loadings inthe model are highly signicant as required for convergent validity( p < 0.05). For construct validity, standardized factor loadings areexamined. Hair et al. (2010) provided that individual standardizedfactor loadings should be at least 0.5. Table 2 shows the modelsstandardized factor loadings. The lowest standardized factor load-ing of the model is 0.540 (connection to the Internet). All factorloadings are above 0.5, and 14 factor loadings exceed 0.7. The con-struct validity of the model is provided.

Table 2 also shows the Average Variance Extracted (AVE) andConstruct Reliability (CR) of each construct of the model. TheAVE of most constructs exceeds 50% (except for reliability and

availability, where it is 47.14%) and the CR all exceed 0.7. These re-sults fulll Hair et al.s (2010) guidelines.

4.4. Correlation

All of the correlation values among the trust factors of the mod-el are signicant, as shown in Table 3 . The values ranged fromaminimum of 0.360 (between the usability factor and the auditand verication mechanisms factor) to 0.700 the highest (betweenreliability and availability factor and audit and verication mecha-nisms factor). Because the highest value is only 0.700, six con-structs are relatively independent from one another, based onthe guidelines of Moore (2007) .

4.5. Model t

The overall model v 2 is 256.190 with 137 degrees of freedom( p = 0.000. The relative/normed v 2 (v 2 /d.f.) is 1.9357. Hair et al.(2010) statedthata number smallerthan2.0 is considered tobe verygood. The value for the root mean square error of approximation(RMSEA) is 0.056. Browne and Cudeck (1993) stated the value of RMSEAbetween0.05and0.08as an adequate t.Thecomparativet index (CFI) is 0.945. Bentler (1990) recommended that the valueof CFIgreater than 0.90 indicating a good t of themodel. Therefore,the above results suggest that the model provides an acceptable tand thus is suitable to proceed to further examination.

4.6. Results of structural equation modelling analysis

Fig. 2 shows the results of structural equation modelling (SEM)analysis. The analytical results indicate that U, E, A, and I have sig-nicant relationships with T, and so Hypotheses 2, 3, 4 and 5 arevalid. Alternatively, Hypothesis 1 is not valid based on the fact thatS and T are found to be insignicant.

5. Discussion

5.1. The ve trust factors

This study shows that usability is an important trust factor forthe adoption of IIOS (standardized weight = 0.189, p = 0.018). Thisis consistent with the study ( Bart et al. 2005 ) that considered thatthe design, presentation, and navigation of web sites were impor-tant to build the trust of users. Because IIOS are used among supplychain partners, a high level of usability can help promote the con-dence in and usage of IIOS.

Furthermore, reliability and availability factor is an importanttrust factor for the adoption of IIOS (standardized weight = 0.245, p = 0.024). This result is consistent with those of other studies(e.g., those of Bart et al.(2005) andBus (2005) ). IIOS carry out trans-

actions andexchangeinformation betweensupply chain partnerstopromote tighter integration and quicker responses to businessneeds. Therefore, continuous service, protection against malicious

Table 2

Conrmatory factor analysis (standard factory loadings, average variance extracted,and construct reliability).

S U R A T I

a1 .722a2 .750a3 .806b1 .722

b2 .679b3 .748c1 .676c2 .540c3 .791c4 .715d1 .632d2 .762d3 .758e1 .750e2 .741e3 .760e4 .696f1 .887f2 .906AVE 57.78% 51.39% 47.14% 51.82% 54.34% 80.38%CR 0.8038 0.7600 0.7780 0.7621 0.8262 0.8912

Table 3

Construct correlation matrix (standardized).

U R A T I

S Security .375**

.544**

.565**

.439**

.394**

U Usability .525**

.360**

.521**

.515**

R Reliability and availability .700**

.643**

.573**

A Audit and verication mechanisms .611**

.578**

T Overall trust toward IIOS .599 *

I Interoperability**

Correlation is signicant at the 0.01 level (2-tailed).


8/11/2019 1-s2.0-S1567422310000529-main3

6/9

attacks, and recovery from failure or attacks are critical for the ef-cient operation of the programs.

Audit and verication mechanism is an important trust factorfor the adoption of IIOS (standardized weight = 0.238, p = 0.035).This nding is consistent with those of other studies ( Altman2001 ). This is because the use of electronic audit trails is criticalto record and trace any changes to the information for future re-view in the event that disputes or problems occur. A softwareagent can be used to audit and verify the information ows be-tween systems to ensure the data is not exposed to or altered byan unauthorized party.

