DETERMINANTS OF THE ADOPTION OF TECHNOLOGICAL INNOVATION BY LOGISTICS SERVICES PROVIDERS IN VIETNAM

Fleischer, 1990 and outstanding characteristics selected from logistics industry Chieh-Yu, 2006, six variables explicitness of technology, accumulation of technology, organizational enco

MINISTRY OF EDUCATION AND TRAINING

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

-NGUYEN THI KIM HA

DETERMINANTS OF THE ADOPTION OF TECHNOLOGICAL INNOVATION BY LOGISTICS SERVICES PROVIDERS

IN VIETNAM

MASTER OF BUSINESS ADMINISTRATION THESIS

HO CHI MINH CITY - 2011

MINISTRY OF EDUCATION AND TRAINING

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

-NGUYEN THI KIM HA

DETERMINANTS OF THE ADOPTION OF TECHNOLOGICAL INNOVATION BY LOGISTICS SERVICES PROVIDERS

IN VIETNAM

Major: Business Administration Major Code: 60.34.05

MASTER OF BUSINESS ADMINISTRATION THESIS

INSTRUCTOR: PROFESSOR NGUYEN DONG PHONG

HO CHI MINH CITY - 2011

First of all, I would like to express my heartfelt gratitude to my research supervisor, Professor Nguyen Dong Phong, for his precious guidance, experiencesharing, ceaseless encouragement and highly valuable suggestions throughout thecourse of my research

I would like to convey my sincere thanks to Dr Tran Ha Minh Quan, for providing valuable guidance, comment and enthusiastic support

My special gratitude is extended to all instructors and staffs at Faculty of Business Administration and Postgraduate Faculty, University of Econimics HoChiMinh City (UEH) for their support and the valuable knowledge during my study in UEH

I wish to take this opportunity to express my appreciation to ProfessorNguyen Dong Phong and UEH Board of Directors for establishing MBA program

The growth of Vietnam’s economy is the effort contributed partially by considerate development of logistics service industry In this industry, technological innovation adoption is one of the most promising and potential premise to increase supply chain visibility and improve process efficiency Vietnam’s logistics service providers should pay attention to adopt more efficient logistics technologies to provide better services for their customers However, first of all, the requirement to identify determinants affecting technological innovation adoption is considered as important goals in any logistics firms This article studies the factors influencing the adoption of technological innovations by logistics service providers in Vietnam Based on the technology–organization–environment (TOE) framework (Tornatzky,

M Fleischer, 1990) and outstanding characteristics selected from logistics industry (Chieh-Yu, 2006), six variables (explicitness of technology, accumulation of technology, organizational encouragement, quality of human resource, governmental support and environmental uncertainty) are proposed to help predict innovation adoption Data collected from 150 logistics service providers in Ho Chi Minh city is tested against the proposed research model using linear regression The findings suggest that five of six variables have positive effect on innovation adoption We find that the adoption of technological innovations is significantly influenced by explicitness of technology, accumulation of technology, organizational encouragement, quality of human resource, and environmental uncertainty However, governmental support does not show the significant impact

on adoption The results and implications included in our study contribute to an expanded understanding of the determinants that affect innovation adoption in logistics service providers

Key words: technological innovation adoption, logistics service providers, technology-organization-environment framework

