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8 Trust and Risk in Business Networks: Towards a Due Diligence for Electronic Commerce

to identify appropriate information and communication elements for each of these phases to
create trust and signal control in these transaction phases to influence the transaction decision.

Table 1. Research areas contributing to the development of the e-commerce due diligence

Although it is difficult to identify clear principles of cause and effect in the emergence of trust
and confidence in transactions (Loose, Sydow, 1994), it is known that positive personal experi-
ence is a strong determinant for the emergence of trust and that it strongly influences decisions
(Luhmann, 2000). However, the use of personal experience for trust generation and for influ-
encing e-commerce transactions with a new partner is difficult as the decision maker receives
rewards in form of a positive transaction experience only after the transaction has taken place.
The relevance of information for creating trust or communicating control shifts with the length
of a transaction relationship provided that it is positive. The fact that gains are expected to be
realized in the future and that they are uncertain at the time of the decision makes personal
experience unsuitable when it comes to the purposeful communication of appropriate informa-
tion to ex ante compensate perceived risks. Figure 3. Shifting importance of trust and control in
transaction relation3 shows the dynamically changing relative importance and the inverse pro-
portionality of trust and control elements in the course of a longer transaction relationship.

Figure 3. Shifting importance of trust and control in transaction relation

Figure 4. Dynamically changing transaction phases in repeated transactions 4 refers to the
shifting need for trust or control in a transaction relation in a first or one-shot transaction
(transaction 1) and in repeated transactions (transactions 2 and 3) on the disaggregated level of

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