Interoperability is an important factor for the adoption of IIOS(standardized weight = 0.218, p = 0.006). This agrees with resultsof other studies (such as those by Bus (2005), Chalmeta andGrangel(2005), Reimers and Li (2005), and Steineldet al. (2005) ). Partner-ing companies with different types of equipment, communicationlinks, business processes, or human or cultural issues may poseproblems to interoperability and thus affect the adoption of IIOS.

Unexpectedly, the results of the study indicate that security hasno signicant inuence on trust in the adoption of IIOS (standard-ized weight = 0.014, p = 0.858). This nding contradicts other stud-ies nding that security risk is a great obstacle to the adoption of Internet-based B2B programs (e.g., Bart et al. 2005, Bus 2005,Croom 2000, Lee and Lai 2007, O Reilly and Finnegan 2005 ). In thisstudy, the security factor consists of authentication of parties in

transaction, data access control, and data integrity. This ndingindicates that respondents are less concerned with the above secu-

rity issues. Future exploratory research can be carried to investi-gate the reasons for this nding.

Among all 15 items under the ve trust factors, the two items of the interoperability factor, namely, the compatibility of infrastruc-ture and communication as well as the smooth integration of application and processes, have the highest factor loadings to trustin the adoption of IIOS (0.887 and 0.906, respectively). This may bebecause they need to solve technical issues, perform the re-engi-neering of businesses processes across the systems of the partners,and physically make the systems work together in an IIOS environ-ment. Without the physical ability to enable the communication

among these systems on the Internet, interoperation of supplychain partners can never be achieved. Additionally, human factorscan affect the smooth integration and cooperation of the applica-tion and its processes. Cultural differences between the technicalteams of the partners may cause troubles in the systems integra-tion and in cooperation. They need a high level of effort and strongcommitment to align the standards and carry out necessarychanges. Among all 15 items, connection to the Internet has thelowest factor loading (0.540). This may be because Internet devel-opment in Hong Kong is at a very mature stage. The regions Inter-net infrastructure is well established. Hong Kong has been in thetop ranks of Internet penetration among the worlds countries forseveral years. Therefore, this provides a solid foundation for trustin the adoption of IIOS. Supply chain partners are less concerned

with the connection to the Internet when determining whetherto trust their IIOS.

Fig. 2. Structural equation modelling results.


8/11/2019 1-s2.0-S1567422310000529-main3

7/9

5.2. Implications and contributions

The study contributes to the practice of practitioners whoshould consider trust factors during the adoption of IIOS. By havinga greater understanding about the importance of the different trustfactors, supplychain partners can align their views andaddress theissues more effectively. Trust factors should be evaluated and ad-dressed from the early planning stage to the implementation stageand carefully monitored during operation to ensure the successfuladoption of IIOS.

In this study, interoperability is added as a specic trust ele-ment to Hoffman et al.s (2006) trust model. The results of thestudy proof that interoperability is one of the most important trustfactors. Interoperability involves both technical and human ele-ments. Technically, IIOS use open standards such as the eXtensibleMarkup Language (XML) data format and the TCP/IP communica-tion standard over public networks. IIOS can act as a platform tofurther link to other internal legacy applications at the backend.This may reduce the scale and complexity of changes necessaryfor the integration of infrastructure among supply chain partners.For the integration of application and processes, the commitmentof the senior management as well as IT experts and employees inthe partnering companies is required to enable the change of thecompanys culture and perform the necessary business re-engi-neering associated with IIOS. In addition, adequate training andpresentation sessions shouldbe given to all levels of the companiesto understand better the expected outcome, benets and changesto be brought by IIOS. This improves their willingness to adoptIIOS. In addition, because there are various aspects of standardiza-tions to be discussed and aligned among supply chain partners,adequate time and effort should be allocated during the adoptionof IIOS and should not be underestimated.

For usability, the design of IIOS should suit the supply chainpartners needs and their operation ows. To encourage the useof IIOS, IIOS should include interactive functions that can providerapid response among supply chain partners.

