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Perceived barriers towards the use of e-trade processes by Korean SMEs

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Perceived barriers towards the use of e-trade processes by Korean SMEs

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Purpose – E-trade (or electronic trading) appears to offer increased efficiency in business processes, but only a limited number of small firms in Korea have adopted the new processes. The purpose of this paper is to try to establish the obstacles and the perceived barriers to the continuing use of e-trade technologies by small Korean firms. Design/methodology/approach – The literature was employed to develop a theoretical model that includes perceived risk and the environment. The model was operationalised in a questionnaire completed by 164 respondents. LISREL validated the instrument and the model. The data were analysed using structural equation modelling. Findings – The authors found that information risk and business risk negatively affect adoption and use. The authors also tested the relationship between the environment of the organisation and adoption of e-trade. The results show that the maturity of information technology and the innovation characteristics of the firm have positive influences on the adoption of e-trade. Research limitations/implications – This study uses data from existing users, so the findings extend the existing literature about decisions to adopt and use new processes. The data are, however, limited to the Korean context. Practical implications – The study demonstrates the negative influence of perceptions about risk associated with innovative processes. Thus, this awareness and understanding of how barriers are perceived should help to increase the diffusion of e-trade systems. The authors' findings indicate what has to be done for developing and extending the use of e-trade. Originality/value – The study is novel and contributes to the understanding of the adoption and use of new processes.
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OH, K.-
Y., ANDERSON, A. R. and CRUICKSHANK, D., 2012.
Perceived barriers towards the use of e-trade processes by Korean
SMEs. Business Process Management Journal, 18 (1), pp. 43-57
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1
Article citation: Ka-Young Oh, Alistair R. Anderson, Doug Cruickshank, (2012) "Perceived barriers
towards the use of e-trade processes by Korean SMEs", Business Process Management Journal, Vol.
18 Iss: 1, pp.43 57
Perceived barriers towards the use of e-trade processes by Korean SMEs
Ka-Young Oh a, Alistair R Anderson b, Doug Cruickshank b
a The Department of International Trade, Konkuk University, 322 Danwol-Dong Chung-Ju SI,
Chungcheongbuk-Do, 380-701, South Korea
b Aberdeen Business School, The Robert Gordon University, Aberdeen, AB10 7QY, UK
Abstract
Purpose – E-trade, electronic trading appears to offer increased efficiency in business processes, but
only a limited number of small firms have adopted the new processes. The purpose of this paper is
to try to establish the obstacles, the perceived barriers, to the continuing use of e-trade technologies
by small Korean firms.
Design/methodology/approach – The literature was employed to develop a theoretical model that
includes perceived risk and the environment. The model was operationalised in a questionnaire
completed by 164 respondents. LISREL validated the instrument and the model. The data were
analysed using Structural Equation Modelling.
Findings – We found that information risk and business risk negatively affect adoption and use. We
also tested the relationship between the environment of the organisation and adoption of e-trade. Our
results show that the maturity of information technology and the innovation characteristics of the
firm have positive influences on the adoption of e-trade.
Research limitations/implications – This study uses data from existing users, so our findings extend
the existing literature about decisions to adopt and use new processes. The data are, however, limited
to the Korean context.
Practical implicationsThe study demonstrates the negative influence of perceptions about risk
associated with innovative processes. Thus this awareness and understanding of how barriers are
perceived should help to increase the diffusion of e-trade systems. Our findings indicate what has to
be done for developing and extending the use of e-trade.
Originality/value –.The study is novel and contributes to our understanding of the adoption and use
of new processes
Key words: barriers; technology adoption; e-trade; perceived risks; Korea; SME.
2
Perceived barriers towards the use of e-trade processes by Korean SMEs
Introduction
There is increasing evidence that the use of ICT (Information Communication Technology) can lead
to more efficient transactions for smaller businesses. This is apparent for e-commerce in general
(Bayo-Moriones and Lera-Lopez, 2007), but particularly true for international trade. International
trade requires considerably more documentation and more detailed organisation, both of which can be
usefully facilitated by e-trade. Given that international trade is increasing in the wake of globalisation,
e-trade which utilises process innovations, appears as an attractive option for SMEs (Bernadas and
Verville, 2005). Indeed it can be argued that the increased efficiency promised by e-trade may offer
the competitive advantage so necessary in global markets (Drew, 2003; Subba Rao et al, 2003). As Li
et al (2003) argue, success now seems to be measured in terms of flexibility, agility and versatility.
