Buyer-Side Institution-Based Trust-Building Mechanisms: A 3S Framework with Evidence from Online Labor Markets. Issue 1 (2nd January 2020)

• Record Type: Journal Article
• Authors: Hong, Zhijuan; Zhu, Hui; Dong, Kunxiang
• Is Part Of: International journal of electronic commerce. Volume 24:Issue 1(2020)
• Page Start: 14
• Page End: 52
• Publication Date: 2020-01-02
• Subjects: Bidding behavior -- bidding strategy -- freelancer participation -- institution-based mechanisms -- online labor markets -- trust-building mechanisms; Electronic commerce -- Periodicals; Electronic commerce; Periodicals; Electronic journals; 381.14205
• DOI: 10.1080/10864415.2019.1683703
• Languages: English
• ISSNs: 1086-4415

Abstract

ABSTRACT: Buyer-side, institution-based trust-building mechanisms, which usually appear in the form of guarantee-required schemes, are prevalently provided by the online labor marketplace for buyers to voluntarily adopt. We integrate signaling theory and organization theories of organizational slack and contractual incompleteness to propose a 3S (screening, signaling, and slack) effect framework to explain how the adoption of buyer-side trust-building mechanisms (i.e., guarantee-required schemes) affects freelancers' participation and bidding behavior. Based on a data set from one of the leading online labor markets in China, this study finds that guarantee-required tasks attract fewer but higher-quality freelancers. Furthermore, freelancers bid shorter durations but less-detailed proposals in guarantee-required tasks. This research also examines and finds support for the moderating role of task complexity in weakening screening and slack effects. Our research complements literature on trust-building mechanisms and online labor markets by providing a new framework (i.e., 3S effect framework) and empirical evidence with large-scale observational real-life data. Our study suggests that buyers should take both the advantages (e.g., bidders with higher-quality features, bids with shorter bidding durations) and disadvantages (e.g., fewer bids, bids with less-detailed proposals) into consideration and make appropriate trade-offs when making decisions on the adoption of buyer-side trust-building mechanisms.