Investigating the Nonlinear and Conditional Effects of Trust – The New Role of Institutional Contexts in Online Repurchase

Trust is paramount to developing and maintaining long-term relationships in all stages of the customer lifecycle, including the repurchase stage. This research goes beyond the simple finding documented in the extant trust literature that the effect of trust will diminish. It sheds light on the role of institutional contexts and develops a nuanced understanding of the boundary conditions under which trust operates in the repurchase stage, where knowledge-based trust becomes more predominant. Drawing on a different theoretical tenet, prospect theory, we find that customers exhibit distinctively different transaction intentions in the two perceptual conditions of high and low trust in institutional contexts. Specifically, the nonlinear relationship between trust and repeat online transaction intention is inverted U-shaped curvilinear when trust in institutional contexts is high, but is U-shaped when trust in institutional contexts is low. With data collected from both e-commerce and mobile banking contexts using two different measures of institutional contexts, we employed a new and advanced latent moderated structural (LMS) equations approach for analysis and provided robust results. Our findings largely confirm the hypotheses and offer theoretical, methodological, and practical implications.