The Role of Language in the Establishment of Trust Between Organisations

8/8/2019 The Role of Language in the Establishment of Trust Between Organisations

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Abstract Trust has been identified as one of the major factors in the success, failure and

adoption of Business to Business Electronic Commerce by firms. In the context of ElectronicMarketplaces (EM) in particular, studies have found that issues related to trust have beenprimarily caused by cultural differences and communication (information exchange) problemsthat have been created by the unique characteristics of E-Marketplaces. Language usedbetween parties which is likely to effect the establishment of trust in online environment has notbeen well explored in the literature. This paper therefore presents a preliminary study thatinvestigates and examines the role of language used between parties in facilitating theestablishment of trust how language is determined by the culture and the type of communicationinvolved. Some implications for academics and practitioners are outlined.

Keywords: e-Marketplaces, Culture, Communication, Procurement, Strategies, Initiatives, language

I. INTRODUCTION

Trust has been recognized as a critical factor in the adoption of B2B Electronic Commerce,

particularly in the context of B2B E-Marketplaces since organizations may trade with other

organizations around the globe. A B2B E-Marketplace can be defined as an Internet-based

electronic market where multiple buyers and sellers interact with each other whereby

information exchange and transactions are supported by value-added facilities (Colins 2005)

that allow businesses to lower the cost of trading, have access to quicker & accurate information

for business decision making processes as well as reduce the importance of geography in

conducting business (Smith 1998).

The overall aim of utilizing B2B E-marketplaces is to assist firms with their procurement

strategies by matching customer needs with suppliers and lowering various costs associated

with procurement. This is achieved by allowing for the reach and richness of information to be

more efficiently communicated to multiple vendors, and also for better price transparency

surrounding the markets through proper use of B2B E-marketplaces (Mahadevan 2003).

It is a well-known fact that each technology, including B2B EMs goes through various cycles.

The Role of Language in the Establishmentof Trust between Organisations


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Figure 1 shows us the Gartner Hype Cycle for B2B E-Marketplaces. From the peak of inflated

expectations during the 90s where a wealth of different literature emphasized the benefits of

using E-Marketplaces (e.g. Farhoomand et al 2000 etc.), then moving through the trough of

disillusionment which was evident during the closure of thousands of B2B E-marketplaces

following the burst of the IT bubble in 2000, we are now in the slope of enlightenment, where

several well established B2B E-Marketplace providers have persisted through the difficult times,

and have found certain benefits & practical applications that business can experience (Li & Li

2005).

Figure 1: Gartner Hype Cycle (Gartner 2001)

As B2B E-marketplaces heads towards the Plateau of Profitability where businesses will be

able to truly experience all the benefits that B2B E-Marketplaces can provide, the risks and

barriers associated with the use of B2B e-marketplaces must be examined more carefully in

order for the technology to truly live up to its potential.

One of the major barriers that have limited the potential use of B2B E-Marketplaces revolves

around the establishment of trust between both the Purchaser and Vendor in a B2B

E-Marketplace environment.


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In this study, we first explore the key concepts by reviewing the existing literature associated to

B2B E-Marketplaces, trust & communication to investigate the role of language and possible

relationship with the type of communication involved and culture. Then we develop a framework

to summarize the findings of our analysis. Finally, the paper concludes by outlining some

limitations, future study and contributions / implications of the findings for both academics and

practitioners.

II. BACKGROUND

i. Interaction in B2B E-Marketplaces

Reviewing the existing literature which examines B2B E-Marketplaces indicates that a higher

level of interaction and participation is required by firms participating in B2B E-Marketplace

environments in order for them to add real value from the participation in B2B E-Marketplaces.

The earlier B2B e-marketplace models purely focused on the potential of reducing the overall

transactional costs of doing business, as this was the primary objective of most firms

participating in B2B E-Marketplaces. The hype around cost savings, as evident from Kaplan and

Sawhneys (2000) stud, suggests that the savings from transactional costs alone from using

B2B exchanges was a substantial portion of the total cost of production and order fulfillment.

This shows that cost savings as the primary objective was a well-established fact between both

academics as well as the industry in general.

Through the use of dynamic channels such as auctions and exchanges, it was proposed that

firms would be able to make significant savings through lowering transactional costs, as B2B

E-Marketplaces made the process of matching potential buyers and sellers easier, and allowed

for a higher volume of transactions to be processed (Grey et al 2005).


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However, as numerous B2B E-Marketplaces started to fail in the late 2000s, E-Marketplace

service providers realized that there was a need to change the nature of the services offered to

users. Hence those B2B e-marketplaces that did survive started providing additional services

focusing on collaboration and information-sharing amongst users through various applications

and services (Grey et al 2005). This was because the real value for firms trading in B2B

E-Marketplaces was not just from the automation of business processes which would allow for

the improvement of supply chain efficiency, but also the ability for firms to establish long-term,

relationship based partners through B2B E-Marketplace (Pare 2003).

