IDEAS home Printed from https://ideas.repec.org/a/inm/orisre/v24y2013i4p1100-1111.html
   My bibliography  Save this article

Research Note ---The Value of Third-Party Assurance Seals in Online Retailing: An Empirical Investigation

Author

Listed:
  • Koray Özpolat

    (College of Business Administration, University of Rhode Island, Kingston, Rhode Island, 02881)

  • Guodong (Gordon) Gao

    (Robert H. Smith School of Business, University of Maryland, College Park, Maryland, 20742)

  • Wolfgang Jank

    (College of Business, University of South Florida, Tampa, Florida, 33620)

  • Siva Viswanathan

    (Robert H. Smith School of Business, University of Maryland, College Park, Maryland, 20742)

Abstract

Third-party quality assurance seals have emerged as a prominent mechanism to reduce uncertainty and increase purchase conversion in online markets. However, systematic studies of the effectiveness of these seals are scarce. In this study, we exploit a unique data set of 9,098 shopping sessions at an online retailer's website to empirically measure the value and effectiveness of assurance seals on the likelihood of purchase by shoppers. The data set is collected from a randomized field experiment conducted by a large seal provider, which enables us to infer the causal impacts of the presence of an assurance seal. We find strong evidence that the presence of the assurance seal increases the likelihood of purchase conversion. We discuss the implications of our findings for online retailers, third-party certifiers, policymakers, and researchers.

