Abstract

Trust formation in informal social commerce, also considered lateral exchange markets (LEMs) on social media platforms, has different dynamics from e-commerce and traditional consumer-to-consumer (C2C) exchange. These online markets are massive in scale; thus, it is an important phenomenon in consumer research. With a holistic perspective, we conducted in-depth interviews with Instagram consumers and sellers. Our research is among the first to reveal an empirical understanding of the critical dynamics of trust formation in LEMs within social commerce and contribute to theory by introducing a novel dimension termed social credibility. Social credibility surpasses the source credibility evaluations one step further from assessing the source itself to assess the credibility of the individuals who contribute to the source’s reputation, such as reviewers, followers, and customers. Thus, we define social credibility as customers’ assessments of LEM sellers’ credibility through perceived homophily with other reviewers, followers, and customers.