That is, by the ability to handle continuous improvements and change. Yet it appears that take up is
uneven internationally (Seyal et al, 2007; Viswanathan and Pick, 2005; Oxley and Yeung, 2001; Fillis,
Johansson and Wagner, 2004) and more specifically, many SMEs seem reluctant to adopt e-commerce
(Fillis, Johansson and Wagner, 2003; Matlay and Addis, 2003; Grandon and Pearson, 2004). It has
been suggested that there may be something unique about small firms (Bruque and Moyano, 2007;
Anderson, 2000) or about their environment (Oxley and Yeung, 2001), which deters the adoption of e-
business (Drew, 2003; Daniel, Wilson and Myers, 2002).
This anomaly, the reluctance of SME’s to engage in e-trade despite the promise of advantages, is the
focus of this paper. We want to know what factors deter Korean small firms from the continuing use
of e-trade. The paper contributes to the literature because our sampled firms already use e-commerce,
thus our findings relate to continuing use rather than the more typical questions of adoption. E-trade,
an electronic trading system, is similar to e-commerce, but involves international trade. It is
distinguished by the additional complexities of international commerce; for example, bills of lading,
customs documentation, letters of credit and certificates of origin. E-trade is thus argued to simplify
and expedite a complex paper driven process. We are interested in a very specific context, SMEs in
Korea. Korea is interesting because as Lee, O’Keefe and Yun (2003) note, the take up of ICT in
general has been spectacular. Yet, Oh, Cruickshank and Anderson (2009) note that despite this, and
active government encouragement (Joen, Han and Lee 2006), few Korean SME’s have adopted e-
trade. Indeed of those who have adopted, many remain in the early stages (Daniel, Wilson and Myers,
2002). Thus identifying barriers to the use of e-trade in Korea may have much wider implications.
As long ago as 1981, Kimberly and Evanisko (1981) identified three determinants of the adoption of
technological innovations. Their categories; the characteristics of the company CEO coupled with the
characteristics of the organisation and the environment in which they operate, have provided the basis
for many studies. For example, Tornatzky and Fleischer (1990) listed three factors; organisational
factors, technological factors and environmental factors. Thong (1999) identified four variables for
information systems adoption from the technological innovation literature: CEO characteristics, the
characteristics of the information systems, organisational characteristics and environmental
characteristics. Accordingly, we see that the attitudes towards innovation by senior members of the
organisation combines with the internal characteristics of the firm and the external environment of
3
that firm. As we discuss later, the literature thus suggests that barriers to adoption appear to fall into
two distinct categories; the perception of risks and the perception of the firm’s internal and external
environment, albeit that in practice these factors work in combination. These categories thus form the
variables that we investigate.
Barriers
The concept of barriers is useful in understanding why some firms adopt and others do not, (Irvine
and Anderson, 2008; Walczuch, Van Braven and Lundgren, 2000) or in helping to explain why some
adopt early and others lag behind (Fillis, Johansson and Wagner, 2003), perhaps using only some
aspects of the system (Bouwman et al., 2007). In essence, barriers have a negative effect on the
acceptance of e-commerce (Lawson et al., 2003; MacGregor and Vrazalic, 2005). For small business,
which may lack the resources of larger firms (Jack, Dodd and Anderson, 2004), these barriers may be
seen as substantial. MacGregor and Vrazalic’s (2005) study of small businesses’ e-commerce adoption
barriers in Sweden and Australia noted that for some respondents, e-commerce was either "too
difficult" or "unsuitable" for the business. Similarly, Heung (2003) identified five categories of
barriers to the implementation of e-commerce in Hong Kong: inadequate financial resources,
technical issues, inadequate knowledge of e-commerce, partner's participation and security.
Thus, in many ways the literature proposes a trade off between the perceived advantages and the
perceived disadvantages. Gunasekaran and Nagi (2005) explored the application and implementation
of e-commerce in Hong-Kong. They found that the factors influencing acceptance of e-commerce
could be divided into perceived benefits, application of e-commerce, usage of the Internet and
perceived barriers. Perceived benefits include quick response and access to global information,
customer service, advertising and low cost whilst the perceived barriers consist of a limited legal
framework, the lack of technical skills and security and problems with cost justification. Taking a
broad view, Kshetri (2007) distinguished 3 types of barriers to e-commerce; economic, socio-political
and cognitive. He argues the first two, economic and socio-political are primarily organisational.