Acknowledgement 3

Abstract 4

Contents 5

List of Tables 7

List of Charts 8

List of Figures 9

CHAPTER1: Introduction 10

1.1 Research background 10

1.2 Research objective 12

1.3 Research scope and research design 12

1.4 Research structure 13

CHAPTER 2: Literature review and research model 14

2.1 Theoretical framework 14

2.1.1 Definition of innovation 14

2.1.2 Innovation adoption in logistics technologies 17

2.1.2.1 Logistics and supply chain management 17

2.1.2.2 Logistic services providers and role of innovation for their services ……… 18

2.1.2.3 Four categories of logistics technologies………19

2.1.3 Determinants of innovation 22

2.2 Research model 25

CHAPTER 3: Methodology 30

3.1 Research process 30

3.2 The measurement scales 31

3.2.1 Adoption of innovation 32

3.2.2 Explicitness of technology 32

3.2.3 Accumulation of technology 32

3.2.4 Organizational encouragement 32

3.2.5 Quality of human resource 33

3.2.6 Governmental support 33

3.2.7 Environmental uncertainty 33

3.3 The pilot research 34

3.4 The main research 35

3.4.1 Sampling 35

3.4.2 Sample size 36

3.4.3 Survey method 36

3.4.4 Data collection and analysis 37

CHAPTER 4: Research result and finding discussion 38

4.1 Descriptive statistics of sanple 38

4.1.1 Final sample 38

4.1.2 Characteristics of sample 39

4.1.3 Descriptive statistics 41

4.2 The construct measurement scale 42

4.2.1 Reliability analysis 42

4.2.2 Exploratory factor analysis 47

4.3 The hypotheses assessment 52

4.3.1 Correlation analysis 53

4.3.2 Overall model fit 54

4.3.3 Multi linear regression analysis 56

4.4 Finding disscussion 61

CHAPTER 5: Conclusion and implications 65

5.1 Concluding remarks 65

5.2 Implications of the research 66

5.3 Recommendation from the research result 67

5.4 Limitations and further research 68

References 70 Appendix 1

Appendix 2

LIST OF FIGURES

Figure 2.1 : Process of literature review 14

Figure 2.2: Research model 29

Figure 3.1 : Process of research 31

Figure 4.1 : Process of hypothesis assessment 53

LIST OF CHARTS

Chart 4.1 : Standardized distributions of variables………59Chart 4.2: Regression standardized predicted value……… 60Chart 4.3: Nornal P-P plot of regression stand……… 60

LIST OF TABLES

Table 2.1: Previous studies using the TOE framework in

investigation of the adoption of technological innovations………23

Table 4.1 : Case Processing Summary 38

Table 4.2 : Company history 39

Table 4.3 : Number of employee 39

Table 4.4 : Technological innovation implementation for LSPs 40

Table 4.5 : Descriptive statistics 41

Table 4.6 : Cronbach’s alpha of adoption of innovation 43

Table 4.7 : Cronbach’s alpha of explicitness of technology 43

Table 4.8 : Cronbach’s alpha of accumulation of technology 44

Table 4.9 : Cronbach’s alpha of organizational encouragement 44

Table 4.10 : Cronbach’s alpha of quality of human resource 45

Table 4.11 : Cronbach’s alpha of governmental support 46

Table 4.12 : Cronbach’s alpha of environmental uncertainty 46

Table 4.13 : The EFA result of Dependent Variable 47

Table 4.14 : The EFA result of Independent Variables 49

Table 4.15 : The final construct measurement items 51

Table 4.16 : The result of correlation analysis 53

Table 4.17 : The result of overall model fit 55

Table 4.18 : The result of ANOVA 55

Table 4.19 : The result of multi regression analysis 57

Table 4.20 : The conclusion about hypothesis 59

CHAPTER 1 : INTRODUCTION

1.1 RESEARCH BACKGROUND

The country economy in the beginning months of 2011 is happing in the background of the world’s economy which has not yet fully escaped from the crisis but been gradually stabilized According to the Asian Development Bank, the Vietnamese economy grew at 6.7 per cent last year and is likely to achieve 7 per cent growth this year

Contribution to above figures is shipping and logistics industry Experts have called for the development of the country’s logistics and maritime services to make the economy more competitive and boost global integration For developing countries, revenue from logistics services account for about 15 to 20 percent of GDP For less developed countries, this rate could be over 30 percent It is currently

25 percent for Vietnam (Vietnam Business News)

Logistics and supply chain management are seen as the fields in which logistics services providers, by virtue of their particular expertise, are able to offer the most added values to transactions in the freight trade Not only do logistics services providers have to arrange for the transport of cargo and facilitate its clearance through customs, they also need to manage their client’s order processing (Ruth Banomyong) Thus, logistics services providers play a significant role in supply chain management