For reliability and availability, adequate measures should be inplace to prevent and detect the malfunctions of the IIOS. IT profes-sional needs to determine the level of resilience of the IIOS to pro-tect the system against any hardware failure or a malicious attacksuch as a denial-of-service attack. A higher resilience level impliesa higher level of implementation and maintenance costs. Systemrecovery drills may be carried out periodically to test whetherthe measures are well established and will be effective when fail-ure happens. All these measures help ensure continuous and highperformance service of the IIOS so that the business among supplychain partners will not be affected.

For audit and verication mechanism, an audit log of everytransaction, such as the delivery of data, should be kept in the IIOSfor review when necessary. The provision of easy-to-use audit

reporting tools and external consultants providing independentsecurity audit reviews of the IIOS will promote the trust of supplychain partners towards IIOS.

Although this study indicates that security has no signicantinuence on trust in the adoption of IIOS, IIOS should have a fea-ture to identify the source of data and know whether the datahas been altered without authority after being signed. IIOS incor-porate seamless mechanisms for applying signatures to their out-puts, and they read signatures before opening documents, so thatthe origin and the integrity of the data can be easily checked. Itis also important to ensure that data are not accessed by unin-tended parties. Therefore, proper security measures should be inplace to safeguard the IIOS.

On the other hand, the study lls the gap in the IIOS literature

with a trust model that comprehensively covers various aspectsof trust factors. The use of IIOS can develop an environment for vir-

tual collaboration. The formation of VOs requires collaboration interms of technological support, as trust can also be one of the mostimportant factors for a successful VO. Therefore, this trust modelcan be extended to the investigation of the formation of VOs. Fur-thermore, this trust model can be used by researchers to carry outlongitudinal studies in the same context over years to investigatewhether any pattern can be observed throughout the lifecycle of the adoption of IIOS. In addition, comparative studies may be con-ducted over different geographical locations such as the US or indifferent tiers of the supply chain, such as upstream or down-stream or horizontally or vertically along the supply chain.

5.3. Limitations and further research

This survey was only carried out in Hong Kong, and the respon-dents were all Chinese. There is thus a monocultural limitation.Trust is a signicantly cultural phenomenon. Trust priorities willchange between different cultures. Future studies can be con-ducted with people of different cultures in different countries tomeasure the cultural effects.

On the other hand, different IIOS may create different trust con-

cerns. This study is not specied for any type of IIOS. Further stud-ies can be conducted to test whether the model varies according tothe types of IIOS adopted by companies.

In addition, due to limited resources and time, the subjects aremostly certain types of professionals, such as IT professionals, engi-neers, and managers. Therefore, future studies may be conductedamong people belonging to other types of professions, industries,and cultures to test the generalizability of the model.

6. Conclusions

The study aims to develop a trust model for the adoption of IIOS.The trust model consists of ve trust factors: security, usability,reliability and availability, audit and verication mechanism, user

expectation, and interoperability. This study examines the impor-tance of the ve trust factors of the trust model to the adoption

Table A1

Summary of respondent characteristics (n = 295).

Frequency Percent

Company characteristicsCountry of origin HK 232 78.60

United States 27 9.20China 20 6.80Others 16 5.40

Industry Construction 116 39.30Computing 104 35.30Education 26 8.80Finance 20 6.80Others 29 9.80

No. of employees 100 178 60.30

Subject characteristicsGender Male 235 79.70

Female 60 20.30Profession IT people 145 49.20

Engineer 79 26.80Management 52 17.60Others 19 6.40

System characteristicsHaving IIOS set up in

companyNo 163 55.30Yes 132 44.70

Schedule to plan for IIOSadoption

No plan or have IIOSremoved

182 61.70

Planning stage 24 8.10Implementation stage 36 12.20Enhancement stage 53 18.00


8/11/2019 1-s2.0-S1567422310000529-main3

8/9

of IIOS. The model is tested in an empirical study using a question-naire survey. Using statistical analysis, the study proves that fourout of the ve factors of the model have a signicant inuenceon trust in the context of IIOS adoption. Unexpectedly, securityhas no signicant inuence on trust in the adoption of IIOS.

The study offers guidance to practitioners, who should considerthe trust factors during the adoption of IIOS. It also adds a trustmodel to the literature on IIOS in the electronic supply chain con-text. The model can be applied further to other areas such as lon-

gitudinal studies or different tiers in the supply chain.

Appendix A

See Tables A1 and A2 .

References

Altman, R. S. What is a transaction delivery network? ID Number TU-13-4514,Gartner, Stamford, CT, May 8, 2001.