However, he notes that cognition affects behaviour and argues that the cognitive component plays a
prominent role. Eastin (2002) considers risk in conducting online business is about the perception of
security and this plays a significant role in the adoption processes. Similarly UNCTAD (2000)
reported that cognitive barriers are more serious than other categories of barriers. It seems that a
cognitive barrier may be manifest as a lack of trust in the systems (Anderson, Steinerte and Russell,
2010). Certainly, Lawson et al.’s (2003) results showed that major barriers are perceived security and
privacy of transactions and lack of IT expertise of staff. Reliability or riskiness can thus be
conceptualised as the amount of uncertainty surrounding the outcome of an innovation (Dearing,
Meyer, and Kazmierczak, 1994; Johnson et al.,1998).
There is an interesting paradox in that ICT systems are meant to reduce risk by making more complete
information readily available. But the systems themselves, the solutions, carry their own risks, the
most catastrophic being systems failure (Hanseth and Ciborra, 2007). So the very reliance on a system
can be perceived as a risk in itself. Moreover, Hanseth and Ciborra (2007) point out that as ICT
systems become more complex, our own knowledge of how the system works is always incomplete.
However we might expect that familiarity will reduce this perception of risk; alternatively a bad
experience may increase the perceived risk. Hence looking at continuing use will add to what we
already know about adoption.
Importantly many of these concerns are the perceptions of barriers, rather than de facto obstacles.
Nonetheless, perception is what influences decisions, especially in small firms where the owner
manager plays a decisive role in decision making (Harbi, Amamou and Anderson, 2009). Grandon and
Pearson (2004) examined the determinant factors in the adoption of electronic commerce as perceived
by top managers in SME. They argue that those who perceive e-commerce as adding strategic value to
the firm have a positive attitude toward its adoption. Perceptions about a new technology (Chorev and
4
Anderson, 2006) often relate to the perceptions of risk. Indeed, Lawson et al. (2003) identified the
major barriers to electronic commerce for SMEs as security and privacy of transaction. Hence trust
and security appear to be most important among the challenges to be overcome if e-commerce is to be
facilitated. The literature indicates that risk is cognitively understood. That is to say, it is about
perception rather the reality. The literature describes two forms of cognitive risk, information risk and
business risk.
Liu and Wei’s (2003) study showed that e-commerce adoption decisions are strongly influenced by
their perception of risk. Salo and Karjaluoto (2007) noted the major barrier for most end-users related
to revealing personal information. This was manifest as a lack of trust in the other party’s ability to
keep the information safely. Presented more generally, this suggests that because e-commerce is
virtual, and hence lacking personal contact, a lack of trust could operate as a barrier for adopting e-
commerce. Udo (2001) also investigated the privacy and security concerns of online IT users. He
found that the majority of users have serious concerns about their privacy and security while shopping
on the Internet together with concerns about the confidentiality of their e-mails. Turning to the object
of our study, e-trade, it is clear that previous research has found similar effects about perceptions of
risk. Several studies about adopting e-trade systems have described barriers as cognitive or distrust
(Kshetri, 2007; MacGregor and Vrazalic, 2005; Lawson et al., 2003; Salo and Karjaluoto, 2007).
These barriers could delay the adoption of a system or lead to the abandonment of the attempt to
adopt innovation. However if use of the e-trade system had proved satisfactory, perceptions of risk
would be reduced and hence encourage continuing use.
Based on previous research, we define cognitive barriers as the lack of trust in the technology of a
system. We propose two elements of trust, perceived information risk and perceived business risk,
Perceived information risk is defined as the degree of distrust about the product which is offered by an
e-trade system; perceived business risk is defined as apprehension about an organisation’s business
security when using an e-trade system.
The organisational environment
Clearly perceptions and decisions do not operate independently or in isolation. Rather they are formed
in the context of the organisation in which the view is fashioned and action is taken (Anderson, Dodd
and Jack, 2010). Thus, as we noted earlier, the organisational context is important. Previous research
about the diffusion of IT has argued that the organisational environment has a strong influence on
decisions about IT (Premkumar and Ramamurthy, 1995; Thong, 1999; Zhu, Kraemer and Xu, 2003).
