Consumer-perceived risk in e-commerce transactions

Consumer-perceived risks of transactions over the Internet specifically focusing on the financial dimensions of e-commerce are examined. The social exchange framework allows users to integrate risk into the decision of the consumer and take a decision regarding making a transaction. Institutional structures create and foster an institutional trust among customers and businesses and provide fundamental requirements for e-commerce by reducing the customer-perceived risk of transactions over the Internet. It is found that consumer-perceived risk is reduced with an increase in institutional trust and with the increase in economic incentives. Analysis has found that socially recognized and entrenched institutions such as banks and credit card companies can better foster institutional trust compared to non-institutionalized organizations.