According to Vietnam Freight Forwarders Association Viffas , Vietnam has more than 1000 enterprises which provide logistics services, most of which, about 600-700 enterprises, are located in HCM City, and the majority of enterprises have

a modest capital of 1-1.5 billion dong Currently, Vietnam ranks the 53rd among

155 countries which have logistics services and ranks the fifth among ASEAN countries

Although Vietnam occupies a vital geographical position in Asia, providing a dynamic and diverse cargo transport system, the logistics industry in Vietnam has not developed as rapidly as in regional countries like Thailand and China and not well to fit the existing potentials.

For this reason, Vietnam is very concerned about boosting the industry to aid its subsequent integration with the region in the near future In fact, over the recent years, many logistics services providers (LSPs) have acknowledged that their operations are not responsive enough Moreover, firm level competitiveness is extremely sensitive and affects directly their operations In order to fully meet customers’ demand, Vietnam’s logistics services providers have begun to improve their service efficiently by continuous adoptions of technologies Many studies have found that innovation is the most important tool for enterprises to keep their competitive advantage (Kimberly and Evanisko, 1981; Damanpour and Evan, 1984) Nixon (2001) suggests that logistics service providers should employ new information technologies to raise their service capability in the e-commerce age Speakman (2002) proposes that logistics companies could increase their performance by employing new technologies Chapman, Soosay and Kandampully (2003) suggest that the logistics industry should pay more attention to innovation in logistics service, and the innovation in logistics can be implemented through technology, knowledge and relationship networks Adopting new technologies might enable logistics service providers to enhance their service abilities

There are several previous studies done on determinants of the adoption of technological innovations One of the frameworks many researchers referred relates

to technology – organization - environment (TOE) framework Tornatzky and Fleischer firstly proposed the TOE framework to study the adoption of technological innovations They argue that the decision to adopt a technological innovation is based on factors in the organizational context and environmental contexts, as well as characteristics of the technology itself

important for Vietnam’s logistics service providers Before logistic services providers can draw up strategies for technological innovations, they should know what factors will influence technological innovations adoption However, there is still a lack of empirical research on the adoption of technological innovations for Vietnam’s logistics industry

Therefore, the main purpose of this paper is to explore determinants of the adoption of technological innovations by logistics services providers in Vietnam

1.2 RESEARCH OBJECTIVES

The research objective is to explore the impact of determinants belonging to technology – organization – environment framework on the adoption of technological innovations by logistics service providers in Vietnam In particularly,

this research will answer the question “What are the key determinants of the adoption of technological innovation by logistics service providers in Vietnam?”

The research will provide some conclusions about the role of these determinants in logistics service providers in Vietnam It helps logistics service providers identify which important factors influencing the adoption, thereby making

a contribution to the significant decisions about technological innovations

1.3 RESEARCH SCOPE AND RESEARCH DESIGN

This research is conducted at Ho Chi Minh City The research object is the company whose function is logistics service provider

The research process includes two main steps: the pilot research and the main research The pilot research bases on qualitative method We interview sevendifferent logistics service providers, in order to check the content and the meaning

of words by using the measurement scales

The main research is conducted with 150 logistics service providers through

quantitative technique The reason is to test the measurement model, research model and the hypotheses.

After collecting data, the measurement scales will be verified the reliabilityand validity by Cronback alpha coefficient, Exploratory Factor Analysis (EFA)respectively Finally, the hypotheses will be tested by using the linear regression analysis

1.4 RESEARCH STRUCTURE

The structure of this research consists of 5 chapters

Chapter 1: Introduction presents overview about research background, researchobjectives and research meaning, research scope and research design, as well research structure

Chapter 2: Literature reviews provide the theoretical foundations of logistics technologies, innovation adoption and determinants of innovation adoption This chapter also includes the development of research hypotheses and the proposed research model

Chapter 3 : Methodology introduces research methodology used in the research that includes research methodology design, research procedures, measurement scales.Chapter 4: Research results and finding discussion describe sampling, data processing , and discussion of the findings