The factors which constitute the environment of an organisation comprise two categories; internal and
external. Generally, the internal environment, the organisational characteristics, can be described as
the infrastructure, top management support and IT employees. Fathian, Akhavan and Hoorali’s (2008)
study identified critical internal factors, described as resource barriers, such as ICT infrastructures and
staff knowledge. The presence of these factors in the internal environment of organisation is often
usefully described as “e-readiness” (Grandon and Pearson, 2004; Molla and Licker, 2001; Tan, Tyler
and Manica, 2007; Bayo-Moriones and Lera-Lopez, 2007). Molla and Licker (2001) argued that such
organisational factors affect e-commerce adoption. Interestingly, they synthesise these as perceived
organisational e-readiness and perceived external e-readiness. Thus factors in the external
environment mirror the concept of e-readiness. Fathian, Akhavan and Hoorali (2008) discuss external
issues as ICT availability, security and the legal environment. Tan, Tyler and Manica (2007) describe
external e-readiness as market forces and supporting industries. Their study finds that the external
environment plays a major positive role in e-commerce adoption whilst internal organisational factors
inhibit e-commerce adoption and diffusion.
5
Drawing from this literature, we define e-readiness as the ability of an organisation to successfully
adopt, use, and benefit from information technologies. We look at two aspects of e-readiness; the
maturity of information technology and the innovation characteristic of the organisation. The maturity
of information technology and the innovation characteristics of an organisation are defined as follows;
the maturity of information technology is the degree to which an organisation has information
technology relating to e-trade and the innovation characteristic is the degree that e-trade systems are
supported by the CEO. This study thus explores the relationship between environment variables and
the continuous use of e-trade and the relationship between barriers and environment. We present these
variables in the model below.
The model derived from the literature and hypotheses
Our model is designed to identify whether the perceived risk and environment influence the
continuous use of e-trade. It has three categories, perceived risk, the information technology
environment of an organisation and the future adoption and continuing use of e-trade. The model is
illustrated in Fig. 1. It describes the impact of two sets of independent factors, perceived risk and the
environment of an organisation, on the continuous use’’ of e-trade by firms. The dependent variable
is continuous use which means the degree of willingness of firms to continue to use e-trade. This is
estimated on a five point Likert scale. We explore the direct, indirect and total effect amongst
perceived risk, environment and continuous use of e-trade by using this model.
Figure. 1. The Model
Hypotheses- Perceived Risk
As discussed earlier, in the many studies relating to perceived risks, there has been shown to be a
negative relationship between e-commerce adoption and perceived risk. We test two categories of
risk; cognitive risk and trust, which we term Perceived Risk. Perceived risk consists of two sectors,
perceived information risk and perceived business risk. Perceived information risk is defined as the
extent of distrust about information which is offered by the e-trade system. Perceived business risk is
defined as anxiety relating to an organisation’s business security. Thus perceived business risk
represents trust in the counterparty when companies do business with others. If companies do business
using the internet, they do not meet each other and a lack of face-to-face or verbal contact may
engender a sense of insecurity. Such perceived risks will have a negative influence on the
environment related to information technology and on the future adoption of e-trade. Thus, we
propose the following hypotheses:
6
H 1-1: Perceived information risk negatively affects the maturity of information technology related to
e-trade.
H 1-2: Perceived information risk negatively affects the innovation characteristics of an organisation
related to e-trade.
H 1-3: Perceived information risk negatively affect the future adoption of e-trade.
H 2-1: Perceived business risk negatively affects the maturity of information technology related to e-
trade.
H 2-2: Perceived business risk negatively affects the innovation characteristic of an organisation
related to e-trade.
H2-3: Perceived business risk negatively affects the future adoption of e-trade.
The organisation’s environment
As demonstrated in our review, e-readiness is expected to have a positive effect on the use of e-trade.
In this study, organisational environment is treated as the maturity of information technology and the
degree of support within an organisation. The degree of organisation support is referred to as the
“innovation characteristic”. We explore the relationship between maturity of information technology
and innovation characteristics in the following hypotheses:
H3-1: The maturity of information technology positively affects the innovation characteristics of an
organisation.
H3-2: The maturity of information technology positively affects the future adoption of e-trade.
H4: The innovation characteristics of an organisation positively affect the future adoption of e-trade.
Methodology
The sample
Our initial sample universe was drawn from some 500 companies registered with the Korea
International Trade Association (KITA). This list provided details of trade type, company name,
phone numbers and e-mail address of various small-medium sized enterprises. From the initial list we
received a total of 193 completed questionnaires. Of these, 29 had missing responses in the
questionnaire and these were excluded from our analysis. Our usable final number of completed
responses was 164, a satisfactory response rate of some 33%. The details and characteristics of the
sample are shown in Table 1. The entire sample was comprised of SMEs according to the Korean
official definition of less than 300 employees. All the responses were from companies operating e-
trade.
Respondent sample profile, Table 1.
