Signaling Trust Using B2B Firm Indicators: An Abstract

Abstract

Seller indicators are becoming the new norms on digital platforms. Yet, B2B seller firm indicators have not been widely examined in academic studies. For instance, Alibaba uses supplier online performance index (SOPI), a data-driven indicator of business performance, to measure presentation quality, product popularity, transaction volume, and service quality (Alibaba, n.d.).

Signaling theory holds when parties (individuals or organizations) in an exchange have access to different kinds and degrees of information. Besides signaling theory, a relevant research topic for this paper is trust. Trust development in a digital platform has more barriers for B2B sellers to overcome because of the high degree of uncertainties and trading risks (Kim & Ahn, 2007; Pavlou & Gefen, 2004). In the context of B2B seller firm indicators on digital platforms, transaction level indicators (e.g., Alibaba’s SOPI indicators) can be useful ways for buyers to establish observable and credible signals.

Secondary data from Alibaba was collected in 2020. After cleaning, there were a total of 220 B2B seller firms in the electronics industry covering multiple product categories. Multiple regressions and mediation analyses using SPSS 27 were conducted to test our proposed hypotheses. The results indicate that both transaction level and WOM volume were significant predictors of total numbers of transactions. There is a full mediation of transaction level on the total number of transactions through WOM volume.

We propose that seller indicators are important trust signals of B2B firms on digital platforms. Buyers can perceive seller firm indicators as trust signals positively through the number of reviews, which further impacts seller business performance. This study contributes to the marketing literature by revealing that the relationship between seller indicators and business performance is fully mediated by WOM volume. B2B digital platforms generally incorporate a variety of mechanisms for suppliers to convey information to prospective buyers to mitigate information asymmetry to facilitate online transactions.