The role of external and internal signals in E-commerce

• We developed a model that integrates trust and deception theories with economic theory of signaling.
• We introduced a new dimension of online signal believability and discussed its effect on the online buyers’ perceptions of trust and deception.
• The results suggest that externally obtained signals are more salient for buyers than internally produced signals.

Online markets present a challenging environment to evaluate experience products, especially products sold by unknown online sellers. To alleviate this problem, unknown online sellers may choose to signal quality using website signals. However, signals are not useful unless buyers notice these signals and believe that these signals are true. In this study, we evaluate the effect of the believability of external and internal website signals on the buyer's evaluation of seller and product quality and purchase intentions when interacting with unknown online sellers. The results suggest that external and internal signals, if believable, have a significant effect on buyer perceptions. While both types of signals are important, buyers find external signals more salient than internal ones. These results enhance our understanding of signals in e-commerce because they help online sellers to refine their digital business strategies and inform online buyers about the importance of website signals.