With the change in the nature of the services provided through B2B E-Marketplaces, a new

challenge is now presented to firms because the anonymous, cost-driven nature B2B

E-Marketplace environments make it difficult for firms to establish the required trust to interact

with each other to fully utilize the services and applications provided.

ii. Importance of Trust in B2B E-Marketplaces

Although the definition of trust covers many disciplines and meanings, Zucker (1986) definition

of trust as a set of expectation shared by all those involved in an exchange, is the most

appropriate in the B2B E-Marketplace context as it allows for trust to be viewed as a

precondition that supports economic activities.

Ratmasomga & Phan (2003) in their study state that uncertainties that resonate in the current

B2B E-Marketplaces create a perception of increased risk amongst firms. Furthermore,

uncertainties also reduce confidence and reliability of transactions occurring, and, more

importantly, between trading partners. Despite the application of various security mechanisms

by B2B E-Marketplaces, most businesses still perceive that E-Commerce transactions are still

both unreliable and insecure. As a result, they emphasize that trust is critical in environments

such as E-Marketplaces because of the following reasons:


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a) Online Environments are perceived as non-personal.

b) Communication through Technology doesnt involve any face-to-face contact.

c) Mistrust over the technical standards used to process transactions.

d) The newness of the transaction medium

The issues related to trust in the context ofB2B E-Marketplace environment cannot be

addressed using technological tools, but rather require organizational skills to overcome some

of the imposed risks these issues create. The following excerpt from CIO magazine in 1999

provides further support for the statement above:

Whilst there is no disputing the technical difficulties for suppliers involved in integrating

back-end transaction systems, data warehouses, manufacturing and inventory tracking systems

with Web applications, some believe that the organizational issues are more difficult to

overcome (CIO, 1999a). These issues include: change management, organizational culture and

trust between companies. Companies must be confident in their suppliers to allow supply chains

to open up to partners and thereby providing increased visibility into the company (CIO, 1999b).

(Standing 2001)

Based on this statement, issues surrounding culture and trust between companies are

highlighted as more important barriers than technical issues firms must overcome in order to

fully utilize the services offered by B2B E-Marketplaces. These two issues will be examined

below.

(a) Culture


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The term culture can be defined in many ways, but for the context of this paper, we define

culture as the collective programming of the mind which distinguishes the members of one

category of people from another (Hofestede 1994). Furthermore, in the context of B2B

E-Marketplaces, we define category of people as a group of people resonating from a specific

geographical location with their own National Culture, as well as from a particular type of

business and work organisation with their specific Organisational Culture'. The main role of the

B2B E-Marketplace is primarily allowing businesses with different Organisational Culture) from

different regions of the world with different National Culture to conduct trade through the

Internet.

Hsiao (2003) states in his research that when an B2B E-Marketplace is adopted by a firm, it is

not only adopting the technology which is required to make use of the B2B E-Marketplace, but

also the trust mechanisms, transformation of economic assumptions as well as cultural beliefs

which are interconnected with how the market surrounding the B2B E-Marketplace operates.

This implies that cultural factors related to Organizational Culture and National Culture must

be considered in order to create trust mechanisms in B2B EMs.

(b) Communication

Tendering, ordering, sourcing via third Parties, electronic mail between buyers and sellers,

electronic mail in contract management, research into supplier markets and integration of

procurement within the financial and inventory systems are all examples of situations when

extensive communication is required between parties while working in a B2B E-Marketplace

environment (Hawking & Stein 2002).

Although the need for communication is extensive in a B2B E-Marketplace environment,

Hasselbring & Weigand (2001) states that one of the challenges that are still faced by firms is

the lack of standardization of message formats as well as the content exchanged between


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businesses. This implies that not only is there difficulty in formatting the message, but also

difficulties in interpreting the meaning of the message when firms communicate in a digital

environment such as B2B E-Marketplaces.

Popovic (2002) further claims that as E-Marketplaces become more global in nature, the lack of

communication standards in the international scene will be one of the main obstacles firms will

face. Likewise, Farhoomand (2000) through his empirical study found that there was a severe

absence of natural-language supported applications and related standards in B2B

E-Marketplaces for businesses participating from Hong Kong.

The relationship of communication and trust is well summarized in the study presented by

Ratmasomga & Phan (2003) which states that in order for partners to be willing to peruse

relationships or interdependencies to achieve a planned goal, trust between both parties is

critical. However, for the establishment of trust, effective communication (information sharing)

between the firms must be present. This suggests that effective communication is an enabler of

trust, at the same time trust is needed for effective communication. This presents a unique

challenge for firms as it causes the Chicken & Egg causality dilemma when trying to

understand the exact relationship between communication and trust in a B2B E-Marketplace

environment.