Respondent profile
Number
Percentage (%)
Respondents’ business type
Trading only firm
21
12.8
7
Trading/manufacturing firm
143
87.2
e-trade age, i.e. extent of time having e-traded
6 months
6-12 months
12-24 months
24-36months
Over36 months
17
37
33
39
Company size
Less than
10 employees
11-50 employees
51-100 employees
101-300 employees
41 (25.0%)
33 (20.1%)
42 (25.6%)
48 (29.3%)
Annual sales revenue
$1 million
US$1
to $1million
Over US$10
to $ 20 million
Over US$20
to US $50 million
More than US$50
million
26 (15.9%)
23 (14.0%)
35 (21.3%)
24 (14.6%)
Survey instrument
Based on our research model presented earlier, a questionnaire was developed. To ensure the content
validity of the scales, the measurement items were based on prior relevant studies and used a 5 point
Likert scale. The questionnaire was presented in four parts. The first part describes the concept of e-
trade and assesses the level of future adoption of e-trade. The continuous use of e-trade measured the
extent of willingness to increase the use of e-trade system in international trade processes. Barriers
consist of two content areas; perceived information risk- the perception of business risk associated
with e-trade.
The items of perceived information risk constitute- insufficient information about business partners or
correspondents, goods and credit. Perceived business risk examined items about business
confidentiality, or the preservation of, and abuse of information. In the third section, we asked about
the industry environment and the innovation characteristics of the respondents’ firms. The final part
consisted of questions about the respondent’s demographics.
Results
Measure development and scale properties
Before testing the hypotheses, we first discuss the confirmatory analysis, scale reliability and validity
of all the measurements in this study. A first-order confirmatory factor analysis using LISREL 8.3
(Jöreskog and Sörbom, 1989) was conducted to test the measurement model. We used a covariance
matrix which referred to the relationship of each variable for the confirmatory analysis.
Table 2. Fit indices for measurement and the structural model
8
Fit indices
Recommend
Value
Measurement
Model
Structural Model
X2(d.f)
Non-Sign
118.87(67)
235.098(10)
AGFI
>0.80
0.87
0.821
NFI
>0.90
0.91
0.977
GFI
>0.90
0.92
0.988
CFI
>0.90
0.96
0.981
IFI
>0.90
0.96
0.981
RMSEA
<0.08
0.05
0.057
In the confirmatory analysis, seven common model-fit measures were used to assess the model’s
overall goodness of fit: the ratio of X2(d.f), adjusted goodness of fit index (AGFI), normed fit index
(NFI), Goodness of fit (GFI), comparative fit index (CFI), incremental fit index (IFI), and root mean
square error of approximation (RMSEA).
As shown in Table 2, all the model-fit indices exceeded their respective common acceptance levels
suggested by previous research, thus demonstrating that the measurement model exhibited a fairly
good fit with the data (x2=118.87 with df=10, NNFI=0.91, CFI=0.96, IFI=0.96, GFI=0.92,
AGFI=0.87, RMR (root mean square residual)=0.03, RMSEA=0.05). Therefore, the study could
proceed to evaluate the psychometric properties of the measurement model in terms of reliability,
convergent validity and discriminant validity. Reliability and convergent validity of the factors were
estimated by construct reliability and average variance extracted (Table 3). The construct reliability
for all the factors in the measurement model was above 0.80.
Table 3. Convergent Validity.
Latent Variables Item Factor loading t-value R2 Error
terms
CAE CAE1
CAE2 .72
.69 3.77
3.93 0.44
0.81 0.66
0.11
PIR PIR1
PIR2
PIR3
.50
.64
.61
9.26
13.07
13.32
.35
.15
.12
.35
.15
.12
PBR PBR1
PBR2
PBR3
.71
.76
.62
13.20
15.26
11.35
.69
.85
.55
.23
.10
.32
ICO
ICO1
ICO2
ICO3
ICO4
.53
.57
.60
.64
8.57
10.77
12.43
11.11
.37
.53
.66
.56
.47
.28
.19
.33
MIT MIT1
MIT2 .58
.91 7.52
9.89 .41
.96 .49
.03
CAE: Continuous adoption of e-trade
PIR: Perceived Information Risk
PBR: Perceived Business Risk
9
MIT: Maturity of Information Technology
ICO: Innovation Characteristic of the Organisation
Convergent validity can also be evaluated by testing factor loading. Hair et al. (1998) suggest that a
factor loading should be greater than 0.5; the factor loadings of all items in the model were greater
than 0.5. Our model examined discriminant validity which compared the shared variance between
factors with the average variance extracted of the individual factors (Fornell and Larcker, 1981). The
results show that the average variance extracted (AVE) of all factors are greater than 0.50 (see Table
4).
