Building and sustaining trust in remote work by platform-dependent entrepreneurs on digital labor platforms: Toward an integrative framework

In the platform economy, digital labor platforms (DLPs) enable remote work by intermediating transactions between platform-dependent entrepreneurs (PDEs) and clients. Information asymmetry arises, however, because PDEs engaged in remote work often are more informed about their abilities than clients are, which may lead to the lemons problem and cause market failure. Applying transaction cost economics, we develop a framework that incorporates propositions about what conditions allow different forms of trust to emerge among PDEs, DLPs, and clients. We also delineate how building and sustaining trust should help mitigate market failure threats on DLPs, and, in turn, improve outcomes for PDEs, platforms, and clients. Our framework makes important conceptual extensions by highlighting the relevance of information asymmetry, linking trust development within the DLP-facilitated service triad, and underscoring transaction frequency's importance, which has been largely overlooked in extant literature. It also provides practical implications for remote work involving PDEs, DLPs, and clients.

Automated summary

In the platform economy, digital labor platforms facilitate remote work transactions between platform-dependent entrepreneurs and clients. However, information asymmetry may lead to market failure. This article applies transaction cost economics to develop a framework that explores the conditions for trust to emerge, mitigating market failure threats and improving outcomes.