factors influencing electronic commerce adoption in malaysian small and medium sized enterprises

347 Pages·2017·11.73 MB·English

FACTORS INFLUENCING ELECTRONIC COMMERCE
ADOPTION IN MALAYSIAN SMALL AND MEDIUM SIZED

ENTERPRISES (SMES)

FATIMA AJMAL

FACULTY OF COMPUTER SCIENCE AND INFORMATION
TECHNOLOGY
UNIVERSITY OF MALAYA
KUALA LUMPUR

2017
FACTORS INFLUENCING ELECTRONIC COMMERCE
ADOPTION IN MALAYSIAN SMALL AND MEDIUM
SIZED ENTERPRISES (SMES)

FATIMA AJMAL

THESIS SUBMITTED IN FULFILMENT OF THE
REQUIREMENTS FOR THE DEGREE OF DOCTORATE
OF PHILOSPHY

FACULTY OF COMPUTER SCIENCE AND
INFORMATION TECHNOLOGY
UNIVERSITY OF MALAYA
KUALA LUMPUR

2017
UNIVERSITY OF MALAYA
ORIGINAL LITERARY WORK DECLARATION

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ABSTRACT
Electronic commerce (E-commerce) plays an important role in growth of Small and
medium-sized enterprises (SMEs) as it allow them compete efficiently in both domestic
and international markets.

This study identifies factors that influence adoption of e-commerce in SMEs, in order to
formulate a proposed model for e-commerce. These factors act as a set of guidelines
that are needed by SMEs for the successful and comprehensively secure implementation
of e-commerce within their businesses. This study uses the IS success model by Molla
and Licker (2001), as the basis for this research. The model proposes a partial extension
and respecification of the Delone and McLean model of IS success for e-commerce
systems. It is posited that e-commerce system quality, content quality, trust, and support
services, effect the use and customer satisfaction that leads to e-commerce success. The
factors of the IS success model are included in the proposed holistic model.

The case study uses data collected from five different Malaysian SME industries. The
study adopts an explanatory mixed-method approach (i.e., using questionnaires,
interviews, and observation); where data is collected from both business owners and
Chief Executive Officers (CEO). The two study groups involved in this study are the
government based organization - SME Corporation (SMEcorp), and the non-
government organization – namely the Association of Bumiputra Women Entrepreneur
Network of Malaysia (WENA).

Descriptive statistics are created to verify the factors for a secure and successful
adoption of e-commerce within SMEs. Transactional security, loyalty, intellectual
property rights, and implementation factors, are deemed to be the most important
elements needed for the success of B2C e-commerce in Malaysia. The conceptual
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model is then verified using the Confirmatory Factor Analysis (CFA) of AMOS; where
the 32 factors that were collected during the literature review were verified to both
develop and confirm the model. This model is later validated by conducting interviews
and observations with SMEs. The prototype system is developed based on a model for
e-commerce evaluated by SME managers, CEOs, and business owners during focus
group sessions.
This study contributes to existing knowledge by studying success factors including
security factors to develop a holistic e-commerce model that can be implemented in
SMEs belonging to any five industries. In the future, this model can be further tested in
different regions and countries to further verify its validity.

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ABSTRAK
Perdagangan elektronik (E-dagang) memainkan peranan penting dalam pertumbuhan
perusahaan bersaiz sederhana (PKS) Kecil dan kerana ia membolehkan mereka bersaing
dengan berkesan dalam kedua-dua pasaran domestik dan antarabangsa.

Kajian ini mengenal pasti faktor-faktor yang mempengaruhi penggunaan e-dagang
dalam PKS, untuk merangka model dicadangkan untuk e-dagang. Faktor-faktor ini
bertindak sebagai satu set garis panduan yang diperlukan oleh PKS bagi pelaksanaan e-
dagang yang berjaya dan selamat keseluruhanya dalam perniagaan mereka. Kajian ini
menggunakan model kejayaan IS oleh Molla dan Licker (2001) sebagai asas untuk
kajian ini. Model ini mencadangkan pengembangan dan spesifikasi semula model
kejayaan IS oleh Delone dan Mclean (1992) untuk sistem e-dagang. Ia dicadangkan
bahawa kualiti, kualiti kandungan, amanah, dan perkhidmatan sokongan sistem e-
dagang mempengaruhi penggunaan dan kepuasan pelanggan yang membawa kejayaan
kepada e-dagang. Faktor-faktor model kejayaan IS adalah termasuk di dalam model
selamat yang dicadangkan.

Kajian kes ini menggunakan data yang dikumpul daripada lima industri PKS Malaysia
yang berbeza. Kajian ini menggunakan pendekatan kaedah penjelasan campuran (iaitu,
soal selidik, temubual, dan pemerhatian) di mana data dikumpulkan daripada kedua-dua
pemilik perniagaan dan Ketua Pegawai Eksekutif. Kedua-dua kumpulan kajian yang
terlibat dalam kajian ini adalah organisasi-organisasi berasaskan kerajaan dan bukan
kerajaan.

Statistik deskriptif dicipta untuk mengesahkan faktor-faktor bagi pelaksanaan selamat e-
dagang dalam PKS. Keselamatan transaksi, kesetiaan, hak harta intelek, dan
pelaksanaan faktor-faktor dianggap sebagai elemen yang paling penting yang
diperlukan untuk kejayaan e-dagang B2C di Malaysia. Model konseptual kemudian
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disahkan melalui Pengesahan Analisis Faktor (CFA) AMOS di mana 32 faktor-faktor
yang telah dikumpulkan semasa kajian literatur telah disahkan untuk membangunkan
dan mengesahkan model tersebut. Model ini kemudiannya disahkan dengan
mengadakan temu bual dan pemerhatian dengan PKS. Sistem prototaip dibangunkan
berdasarkan model selamat untuk e-dagang yang dinilai oleh pengurus PKS, CEO, dan
pemilik perniagaan semasa sesi-sesi kumpulan fokus.

