Developing a competitive edge in electronic markets via institutional and social based quality signaling mechanisms

Much recent effort has been put into developing effective electronic markets. However, the research has mainly focused on institutional trust-building mechanisms. Practically, sellers lack guidelines in shaping competitive edges in electronic markets where institutional mechanisms have been applied to all sellers. In order to fill this gap, we examine the impacts of institutional and social mechanisms on seller differentiation, drawing from quality signaling theories in economics. Hierarchical regression analysis of the objective data crawled from TaoBao.com reveals these two competing categories of quality signal mechanisms result in interesting seller differentiation. Findings, implications and future research are discussed.