It is often argued that as electronic markets lower the cost of market transactions, traditional roles for intermediaries will be eliminated, leading to "disintermediation." We discuss the findings of an exploratory study of intermediaries in electronic markets, which suggest that markets do not necessarily become disintermediated as they become facilitated by information technology. We explore thirteen case studies of firms participating in electronic commerce and find evidence of certain new emerging roles for electronic intermediaries, including: aggregating, matching suppliers and customers, providing trust, and providing inter-organizational market information. Two specific examples are discussed in greater detail to illustrate an unsuccessful strategy for electronic intermediation (BargainFinder) as well as a successful one (Firefly).

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Developing trust between suppliers and consumers is critical for the continued growth of Internet commerce. This article presents an empirical investigation into how firms promote trust by exploring the use and prominence of Trusted Third Parties (TTPs) and privacy statements. The Web sites of 102 publicly held firms with predominantly Internet based businesses were examined for their use of TTPs and privacy statements, the number of links, currency of the Web site, length of time the Web site had been operating, traffic, and financial performance. Surprisingly, only 17 of the firms utilized trusted third parties and only 45 had privacy statements. The article presents a methodology for the analysis of four propositions that explore the relationship of embeddedness and a firm's length of time online to the use and prominence of TTPs and privacy statements. The exploratory data in this article clearly supports the proposition that the use of TTPs and privacy statements increase with the embeddedness of the Web site. This article then discusses the potential reasons for this finding including how TTPs strategically solicit firms and why trusted firms may be more likely to be embedded. The remaining three propositions show mixed results but provide insight into the strategic use of TTPs and privacy statements. One key insight is that TTPs and privacy statements are actually used quite differently by firms to promote trust in Internet commerce.

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