Supply of data assurance in electronic exchanges and user evaluation of risk and performance outcomes

Modern technology allows businesses to efficiently transact in electronic markets. Lack of control over each transacting party raises issues of accountability and increases demand for assurance. While extant assurance services emphasize third-party certification as a primary assurance signal, they do not examine substitutes of such services which address the need for evaluation of assurance signals provided by the level of transparency in an entity’s controls in a web-based data exchange. The present research develops the concept of data assurance to encompass evaluative beliefs communicated to users on a real-time basis. A simulated web-based data exchange was custom-developed for this study and used in an experimental setting. Two levels of data assurance were implemented which manipulated the level of transparency in an entity’s controls in processing real-time transactions. The findings of the study suggest that data assurance operates as an uncertainty absorption mechanism minimizing negative effects of perceived risk in a data exchange. Future research should benefit from these results which provide implications for the design of assurance mechanisms that are substitute to third-party assurance services in a web-based exchange context.