To summarize, B2B E-Marketplaces have begun to provide services and applications that

enables firms to exchange business information but the necessary standards and frameworks to

communicate and relay this information are still lacking. Hence, it is important for businesses to

understand what type of information needs to be communicated to each other to enable the

establishment of trust between both parties.


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iii. Language

An online survey conducted by IDC suggests that over 76 per cent of Chinese respondents

prefer to browse the Internet in their local language, and not in English. The increase of Internet

users whose primary language is not English is evident from Figure 2 below. Furthermore, the

number of users whose primary language is English when using the Internet only caters for 27.3%

of all users (IWS 2010).

Figure 2: Top Ten Languages in the Internet (IWS 2010).

Vatanasakdakul et al (2004) through the interviews conducted in their research found that

businesses considered language to be a very serious barrier in regards to trade. They state in

their studies that language allows for information and knowledge to be exchanged between

firms and that English is the primary language used for the web. However, the implication of

English being the predominant language being used throughout the web is that it creates a

significant barrier for businesses from non-western countries. A case study by Vatanasakdakul


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et al (2004) found that firms from Thailand faced lack of staff that had the ability to communicate

in English. They found that in the Thai tourism industry, many tour operators who received

enquiries from overseas had difficulties replying back in the relevant foreign language.

This is especially an important challenge in the negotiation phase between firms trying to

establish trade in a B2B E-Marketplace environment. Although negotiation can be done through

automated processes, it is only feasible under very specific conditions, and does not work well in

general business conditions (Weigand et al 2008). On top of the general difficulties surrounding

negotiations, the diversity in language magnifies communication (social) and cultural barriers

when viewed in the context of firms using B2B E-Marketplaces (Javalgi & Ramsey 2000).

In conclusion, the diversity in languages spoken in digital environments is increasing due to

various organizational and national cultures involved, and the use of English in a digital

environment to interact between firms may cause issues related communication effectiveness.

As language is an important aspect of culture (Evers 1999) and also a communication tool,

issues around language poses additional challenges for firms participating in B2B

E-Marketplaces to establish trust (Javalgi & Ramsey 2000).

III. CONCEPTUAL FRAMEWORK

In this section, based on the analysis of the related literature, we propose a conceptual

framework to illustrate the role of language in the establishment of trust in the context of B2B

E-Marketplaces. It also shows the relationship between language and culture as well as

between language and types of communication involved.

Figure 3 shows our proposed framework. It consists of 4 main constructs:

a. Trust refers to the confidence or faith level between the buyer and supplier.

b. Language refers to a means or tool of interactions between buyers and suppliers


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c. Culture refers to the knowledge & values shared by a particular society and/or

organisation.

d. Communication refers to the type of information that needs to be relayed between the

buyer and supplier.

Figure 3: Language and the Relationship with Trust in a B2B E-Marketplace Environment

The proposed framework as shown in Figure 3 shows the central role of language in trust

establishment when both culture and communication are considered. It suggests that while it is

widely accepted that both culture and communication are critical for trust building between

trading partners, their effect is also mediated through language. The type of information that

needs to be exchanged between the firms (communication) as well as the culture of the firm

(geographical location National & industry / size - Organizational Culture) need to be

considered when determining the language firms should choose to interact with.

Thus, positioning language in this way addresses the Chicken & Egg problem related to

communication and trust relationship. The use of an appropriate language will facilitate the

establishment of trust between the two parties which in turn enable them to have more effective

communication.


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Cultural proximity (both organizational and national) may lead to higher levels of trust between

firms. Firms with close cultural proximity (both nationally and organizationally) who are of similar

size, and come from countries with similar cultural backgrounds may have higher levels of trust

due to the higher levels of understanding that they have for each other compared to firms with

completely different cultural backgrounds.

In short, the choice of language can strengthen or weaken the trust level between firms as the

right language can lead to better interaction between firms.

For example, if the supplier originates from Hong Kong, and the buyer from Australia, both

parties may be comfortable choosing English as the primary language to interact in. However, if

the supplier is from Japan, and the buyer from Germany, the choice of language may be more

difficult to determine. Furthermore, the organizational culture (e.g. Small to Medium Enterprise

vs. Multi National Corporation) may also affect the type of language that should be used

between firms to interact with each other.

Also, the type of language used in information exchange related to invoice document

(accounting) should be different from the one used when firms negotiate the terms and

conditions (legal). Thus these two factors, communication (information exchange) and culture

determine the language which should be used between the firms when conducting trade within a

B2B E-Marketplace environment.

The framework also suggests that the type of language used by firms to interact in a B2B

E-Marketplace is becoming more important in the development of trust amongst firms as: (a)

participation in B2B E-Marketplaces by firms originating from countries whose primary language

is not English will continue to increase; and (b) The services that are offered through B2B


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