Chapter 5 : Conclusion and implication present conclusions and implicationsfrom the research project

CHAPTER 2 LITERATURE REVIEW AND RESEARCH MODEL

2.1 THEORETICAL FRAMEWORK

The theoretical framework for this article is largely adapted from Chieh-Yu Lin et al.’s theory (2006) and Yu-Min Wang et al.’s concepts (2010) The theoretical framework comprises of processes necessary for a LSP relating to determinants of innovation The theoretical framework, as illustrated in Figure 2.1 , consists of the following three key stages:

Figure 2.1 : Process of literature review

2.1.1 Definition of innovation

Organizations must innovate if they are to survive and compete (Chesbrough, 2003; Desouza et al., 2009; Drucker, 1986; Porter, 1990) The ability to innovate, and do so smartly (i.e effectively and efficiently), is a critical competency that firms have yet to master (Jaruzelski & Dehoff, 2010; Pohle & Chapman, 2006) However, what is innovation?

Most of the definitions of innovation share the idea that innovation implies the adoption of a new idea or behavior Joseph Schumpeter (1934) first described the process of innovation He distinguished three stages Invention precedes innovation Schumpeter understands invention as having idea of something new followed by its deployment and demonstration Innovation then refers to exposing

an invention from the laboratory into the market Both (invention and innovation) can be expressed in a short and concise manner by the term research and development, R&D The classical definition of Joseph Schumpeter distinguished five types of innovation (1) product innovation: changes in the things

Definition of

Innovation

Innovation Adoption in logistics technologies

Determinants of innovation adoption

(products/services) which an organization offers; (2) process innovation: changes

in the ways in which we are created and delivered; (3) position innovation: changes

in context in which the products/services are introduced; (4) the conquest of a new source of supply of raw materials or half manufactured goods , (5) the carrying out

of the new organization of any industry , like the creation of a monopoly position…or the breaking up of a monopoly position

Kuniyoshi Urabe (1988) defined as “innovation consists of the generation of a new idea and its implementation into a new product, process, or service, leading to the dynamic growth of the national economy and the increase of employment as well as to a creation of pure profit for the innovative business enterprise” He assumed that new idea refers to the perception of a new customer need or of a way

to produce It is generated in the cumulative process of information-gathering, coupled with an ever-challenging entrepreneurial vision Through the implementation process the new idea is developed and commercialized into a new marketable product or a new process with attendant cost reduction and increased productivity

Innovation can be seen as a new product or service, a new production process technology, a new structure or administrative system or a new plan or program for organizational members (Damanpour, 1991) Innovation may also be defined as an idea, practice or object perceived new by the adopter (Rogers, 1995; Sciulli, 1998)

Ravichandran (2000) defined organizational innovation as the actualization

of creating a new product, process, method or service by an organization, through concrete and committed efforts of its members and by other resources Through continual improvement practices organizations can find better and more profitable ways to surpass the competition

McKeown (2008) proposed that the term innovation may refer to both, radical and incremental changes in thinking, in things, in processes, or in services

In economics, innovation defines a change in products or processes that increases consumer rent, producer rent or social welfare

Therefore, we can conclude that innovation is any practices that are new to organizations, including equipments, products, services, processes, policies and projects (Kimberly & Evanisko, 1981; Damanpour, 1991).

Type of innovation: technological and administrative

Literature also distinguishes different types of innovation The classification most extended and accepted is the one Damanpour (1991) proposed He distinguished between technological and administrative innovation Previous researches have argued that distinguishing types of innovation is very necessary for understanding organization’s adoption behavior and identifying the determinants of innovation in them (Knight, 1967; Rowe & Boise, 1974; Downs & Mohr, 1976) Technological innovation concentrates on the products, services and production process technology, and it may occur in an operating component and affect the technical system (Daft, 1978; Damanpour, 1991) and is thus rather measurable Administrative innovation is more related to management activities and procedures and is thus connected with the organization’s social system (Damanpour, 1991) Administrative innovation is defined as those that involve an administrativecomponent and affect the organization’s social system This makes it more difficult

to measure

Since the purpose of this article to analyze the determinants of the adoption

of technological innovations by logistics service providers, so it will focus on the technological innovation only