Suggested Citation

  • Koray Özpolat & Guodong (Gordon) Gao & Wolfgang Jank & Siva Viswanathan, 2013. "Research Note ---The Value of Third-Party Assurance Seals in Online Retailing: An Empirical Investigation," Information Systems Research, INFORMS, vol. 24(4), pages 1100-1111, December.
    • Handle: RePEc:inm:orisre:v:24:y:2013:i:4:p:1100-1111
    DOI: 10.1287/isre.2013.0489
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1287/isre.2013.0489
    Download Restriction: no
    File URL: https://libkey.io/10.1287/isre.2013.0489?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Dongmin Kim & Izak Benbasat, 2006. "The Effects of Trust-Assuring Arguments on Consumer Trust in Internet Stores: Application of Toulmin's Model of Argumentation," Information Systems Research, INFORMS, vol. 17(3), pages 286-300, September.
    2. Milgrom, Paul & Roberts, John, 1986. "Price and Advertising Signals of Product Quality," Journal of Political Economy, University of Chicago Press, vol. 94(4), pages 796-821, August.
    3. Terlaak, Ann & King, Andrew A., 2006. "The effect of certification with the ISO 9000 Quality Management Standard: A signaling approach," Journal of Economic Behavior & Organization, Elsevier, vol. 60(4), pages 579-602, August.
    4. Erik Brynjolfsson & Michael D. Smith, 2000. "Frictionless Commerce? A Comparison of Internet and Conventional Retailers," Management Science, INFORMS, vol. 46(4), pages 563-585, April.
    5. Alessandro Lizzeri, 1999. "Information Revelation and Certification Intermediaries," RAND Journal of Economics, The RAND Corporation, vol. 30(2), pages 214-231, Summer.
    6. Sanjeev Dewan & Vernon Hsu, 2004. "Adverse Selection In Electronic Markets: Evidence From Online Stamp Auctions," Journal of Industrial Economics, Wiley Blackwell, vol. 52(4), pages 497-516, December.
    7. Ginger Zhe Jin & Phillip Leslie, 2003. "The Effect of Information on Product Quality: Evidence from Restaurant Hygiene Grade Cards," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 118(2), pages 409-451.
    8. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, April.
    9. King, Gary & Zeng, Langche, 2001. "Logistic Regression in Rare Events Data," Political Analysis, Cambridge University Press, vol. 9(2), pages 137-163, January.
    10. Kleiner, Morris M & Kudrle, Robert T, 2000. "Does Regulation Affect Economic Outcomes? The Case of Dentistry," Journal of Law and Economics, University of Chicago Press, vol. 43(2), pages 547-582, October.
    11. Dellarocas, Chrysanthos, 2003. "The Digitization of Word-of-mouth: Promise and Challenges of Online Feedback Mechanisms," Working papers 4296-03, Massachusetts Institute of Technology (MIT), Sloan School of Management.
    12. Ginger Zhe Jin & Andrew Kato, 2007. "Dividing Online and Offline: A Case Study," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 74(3), pages 981-1004.
    13. Paul A. Pavlou & David Gefen, 2004. "Building Effective Online Marketplaces with Institution-Based Trust," Information Systems Research, INFORMS, vol. 15(1), pages 37-59, March.
    14. George A. Akerlof, 1970. "The Market for "Lemons": Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 84(3), pages 488-500.
    15. Chrysanthos Dellarocas, 2003. "The Digitization of Word of Mouth: Promise and Challenges of Online Feedback Mechanisms," Management Science, INFORMS, vol. 49(10), pages 1407-1424, October.
    16. Bradley S. Wimmer & Brian Chezum, 2003. "An Empirical Examination of Quality Certification in a "Lemons Market"," Economic Inquiry, Western Economic Association International, vol. 41(2), pages 279-291, April.
    17. Janice Y. Tsai & Serge Egelman & Lorrie Cranor & Alessandro Acquisti, 2011. "The Effect of Online Privacy Information on Purchasing Behavior: An Experimental Study," Information Systems Research, INFORMS, vol. 22(2), pages 254-268, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Yipu Deng & Jinyang Zheng & Warut Khern-am-nuai & Karthik Kannan, 2022. "More than the Quantity: The Value of Editorial Reviews for a User-Generated Content Platform," Management Science, INFORMS, vol. 68(9), pages 6865-6888, September.
    2. Wagner, Gerhard & Schramm-Klein, Hanna & Steinmann, Sascha, 2020. "Online retailing across e-channels and e-channel touchpoints: Empirical studies of consumer behavior in the multichannel e-commerce environment," Journal of Business Research, Elsevier, vol. 107(C), pages 256-270.
    3. Bonsón Ponte, Enrique & Carvajal-Trujillo, Elena & Escobar-Rodríguez, Tomás, 2015. "Influence of trust and perceived value on the intention to purchase travel online: Integrating the effects of assurance on trust antecedents," Tourism Management, Elsevier, vol. 47(C), pages 286-302.
    4. Antonia Köster & Christian Matt & Thomas Hess, 2021. "Do All Roads Lead to Rome? Exploring the Relationship Between Social Referrals, Referral Propensity and Stickiness to Video-on-Demand Websites," Business & Information Systems Engineering: The International Journal of WIRTSCHAFTSINFORMATIK, Springer;Gesellschaft für Informatik e.V. (GI), vol. 63(4), pages 349-366, August.
    5. Jianyue Liu & Zhiqiang Ma, 2023. "Optimal quality regulation on the online health platform," Electronic Markets, Springer;IIM University of St. Gallen, vol. 33(1), pages 1-17, December.
    6. Amitai Etzioni, 2019. "Cyber Trust," Journal of Business Ethics, Springer, vol. 156(1), pages 1-13, April.
