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Sources and Mitigating Factors of Perceived Risk in the e-Marketplace  

Yi, Sang-Yoon (Graduate School of Management, KAIST)
Kim, Myoung-Soo (SK Research Institute for SUPEX Management)
Lee, Dong-Hoo (Terminal Laboratory, KTF Inc.)
Ahn, Jae-Hyeon (Graduate School of Management, KAIST)
Lee, Dong-Joo (Division of Business Administration, Hansung University)
Publication Information
Information Systems Review / v.9, no.2, 2007 , pp. 41-66 More about this Journal
Abstract
The e-marketplace is a virtual marketplace where buyers and sellers meet in order to conduct transactions through the intermediation of market-makers. For the success of an e-marketplace, it is crucial for the market-maker to induce both buyers and sellers to make active transactions in it. However, their participation is frequently deterred by potential risk factors caused mainly by the inherent, structural complexity of the e-marketplace. Therefore, it is a critical challenge for the market-maker to identify and manage the transactional risk perceived by both the buyers and sellers. In this paper, we investigate the sources of buyers' and sellers' perceived risks and their mitigating factors in the e-marketplace. Specifically, we derive an analysis framework based on the economic theory of agency relationship. The framework includes four sources of the risks(perceived information asymmetry, fears of seller opportunism, fears of buyer opportunism, and concerns about market-maker's role incompleteness) and five mitigators of the risks(website informativeness, trust in market-maker, trust in seller, product diagnosticity, and social presence). Then, we empirically verify the framework through a case study on four successful e-marketplaces, and provide implications and strategies for the market-maker to effectively manage the transactional risks.
Keywords
e-Marketplace; Market-Maker; Perceived Risk; Agency Relationship Perspective;
Citations & Related Records
Times Cited By KSCI : 1  (Citation Analysis)
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