2.1.2 Innovation adoption in logistics technologies

2.1.2.1 Logistics and supply chain management

Paralleling advances in management theory and information systems, logistics has evolved in scope and influence in the private sector since the mid to the late 1940s In the 1950s and ‘60s , the military was the only organization using the

term logistics Both logistics and supply chain management are fascinating and exciting area that touch all of our lives (John Mangan, Chandra Lalwani, Tim Butcher ,2008) The term logistics and supply chain management, although often used interchangeably, are distinct and will be defined later

The term supply chain management was originally introduced by consultants in the early 1980s and, since then, has received considerable attention

Martin Christopher (Cranfield School of Management) defined that the supply chain is the network of organizations that are involved, through upstream and downstream linkages, in the different processes and activities that produce value in the form of products and services in the hands of the ultimate consumer

Logistics management is a part of supply chain management plans Philip Kotler defines logistics as “ planning, implementing, and controlling the physical flow of materials and finished goods from point of origin to point of use to meet the customer’s need at a profit “

Logistics involves getting the right product to the right place in the right quantity at the right time, in the best condition and at an acceptable cost (the Chartered Institute of Logistic and Transport) However, there is another definition added “two right” for necessity as logistics involves getting, in the right way, the right product in the right quantity and right quality , in the right place at the right time, for the right customer at the right cost

According to the unionist view, logistic is part of the wider entity which issupply chain management Supply chain management is a much wider, inter-company, boundary-spanning concept that is the case of logistics

2.1.2.2 Logistic services providers and role of innovation for their services

Logistics service provider plays an important role in supply chain management due to an increasing number of firms outsourcing their logistics function

The logistics provider sees its function in the supply chain as that of a distributor Its main role is to move goods from one end of the supply chain to the other within the constrains imposed by both clients and the commercial

Today the challenges for logistics service providers include balancing cost minimization with clients’ almost infinitely variable requirement , as well as determining how to achieve and maintain an active and competitive role in providing logistics services through the integration of global supply chains (Ruth Banomyong, 2010).

For this reason, recently, logistics industries improve their operation efficiency by continuous implementation of information or automation technologies according to their business characteristics (Mason-Johns & Towill, 1999; Sauvage, 2003) It is important for logistics service providers, in this age of knowledge-based economy, to accumulate and use their skills and knowledge efficiently and consistently In order to keep the competitive advantage, logistics companies must make use of knowledge more efficiently to make them become innovation-based logistics providers (Chapman et al., 2003)

2.1.2.3 Four categories of logistics technologies

According to Edward Frazelle (2002) , logistics comprised five interdependent activities : customer response, inventory planning and management, supply, transportation and warehousing Meanwhile, most of all logistics activities are inventory management and transportation management (Donald F Wood,2002) Later, Chieh-Yu (2006) supposed that logistics activities not only include inventory and transportation, but rather it can be classified into four categories: data acquisition technologies, information technologies, warehousing technologies and

transportation technologies.

The nature of innovation by LSPs can be associated with changes in offerings that LSPs provide Transportation and warehousing have traditionally been at the core of LSPs offerings However, in the last decade or so, LSPs have had to broaden their service offerings leading to different innovative solutions (Stephan M Wayner, Christian Busse, 2008) In recent years, the advances in data technologies and information technologies have contributed to the success of several different industries Especially, logistics is a field which always requires the most effectiveness in data collection, exchange and processing

This article will bases on the model of Chieh-Yu (2006): technological innovation of logistics consists of four main categories: data acquisition technologies, information technologies, warehousing technologies and transportation technologies