    7. Jifeng Luo & Han Zhang & Haizheng Li, 2018. "Pricing strategies in online book industry: a comparative study," Information Systems and e-Business Management, Springer, vol. 16(4), pages 791-816, November.
    8. Eugenia Y. Huang & Shu-Chiung Lin & I-Ting Hsieh, 2023. "Online marketplace sellers’ influence on rating scores and comment orientation," Electronic Commerce Research, Springer, vol. 23(2), pages 1241-1270, June.
    9. Yicheng Song & Nachiketa Sahoo & Shuba Srinivasan & Chrysanthos Dellarocas, 2022. "Uncovering Characteristic Response Paths of a Population," INFORMS Journal on Computing, INFORMS, vol. 34(3), pages 1661-1680, May.
    10. Tamara Dinev & Allen R. McConnell & H. Jeff Smith, 2015. "Research Commentary—Informing Privacy Research Through Information Systems, Psychology, and Behavioral Economics: Thinking Outside the “APCO” Box," Information Systems Research, INFORMS, vol. 26(4), pages 639-655, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Vandana Ramachandran & Siva Viswanathan & Sanjay Gosain, 2007. "The Impact of Online Information on the Purchase of Certified Used Cars," Working Papers 07-37, NET Institute.
    2. Ginger Zhe Jin & Andrew Kato & John A. List, 2010. "That’S News To Me! Information Revelation In Professional Certification Markets," Economic Inquiry, Western Economic Association International, vol. 48(1), pages 104-122, January.
    3. Belleflamme,Paul & Peitz,Martin, 2015. "Industrial Organization," Cambridge Books, Cambridge University Press, number 9781107687899, September.
    4. Judy E. Scott & Dawn G. Gregg & Jae Hoon Choi, 2015. "Lemon complaints: When online auctions go sour," Information Systems Frontiers, Springer, vol. 17(1), pages 177-191, February.
    5. Paul A. Pavlou & Angelika Dimoka, 2006. "The Nature and Role of Feedback Text Comments in Online Marketplaces: Implications for Trust Building, Price Premiums, and Seller Differentiation," Information Systems Research, INFORMS, vol. 17(4), pages 392-414, December.
    6. Daniel W. Elfenbein & Raymond Fisman & Brian McManus, 2015. "Market Structure, Reputation, and the Value of Quality Certification," American Economic Journal: Microeconomics, American Economic Association, vol. 7(4), pages 83-108, November.
    7. Yili Hong & Paul A. Pavlou, 2017. "On Buyer Selection of Service Providers in Online Outsourcing Platforms for IT Services," Information Systems Research, INFORMS, vol. 28(3), pages 547-562, September.
    8. Khim-Yong Goh & Cheng-Suang Heng & Zhijie Lin, 2013. "Social Media Brand Community and Consumer Behavior: Quantifying the Relative Impact of User- and Marketer-Generated Content," Information Systems Research, INFORMS, vol. 24(1), pages 88-107, March.
    9. W. Bentley MacLeod, 2006. "Reputations, Relationships and the Enforcement of Incomplete Contracts," CESifo Working Paper Series 1730, CESifo.
    10. Un-Kon Lee, 2017. "International Tourism Advertisements on Social Media: Impact of Argument Quality and Source," Sustainability, MDPI, vol. 9(9), pages 1-18, August.
    11. Gary E Bolton & Claudia Loebbecke & Axel Ockenfels, 2007. "How Social Reputation Networks Interact with Competition in Anonymous Online Trading: An Experimental Study," Working Paper Series in Economics 32, University of Cologne, Department of Economics.
    12. Sarah C. Rice, 2012. "Reputation and Uncertainty in Online Markets: An Experimental Study," Information Systems Research, INFORMS, vol. 23(2), pages 436-452, June.
    13. Xiang Hui & Meng Liu, 2022. "Quality Certificates Alleviate Consumer Aversion to Sponsored Search Advertising," CESifo Working Paper Series 9886, CESifo.
    14. Heng Tang & Xiaowan Lin, 2019. "Curbing shopping cart abandonment in C2C markets — an uncertainty reduction approach," Electronic Markets, Springer;IIM University of St. Gallen, vol. 29(3), pages 533-552, September.
    15. Grunewald, Andreas & Kräkel, Matthias, 2017. "Advertising as signal jamming," International Journal of Industrial Organization, Elsevier, vol. 55(C), pages 91-113.
    16. Zhangxi Lin & Andrew B. Whinston & Shaokun Fan, 2015. "Harnessing Internet finance with innovative cyber credit management," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 1(1), pages 1-24, December.
    17. Prüfer, Jens, 2018. "Trusting privacy in the cloud," Information Economics and Policy, Elsevier, vol. 45(C), pages 52-67.
    18. Christian Matt & Thomas Hess, 2016. "Product fit uncertainty and its effects on vendor choice: an experimental study," Electronic Markets, Springer;IIM University of St. Gallen, vol. 26(1), pages 83-93, February.
    19. Vincze, János, 2010. "Miért és mitől védjük a fogyasztókat?. Aszimmetrikus információ és/vagy korlátozott racionalitás [Asymmetric information and/or bounded rationality: why are consumers protected and from what?]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(9), pages 725-752.
    20. Tedi Skiti & Xueming Luo & Zhijie Lin, 2022. "When More is Less: Quality and Variety Trade‐off in Sharing Economy Platforms," Journal of Management Studies, Wiley Blackwell, vol. 59(7), pages 1817-1838, November.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:inm:orisre:v:24:y:2013:i:4:p:1100-1111. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Asher (email available below). General contact details of provider: https://edirc.repec.org/data/inforea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.