Anderson, E., and Weitz, B. Determinants of continuity in conventional industrialchannel dyads. Marketing Science , 8, 4, 1989, 310323.

Arnott, D. C. Trust current thinking and future research. European Journal of Marketing , 41, 9/10, 2007, 981987.

Bart, Y., Shankar, V., Sultan, F., and Urban, G. L. Are the drivers and role of onlinetrust the same for all web sites and consumers? A Large-scale exploratory

empirical study. Journal of Marketing , 69, 4, 2005, 133152.Bentler, P. M. Comparative t indexes in structural models. Psychological Bulletin ,

107, 2, 1990, 238246.Boudreau, M. C., Loch, K. D., Robey, D., and Straub, D. Going global: using

information technology to advance the competitiveness of the virtualtransnational organization. Academy of Management Executive , 12, 4, 1998,120128.

Browne, M. W., and Cudeck, R. Alternative ways of assessing model t. In K. Bollenand J. Long (eds.), Testing Structural Equation Models , Sage, Newbury Park, CA,1993, 136162.

Bus, J. Building trust and security in information society: a strategic challenge forEuropean RandD. ERCIM News Online Edition, ERCIM News, 63, October 2005.

Cash, J. I., and Konsynski, B. R. IS redraws competitive boundaries. Harvard BusinessReview , 63, 2, 1985, 134142.

Chalmeta, R., and Grangel, R. Performance management systems for virtualenterprise integration. International Journal of Computer IntegratedManufacturing , 18, 1, 2005, 7384.

Charney, S. Establishing end to end trust, Microsoft Corp., 2008. Availableat http://download.microsoft.com/download/7/2/3/723a663c-652a-47ef-a2f5-91842417cab6/Establishing_End_to_End_Trust.pdf .

Cheung, C. M. K., and Lee, M. K. O. Trust in Internet shopping: instrumentdevelopment and validation through classical and modern approaches. Journalof Global Information Management , 9, 3, 2001, 2331.

Crompton, S., Wilson, M., Arenas, A., Schubert, L., Cojocarasu, D. I., Hu, J., andRobinson, P. The TrustCoM general virtual organization agreement component.In Proceedings of the UK e-Science All Hands Meeting , Nottingham, UK, September1013, 2007.

Croom, S. R. The impact of web-based procurement on the management of operating resources supply. Journal of Supply Chain Management , 36, 1, 2000,4546.

Dai, Q., and Kauffman, R. J. B2B e-commerce revisited: leading perspectives onthe key issues and research directions. Electronic Markets , 12, 2, 2002,6783.

Dasgupta, P. Trust as a commodity. In D. Gambetta (ed.), Trust: Making and Breaking Cooperative Relations , Basil Blackwell, Inc., New York, NY, 1988, 4972.

Deutsch, M. Trust and suspicion. Journal of Conict Resolution , 2, 4, 1958, 265279.Fogg, B. J., and Tseng, S. Credibility and computing technology. Communications of

the ACM , 42, 5, 1999, 3944.Geri, N., and Ahituv, N. A theory of constraints approach to interogranizational

systems implementation. Information Systems and e-Business Management , 6, 4,2008, 341360.

Granovetter, M. Economic action and social structure: the problem of embeddedness. American Journal of Sociology , 91, 3, 1985, 481510.

Grossman, M. The role of trust and collaboration in the Internet-enabled supplychain. Journal of American Academy of Business , 5, 1/2, 2004, 391396.

Hair, J. F., Jr, Anderson, R.E., Tatham, R. L., and Black,W. C. Multivariate Data Analysis ,7th edition. Prentice-Hall Inc., Englewood Cliffs, NJ, 2010.

Hoffman, L. J., Jenkins, L. K., and Blum, J. Trust beyond security: an expanded trustmodel. Communications of the ACM , 49, 7, 2006, 95101.

Hong, W., and Zhu, K. Migrating to Internet-based e-commerce: factors affecting e-commerce adoption and migration at the rm level. Information andManagement , 43, 2, 2006, 204221.

Jones, S., and Morris, P. Trust-EC: Requirement for trust and condence in e-commerce: Report of the workshop held in Luxembourg. EUR 18,749 EN,European Communities EUR Report, April 1999, 89.