Data acquisition technologies

Data acquisition is the process of sampling signals that measure real world physical conditions and converting the resulting samples into digital numeric values that can be manipulated by a computer Logistics service providers usually deal with a large amount of goods and data Data must be processed when it is transmitted from one system to another Thus, the invention of data acquisition is one of useful achievements for LSPs Besides, data collection and exchange are critical for logistics information management and control Good quality data acquisition can help logistics service providers deliver customers’ goods more accurately and efficiently

Two of commonly outstanding data acquisition technologies LSPs are applying is the bar code system and radio frequency identification system (RFID) They are acquisition technologies that can facilitate logistics data collection and exchange

Information technologies

Information technologies are the devices or infrastructures to make

communications of business information among several organizations more efficiently (Chieh-Yu, 2006) Information technologies have significantly influenced channels of distribution in recent years (Patricia, Richard, Cornelia, 1995) Indeed, many logistics managers see the information technology as a major source of improved productivity and competitiveness Information technologies may increase organizational productivity, flexibility and competitiveness as well as stimulate the development of inter-organizational networks (Cash, Konsynski, 1985) The information technologies that are commonly used in logistics industry include electronic data interchange (EDI), the Internet, value added network (VAN), point of sales (POS), electronic ordering system (EOS), logistics information system, computer telephony integration and enterprise information portals Electronic data interchange is identified as inter-company computer-to-computer exchange of business documents in standard formats Recently, extensible markup language (XML) provides a more efficient way for data exchange.

Warehousing technologies

Warehousing includes the physical process of material handling and stocking

as well as they underlying methodologies (Gunesekaran, Marri, and Menci 1999)

Warehousing is integrally involved in the entire supply chain operation process, and warehouse plays different role in different stages A warehouse is typically viewed as a place to store inventory However, in many logistics systems, the role of the warehouse is more properly viewed as a switching facility as contrasted to a storage facility Given increasing market volatility, wider product range proliferation, and the increased demand for higher customer service levels, warehousing has become crucial components of any distribution network and play a significant role in enhancing supply chain performance (Hosselin Bidgoli, 2010)

The design of a warehouse management system should address physical facility characteristics and product movement The warehousing technologies that are commonly used in logistics industry include automated storage and retrieval system (AS/RS), automatic sorting system, computer-aided picking system and

thermostat warehouse The automated storage and retrieval system is a means to high density, hands free buffering of materials in distribution and manufacturing environments and can offer a quick and efficient way to search and move storages from a warehouse.

Transportation technologies

Transportation is also an important element of a logistics system, providing the links among suppliers, producers, and consumers A reliable and efficient transportation system contributes to efficient production and allows a firm to reach broader geographic market (Jonh F.Magee, 1985) Transportation is one of the most visible elements of logistics operations Transportation functionality provides the major function of product movement The major objective of a transportation management system is to move product from an origin location to a prescribed destination while minimizing costs and damage expenses The movement, at the same time, must take place in a manner that meets customer demands regarding delivery performance and shipment information availability The transportation technologies that are commonly used in logistics industry include transportation information system, global positioning system (GPS), geographical information system (GIS), radio-frequency communication system and transportation data recorder The transportation information system and geographical information system can help logistics managers planning, managing and controlling transportation issues The global positioning system and radio-frequency communication system can track and guide drivers during the transportation of products (Dr Lin,2006)

Above technologies play a significant role in logistics industry Hence, LSPs have begun adopting innovations basing on these technologies

2.1.3 Determinants of innovation adoption

There are several previous studies done on determinants of the adoption of technological innovations One of the frameworks many researchers refer relates to technology – organization-environment (TOE) framework

In the past researches, Kimberly and Evanisko (1981) suggested that the individual factor, organizational factor and contextual factor would have positive effect on the adoption by hospitals of technological innovation

Until 1983, the Rogers theory of innovation diffusion is one of the most widely applied theories in the prediction of organizational level technology adoption Rogers identified technological characteristics as antecedents to any adoption decision He also focused on three groups of adoption predictors: leader characteristics, internal characteristics of the organization, and external characteristics of the organization The leader characteristic can be viewed as a specific internal organizational property The external characteristics of the organization refer to the environmental context in the TOE framework Thus, Rogers’ theory of innovation diffusion is consistent with the TOE framework