The squares of correlation coefficient value do not exceed the AVE of each factor in the correlation
relationship. If the square value of correlation coefficient exceeds AVE, this model would have no
discriminant validity. We employed a composite reliability score to measure the reliability. This relies
on the actual loading to construct the factor score and is thus a better measure of internal consistency
(Fornell and Larcker, 1981; Kim, Ferrin and Rao, 2008) All the variables’ composite reliability scores
exceed 0.7. Thus, all factors in the measurement model had adequate reliability and convergent
validity.
Table 4. Reliability, average extracted variance and discriminant validity
Factor composite reliability CAE PIR BIR ICO MIT
CAE 0.764 0.6241
PIR 0.837 0.208 0.636
BIR 0.872 0.167 0.057 0.695
ICO 0.817 0.229 0.059 0.071 0.530
MIT 0.744 0.043 0.042 0.077 0.067 0.685
Structural Model
Comparison of all fit indices with the corresponding recommended values provided evidence of a
good model fit (x2=235.09 with df=10, AGFI=0.821, NFI=0.977, CFI=0.981, IFI=0.981
RMSEA=0.057). Thus, this study could proceed to examine the path coefficients of the structural
model. The completely standardized path coefficients of the structural model provide evidence for the
hypothesized relationship and are shown in Figure 2. All the relationships of the tested model are
statistically significant at level 0.01, and consequently provide support for our hypotheses. We
explored the relationships between ‘exogenous latent variables’ and ‘endogenous latent variables’. All
the measurements in this model fit within the acceptable range and are above the minimum
recommend values. The completely standardized path coefficients of the structural model provide
evidence for the hypothesised relationships and are shown in Figure 2.
Results
The results show that firms which distrust the product information offered by information technology
have a negative attitude towards “the maturity of information technology”, “innovation
characteristics” and thus towards “the continuous adoption of e-trade”. The t-value of “perceived
information risk” is statistically significant in all relationships (shown in Fig.2). These findings
indicate that such firms are reluctant to continuously adopt e-trade systems. Accordingly hypotheses
10
H1-1 to H1-3 are supported.
Secondly, exploring the direct effect of “perceived business risk”, the t-value of all relationships had a
significant statistical influence. We expected that “perceived business risk” would have a negative
influence on “maturity of information technology” and on “innovation characteristics”. However, our
results show that “business risk” actually has a positive influence on “the environment of an
organisation”. Although the t-values are significant statistically, the path coefficients are positive so
H2-1 and H2-2 are therefore rejected.
Figure 2. Hypotheses test results
We also tested the relationship between “perceived business risk” and “continuous adoption of e-
trade”. The path coefficient is significant statistically and is negative. Therefore, those firms that
recognize “perceived business risk” have an aversion towards e-trade. Thus H2-1 and H2-2 are
rejected and the hypothesis H2-3 is supported.
Thirdly, we tested the total effect of the relationship between “the environment of an organisation
and “future adoption”. The results show that the “innovation characteristics of organisation” and
“maturity of information technology” have a positive direct effect on “continuous adoption of e-trade”.
Thus, H3-1 and H3-2 are both supported.
Table 5. The direct, indirect and total effect of variables depicted
Direct effect Indirect effect total effect
MIT ICO CAE MIT ICO CAE MIT ICO CAE
PIR -0.66 -0.61 -1.43 -1.622 -0.658 -0.614 -0.190
PBR 0.74 0.73 -2.22 1.873 0.742 0.733 -0.347
MIT 1.47 1.466
ICO 1.07 1.072
11
In addition to testing the direct effects, we also tested the total and the indirect effect. In our model,
the total effect of perceived information risk, perceived business risk, maturity of information
technology and innovation characteristic of an organisation affect the continuous adoption of e-trade
are -0.190, -0.347, 1.466 and 1.072. Accordingly, the maturity of information technology had the
strongest effect on the continuous adoption of e-trade, and the perceived business risk has a stronger
effect than perceived information risk. The direct, indirect and total effects of perceived information
risk, perceived business risk, maturity of information technology and innovation characteristic of
organisation on continuous use of e-trade are summarized in Table 5.