Jones, S., Wilikens, M., Morris, P., and Masera, M. Trust requirements in e-business.Communications of the ACM , 43, 12, 2000, 8187.

Khalfan, M. M. A., DcDermott, P., and Swan, W. Building trust in constructionprojects. Supply Chain Management: An International Journal , 12, 6, 2007, 385391.

Kipnis, D. Trust and technology. In R. M. Kramer and T. R. Tyler (eds.), Trust inOrganizations: Frontiers of Theory and Research , Sage, Thousand Oaks, CA, 1996,950.

Kracher, B., Corritore, C. L., and Wiedenbeck, S. A foundation for understandingonline trust in electronic commerce. Journal of Information, Communication andEthics in Society , 3, 3, 2005, 131141.

Kramer, R. M., and Tyler, T. R. Trust in Organizations: Frontiers of Theory and Research .

Sage Publications, Thousand Oaks, CA, 1996.Lai, I. K. W. The information processing infrastructure for Internet-based

collaboration. International Journal of Logistics Systems and Management , 6, 4,2008, 634649.

Lee, C. L., and Lai, S. Q. Performance measurement systems for knowledgemanagement in high technology industries: a balanced scorecard framework.International Journal of Technology Management , 39, 1/2, 2007, 158176.

Lee, G. G., Lin, H. F., and Pai, J. C. Inuence of environmental and organizationalfactors on the success of Internet-based interorganizational systems planning.Internet Research , 15, 5, 2005, 527543.

Leontiades, J. C. Managing the Global Enterprise Competing in the InformationAge. Pearson Education, Singapore, 2001.

Lewicki, R. J., and Bunker, B. B. Trust in relationships: A model of development anddecline. In B. B. Bunker, and J. Z. Rubin (eds.), Conict, Cooperation and Justice , Jossey-Bass, San Francisco, CA, 1995, 133173.

Lin, H. F. Interorganizational and organizational determinants of planningeffectiveness for Internet-based interorganizational systems. Information andManagement , 43, 4, 2006, 423433.

Manchala, D. W. Trust metrics, models, and protocols for electronic commercetransactions. Presented at the 18th International Conference on DistributedComputing Systems, Amsterdam, Netherlands, May 2629, 1998.

Markus, M. L., and Christiaanse, E. Adoption and impact of collaboration electronicmarketplaces. Information Systems and e-Business Management , 1, 2, 2003, 139155.

McKnight, H. D., Cummings, L. L., and Chervany, N. L. Trust formation in neworganizational relationships. Working papers, MIS Research Center, Universityof Minnesota, 1997. Available at http://www.misrc.umn.edu/wpaper/WorkingPapers/9601.pdf .

Meier, J. The importance of relationship management in establishing successfulinterorganizational systems. Journal of Strategic Information Systems , 4, 2, 1995,135148.

Moore, D. S. The Basic Practice of Statistics , 4th edition. W. H. Freeman and Company,New York, NY, 2007.

Nasir, R. M., Ponnusamy, V., and Wazeer, M. W. An exploratory study on the level of trust towards online retails among consumers in the United Kingdom andMalaysia. Paper No. 8252, Munich Personal RePEc Archive, 2007. Available athttp://mpra.ub.uni-muenchen.de/8252/ .

OReilly, P., and Finnegan, P. Performance in electronic marketplace: theory inpractice. Electronic Markets , 15, 1, 2005, 2337.

Table A2

CFA unstandardized factor loading and critical ratio.

Measure Factor Estimateloading

Standarderror

Criticalratio

p-value

a1 S 1.000a2 S 0.911 0.082 11.155 .000a3 S 0.954 0.087 10.952 .000b1 U 1.000

b2 U 0.992 0.103 9.640 .000b3 U 1.155 0.116 9.978 .000c1 R 1.000c2 R 1.030 0.127 8.099 .000c3 R 1.254 0.117 10.762 .000c4 R 1.241 0.121 10.254 .000d1 A 1.000d2 A 1.254 0.127 9.878 .000d3 A 1.284 0.136 9.426 .000e1 T 1.000e2 T 0.995 0.085 11.694 .000e3 T 1.033 0.089 11.546 .000e4 T 0.935 0.084 11.151 .000f1 I 1.000f2 I 1.018 0.064 16.017 .000

S = Security.U = Usability.R = Reliability and availability.A = Audit and verication mechanisms.T = Overall trust toward IIOS.I = Interoperability.

