Investigating the nonlinear and conditional effects of trust on effective customer retention -- The role of institutional contexts

Abstract

Transacting online, customers may concern about risks regarding the vendors and the general online environment. Trust and institutional contexts are thus in place to address such concerns. The IS literature has long studied trust’s effects on customers’ shopping intention. To make better use of vendors’ limited resources in trust building, recent studies shed light on narrowing down trust’s operational boundary for a more effective range. Integrating the findings on the nonlinear and conditional effects of trust, this study aims at understanding the complex moderating effects of institutional contexts on the relationship between trust and repurchase intention. Drawing on prospect theory, we hypothesize that customers will perceive the effectiveness of institutional contexts in mitigating risks in two distinct conditions (perceived effective and perceived ineffective) and hence exhibit different repurchase patterns. Our findings reveal an inverted U-shaped nonlinear relationship between trust and repurchase intention in perceived effective contexts and a U-shaped nonlinear in perceived ineffective contexts using survey data collected from online customers in the United Kingdom. Implications for vendors’ effective trust cultivation in two conditions are accordingly provided.