Discussion
Our study looked at the perceived barriers to the continuing use of e-trading by Korean SMEs. We
argued that understanding the extent of impediments to e-trading had important implications for the
efficiency of these small firms. Our review of the literature identified a number of predictors and we
employed these in a model. The purpose of the model was to establish whether factors had a positive
or negative effect, and the extent of the effect, on the decision to continuously use e-trade. This model
formed the basis for our survey of 164 SMEs who currently used some form of e-trading.
We found that the organisation environment is an important predictor and that perceived information
risk and perceived business risk has a negative influence on the continuous use of e-trade. Our results
are similar to those of previous research carried out about the acceptance and diffusion of innovation
(Kshetri, 2007; Lawson et al., 2003; Salo and Karjaluoto, 2007; Udo, 2001). In examining the
relationship between perceived information risk and environment of an organisation, we found that
information risk has a negative influence on the maturity of information technology and on the
innovation characteristics of an organisation. Again our results are similar to those found in previous
studies. Perceived information risk exhibited a stronger negative effect on the maturity of information
technology than that of the innovation characteristics of an organisation, but there was very little
difference between these values.
In our analysis of the direct effect, the ‘maturity of information technology’ and ‘innovation
characteristics of an organisation’ are controlled. However, the total effect analysis considers
mediation variables. That is, the maturity of information technology and the innovation characteristics
of an organisation are considered in the total effect when examining the effect which perceived risk
has on the continuous use of e-trade. The total effect results show that perceived information risk has
a negative effect on the environment of an organisation, on information maturity and on the
continuous use of e-trade. So perceptions of information risk have an important influence.
Interestingly, perceptions of business risk has a positive influence on the innovation characteristics of
an organisation, this result differs from our original expectation. This result means that the greater the
business risk, the more likely firms will be to strengthen the innovation characteristics of their
organisations. This result raises both academic and business interest because it is different from
previous results and requires a reinterpretation of the role of negative predictors such as business risk.
We interpreted this finding to propose that firms which already use an e-trade system want to
strengthen their information technology systems to maintain information security. Perceived business
risk factor is a negative effect on the continuous use of e-trade in total effect, but it has a positive
effect on the maturity of information technology and on the innovation characteristics of an
organisation. These results show that perceived business risk has a stronger negative influence than
perceived information risk on the continuous use of e-trade. Consequently business risk is a major
concern for the use of e-trade systems.
Based on our findings, we propose that e-trade systems should be strengthened by some sort of
guarantee. For example, insurance for goods which are traded on e-trade systems could be one
12
method. We note that the value of the relationship between perceived risk and continuous use of e-
trade in direct effect, decreased in total effect. This could be explained by the fact that perceived risk
in the use of e-trade falls when the IT environment of an organisation is improved. Thus increased
internal IT expertise and application, in other words familiarity, appears to reduce the perception of
risk and enhances confidence in the e-trade system. Our results also show that firms worry about the
exposure of their business information and leakage of confidential information. Moreover, perceived
information risk and perceived business are ‘trust’ factors. Consequently building more trust into the
systems would have a considerable positive effect in encouraging e-trade use.
Implications
We believe that our study has contributed to the debates about e-trade by employing a sample of firms
who actually use the technological process. Previous research relating to e-trade has generally focused
on the adoption and diffusion of e-trade. Whilst these studies have established the usefulness and
convenience of e-trade, the pace of diffusion remains slow. Consequently an awareness and
understanding of how barriers are perceived should help to increase the diffusion of e-trade systems.
To achieve this understanding, this study presented and validated a research model of an e-trade
system; the model included the barriers and the environment of an organisation. We believe that the
study has implications for both practitioners and academics. The study demonstrates the negative
influence of perceptions about risk associated with innovation. Consequently, we believe that these
results may help companies appreciate the managerial implications of adopting and use of e-trade
systems. For government and other bodies who wish to promote new, more efficient technological
processes, we suggest that the findings help by demonstrating the nature of the barriers. In turn, our
findings indicate what has to be done for developing and extending the use of e-trade.
For academics, we had employed a sample who already used the system, thus our study extends the
literature on adoption. Our results show that perceived risks have a negative influence on the
continuous use of e-trade. These findings are similar to the results from other research on innovation,
but extend the concepts to existing users. We have proposed that because of the perceptions of risk,
there is a need to overcome the uneasiness associated with the new technology. Consequently,
government and organisations might consider the use of an insurance system when companies use e-
trade systems. Importantly we argue that the fear of an e-trade system creating risks appears to be
related to the lack of innovation characteristic within the organisation. We propose this could be
overcome by the continuing use of the e-trade system itself. Thus we are arguing that familiarity will
help to build confidence and overcome the perceived barriers. This point appears to be confirmed by
our finding that the innovation maturity of information technology has a positive influence.