http://download.microsoft.com/download/7/2/3/723a663c-652a-47ef-a2f5-91842417cab6/Establishing_End_to_End_Trust.pdfhttp://download.microsoft.com/download/7/2/3/723a663c-652a-47ef-a2f5-91842417cab6/Establishing_End_to_End_Trust.pdfhttp://www.misrc.umn.edu/wpaper/WorkingPapers/9601.pdfhttp://www.misrc.umn.edu/wpaper/WorkingPapers/9601.pdfhttp://mpra.ub.uni-muenchen.de/8252/http://mpra.ub.uni-muenchen.de/8252/http://www.misrc.umn.edu/wpaper/WorkingPapers/9601.pdfhttp://www.misrc.umn.edu/wpaper/WorkingPapers/9601.pdfhttp://download.microsoft.com/download/7/2/3/723a663c-652a-47ef-a2f5-91842417cab6/Establishing_End_to_End_Trust.pdfhttp://download.microsoft.com/download/7/2/3/723a663c-652a-47ef-a2f5-91842417cab6/Establishing_End_to_End_Trust.pdf

8/11/2019 1-s2.0-S1567422310000529-main3

9/9

Papadopoulou, P., Andreou, A., Kanellis, P., and Martakos, D. Trust and relationshipbuilding in electronic commerce. Internet Research: Electronic Networking Applications and Policy , 11, 4, 2001, 322332.

Reimers, K., and Li, M. Antecedents of a transaction cost theory of vertical ISstandardization processes. Electronic Markets , 15, 4, 2005, 301312.

Sahay, B. S. Understanding trust in supply chain relationships. IndustrialManagement and Data Systems , 103, 8, 2003, 553563.

Schubert, L., Kipp, A., and Koller, B. Supporting collaborative engineering using anintelligent web service middleware. Advanced Engineering Informatics , 22, 4,2008, 431437.

Spekman, R. E., Kamauff, W. J., and Niklas, M. An empirical investigation into supplychain management: a perspective on partnerships. International Journal of Physical Distribution and Materials Management , 28, 8, 1998, 630665.

Srinivasan, S. Role of trust in e-business success. Information Management andComputer Security , 12, 1, 2004, 6672.

Steineld, C. W., Markus, M. L., and Wigand, R. T. Exploring interorganizationalsystems at theindustrylevel of analysis: evidence from theU.S. home mortgageindustry. Journal of Information Technology , 20, 4, 2005, 224233.

Straub, D., Boudreau, M. C., and Gefen, D. Validation guidelines for IS positivistresearch. Communications of Association for Information Systems , 13, 24, 2004,380427.

Thatcher, S. M. B., Foster, W., and Zhu, L. B2B e-commerce adoption decisions inTaiwan: the interaction of cultural and other institutional factors. Electronic Commerce Research and Applications , 5, 3, 2006, 92104.

van der Heijden, H., Verhagen, T., and Creemers, M. Understanding online purchaseintentions: contributions from technology and trust perspectives. European Journal of Information Systems , 12, 1, 2003, 4148.

Wilson, M. TrustCoM Project Final Report, 2007. Available at http://cordis.europa.eu/documents/documentlibrary/99069561EN6.pdf .

Zand, D. E. Trust and managerial problem solving. Administrative Science Quarterly ,17, 2, 1972, 229239.

Zhang, X., and Moussi, C. Level of Internet use by Chinese businesses: apreliminary study. Electronic Commerce Research and Applications , 6, 4, 2007,453461.

Zhu, K., Kraemar, K. L., and Xu, S. Electronic business adoption by European rms: across-country assessment of the facilitators and inhibitors. European Journal of Information Systems , 12, 4, 2003, 251268.

Zhu, K., Kraemer, K. L., Gurbaxani, V., and Xu, S. X. Migration to open-standardinterorganizational systems: network effects, switching costs, and pathdependency. MIS Quarterly , 30, special issue, 2006, 515539.

http://cordis.europa.eu/documents/documentlibrary/99069561EN6.pdfhttp://cordis.europa.eu/documents/documentlibrary/99069561EN6.pdfhttp://cordis.europa.eu/documents/documentlibrary/99069561EN6.pdfhttp://cordis.europa.eu/documents/documentlibrary/99069561EN6.pdf

Documents

1-s2.0-S1567422310000529-main3