Kajian ini menyumbang kepada pengetahuan yang sedia ada dengan menggabungkan
dua topik aliran utama keselamatan dan faktor kejayaan e-dagang untuk membangunkan
suatu model bersepadu e-dagang yan selamat yang boleh dilaksanakan dalam PKS yang
dimiliki oleh mana-mana lima industri. Pada masa yang akan datang, model ini boleh
diuji selanjutnya di kawasan-kawasan dan negara-negara yang berbeza untuk
mengesahkan lagi kesahihannya.

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ACKNOWLEDGEMENT

Thank you, God for the completion of this thesis.

I would like to thank my supervisors, Dr. Norizan Mohd Yasin for her incredible
support, constant guidance, encouragement, advice and patience throughout my
doctorate journey and Dr. Azah Anir Norman, thank you for advice, comments and
critics that helped me to improve my research.

I am also thankful to SMEcorp., and WENA organization, who provide me their support
in data collection. Special thanks to my friends and colleagues who supported my ideas
and shared my experience.

Thank you to my father, Mohd Ajmal Mirza and my mother, Nusrat Ajmal and my
sibling Bilal, Awais and Sara for believing in me and providing their constant
encouragement and support.

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TABLE OF CONTENTS
ABSTRACT ...................................................................................................................... iii
ABSTRAK.......................................................................................................................... v
ACKNOWLEDGEMENT .............................................................................................. vii
TABLE OF CONTENTS ............................................................................................... viii
LIST OF TABLES ......................................................................................................... xiii
LIST OF FIGURES ....................................................................................................... xvi
LIST OF ABBREVIATIONS ...................................................................................... xviii
LIST OF APPENDICES ................................................................................................. xx
CHAPTER 1: INTRODUCTION .................................................................................... 1
1.1Background of the Study ........................................................................................... 1
1.2 Problem Statement .................................................................................................... 4
1.3 Research Objectives ................................................................................................. 6
1.4 Research Questions................................................................................................... 6
1.5 Expected Outcome .................................................................................................... 7
1.6 Research Design ....................................................................................................... 8
1.7 Scope of Research .................................................................................................. 11
1.8 Significance of the Study ........................................................................................ 11
1.9 Outline of Project ................................................................................................... 12
CHAPTER 2: LITERATURE REVIEW ...................................................................... 15
2.1 Introduction ............................................................................................................ 15
2.2 Electronic Commerce ............................................................................................. 15
2.3 Small and Medium-sized Enterprise........................................................................ 16
2.4 E-commerce in Small & Medium-Size Enterprises (SMEs) .................................... 17
2.5 E-commerce Success Factors .................................................................................. 18
2.5.1 Technological Factors ...................................................................................... 25
2.5.2 Individual Factors............................................................................................. 26
2.5.3 Implementation Factors .................................................................................... 27
2.5.4 Organizational Factors ..................................................................................... 31
2.5.5 Management Factors ........................................................................................ 32
2.5.6 Environmental Factors ..................................................................................... 33
2.6 E-commerce Security Factors ................................................................................. 34
2.6.1 Trust Factors .................................................................................................... 38
2.6.2 Security Factors ............................................................................................... 39
2.6.3 Privacy Factors ................................................................................................. 41
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2.6.4 Ethical and Legal issues Factors ....................................................................... 43
2.6.5 Intellectual Property Rights Factors .................................................................. 45
2.6.6 Loyalty Factors ................................................................................................ 46
2.7 Information System Success Models ....................................................................... 48
2.8 Integrated Models in E-commerce .......................................................................... 53
2.9 Criticism on Models ............................................................................................... 56
2.10 Conceptual Model................................................................................................. 58
2.11 Summary .............................................................................................................. 59
CHAPTER 3: RESEARCH DESIGN ........................................................................... 60
3.1 Introduction ............................................................................................................ 60
3.2 Research Methodology ........................................................................................... 60
3.3 Procedural Issues in the Mixed-Methods Sequential Explanatory Design ................ 63
3.4 Research Strategy ................................................................................................... 65
3.5 Data Collection Method .......................................................................................... 68
3.6 Respondents of this Study ....................................................................................... 69
3.7 Quantitative Research Investigation ........................................................................ 71
3.7.1 Quantitative Research Population and Sampling ............................................... 72
3.7.2 Questionnaire ................................................................................................... 72
3.7.3 Designing Questionnaire .................................................................................. 73
a) Research Instrument Development ..................................................................... 73
b) Measure of Elements ......................................................................................... 74
3.7.4 Quantitative Pre-Test ........................................................................................ 75
3.7.5 Questionnaire Response Analysis ..................................................................... 76
3.7.6 Quantitative Data Presentation and Analysis .................................................... 77
a) Descriptive Statistics .......................................................................................... 77
b) Confirmatory Factor Analysis ............................................................................ 78
3.7.7 Software used for Quantitative Data Analysis ................................................... 79
a) SPSS .................................................................................................................. 80
b) AMOS ............................................................................................................... 80
3.8 Qualitative Research Investigation .......................................................................... 81
3.8.1 Interview .......................................................................................................... 82
3.8.2 Observation ...................................................................................................... 85
3.8.3 Qualitative Analysis Strategy ........................................................................... 87
3.9 Validation and Reliability ....................................................................................... 89
3.10 Prototyping Tools ................................................................................................. 89
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