Limitations and further research
Our study has limitations which could be addressed in any future research. Importantly, one of our
reviewers pointed out that organisational characteristics would have an effect on the perceptions of
risk. Thus if a company had information maturity and innovative characteristics they might view risk
differently. This is a very good point that deserves attention in future work. It was also pointed out
that our method did not allow us to identify the direction of causality. Hence the characteristics of the
organization could impact on the perception of risk rather than as we describe. This issue thus needs
to be tested.
Our study explores the continuous use of e-trade by existing users, but it would be beneficial to
examine differences between users and non-users of e-trade systems. We only examined Korean
SMEs, so it would be useful to also examine the foreign counterparts in the e-trade transactions. We
argued that the use of e-trade increased efficiency, but did not study the financial impact. The study
might be extended to examine the financial implications. Such an extension of the scope of the study
might adopt the conception of risks identified by Bloom, Milne and Adler (1994). They had noted that
13
negative endogenous latent variables could include economic, psychological and physical risk.
Nonetheless, we hope that this study will serve as a foundation for future research in the subject area.
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Thesis
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Purpose - The main objective of this study is to develop a framework for: identifying the reasons for using e-commerce; understanding the implications of e-commerce in companies; and implementing and applying e-commerce successfully for improved organizational competitiveness and success. Design/methodology/approach - A structured questionnaire was designed, pre-tested, modified, and used to capture data on e-commerce in Hong Kong. Based on the feedback from the pilot-test, the questionnaire was modified and a final questionnaire was developed and mailed to companies in Hong Kong. In the survey, conducted with Hong Kong companies, the perceived benefits and perceived barriers of e-commerce implementation are discussed. Findings - The conceptual model based on the analysis of literature and some reported case experiences is developed using the current issues that have been highlighted as important e-commerce success factors of implementation. The major factors that influence the application and implementation of e-commerce are: perceived usefulness of web; perceived barriers of the internet for e-commerce; usage of the internet; and perceived benefits of the internet for e-commerce. In addition to this, country-specific factors such as culture, technology competency, government policy, educational level, influence the level of application of e-commerce. Practical implications - The framework is the result of the validation of the theoretical model, together with the conclusions of the empirical analysis conducted in Hong Kong. The empirical analysis supported some of the assumptions of the theoretical model, whereas others were not supported. Based on the feedback received from respondents, the model has been revised to reflect these practical considerations. Originality/value - Little research has been done to address the perceived benefits and potential barriers to e-commerce implementation in Hong Kong. This study is a timely and important one in that examines the current status of e-commerce implementation in Hong Kong. A generic framework is presented with the objective of supporting the application and implementation of the internet for e-commerce.
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'The book benefits from the contributions of the variety and experiences of its authors that provide depth, insight, rigorous argument and research. Also contributing to the effectiveness of the book are the organization of the text and the clarity of its structure. . . I would highly recommend this book for both those who study the management of information systems, and for practitioners, who advise on and make decisions about information systems. The setting of the book in theory and the application of theoretical concepts in the cases, provide knowledge for study and practice as well as a teaching/learning methodology that supports the development of expertise.' - Anna-May Edwards-Henry, International Journal of Education and Development using ICT.
Purpose – To develop a basic model of e‐commerce adoption barriers to small businesses located in regional areas of developed countries. Design/methodology/approach – An empirical survey of 477 small businesses in Sweden and Australia about e‐commerce adoption and implementation. The data was analysed using correlation matrices and factor analysis to derive a model of e‐commerce barriers. Findings – E‐commerce adoption barriers to small businesses in regional areas in both Sweden and Australia can be grouped according to two distinct factors: e‐commerce is either “too difficult” or “unsuitable” for the business. The model derived is based on these factors. Research limitations/implications – Limitations – inability to derive industry specific conclusions; standard limitations associated with mailed survey instruments; further qualitative research is necessary. Research implications – “first of its kind” model of e‐commerce adoption barriers to small businesses located in regional areas; consolidated understanding of e‐commerce adoption barriers. Practical implications – Significant implications for government organizations engaged in promoting e‐commerce adoption in small businesses. This research indicates where and how adoption initiatives should be targeted. Originality/value – This research fills a gap in our knowledge about e‐commerce adoption barriers and overcomes some of the fragmentation associated with e‐commerce adoption in small businesses.
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