Tornatzky and Fleischer (1990) proposed the technology–organization–environment (TOE) framework to study the adoption of technological innovations They argue that the decision to adopt a technological innovation is based on factors

in the characteristics of the technology itself, organizational context and environmental context

Furthermore, findings from other innovation-adoption researches are consistent with the TOE framework For example, Iacovou et al (1995) found that three major determinants influenced EDI adoption in the small business context These determinants are organizational readiness, external pressure, and perceived benefits The organizational readiness belongs to the organizational context in the TOE framework, while the external pressure is a factor in the environmental context

in the TOE framework The idea of perceived benefits refers to the level of recognition of the relative advantage that an EDI technology can provide to the

organization Therefore, the concept of perceived benefits is part of the technical context in the TOE framework.

Table 2.1 summarizes the relevant studies based on TOE framework The TOE framework can be used to study adoption of general technological innovations,

as well as innovation in specific field

Table 2.1: Previous studies using the TOE framework in investigation of the adoption of technological innovations

Chau and Tam (1997) Open system Technology: perceived benefits;

perceived barriers; perceived importance

of compliance to standards, interoperability, and interconnectivity

Organization: complexity of IT infrastructure; satisfaction with existing systems; formalization on system development and management

Environment: market uncertainty

Zhu et al (2003) E-business Technology: technology competence

Organization: firm scope; firm size

Environment: consumer readiness; competitive pressure; lack of trading partner readiness

Zhu et al (2003) E-business Technology: technology readiness;

regulatory environmentZhu et al (2006) E-business Technology: relative advantage;

compatibility, costs and security concern

Organization: technology competency; organizational size

Environment: competitive intensity; partner readiness

Gibbs and Kraemer E-commerce Technology: technology resources

organizational compatibility; financial resources; firm size

Environment: external pressure; government promotion; legislation barriers

Kuan and Chau EDI Technology: perceived direct benefits;

Organization: perceived financial cost; perceived technical competence

Environment: perceived industry pressure; perceived government pressure

Zhang et al IT usage Technology: IT infrastructure

Environment:e-government; government regulation and promotion

Xu et al Internet Technology: technology competence

This article will follow Chieh-Yu model to investigate the influence of main determinants which belong to technological, organizational and environmental characteristics on the adoption of technological innovations by Vietnam’s logistics service providers

A wide range of factors has been found in the literature Instead of repeating them, we choose to focus on a few factors that are believed to be important in understanding and explaining innovation adoption in logistics industry The research model was proposed as shown in Figure 2.2 It is desirable to use adoption

as the dependent variable in our study

The model of this research consists of six determinants (two determinants are selected to study for each characteristic in TOE framework as discussed earlier) based on Chieh-Yu’s model that are hypothesized to have a direct effect on firm adoption of technological innovation

Technological characteristic

The technological characteristics refer to the technologies relevant to the firm This includes the existing technologies, as well as the emerging technologies relevant to the firm (Yu-Min et al, 2010) Technologies can be considered as one kind of knowledge (Grant, 1996) Tsai and Ghoshal (1998) found that an organization will have higher innovative capability when knowledge can be

distributed easily within the organization

In term of specific characteristics of technology, Zhu et al (2003) identified technology competence as a main factor in E-business industry However, until

2006, Zhu et al pointed out that technology readiness and technology integration most influence adoption of innovation diffusion

Chieh-Yu’s theoretical foundation bases on transferability and accumulation

of technology from previous studies Firstly, he supposed that transferability ( in this case it is determined by the explicitness of technology) has a strong effect on technological knowledge adopted by organization Secondly, according to Tornatzky and Fleischer (1990), how the technology fits with the technologies that a firm already possesses will also be another important technological characteristic Teece (1996) found that technological innovation usually follows a technological paradigm The cumulative nature of technologies will influence the innovation in technologies Grant (1996) and Simonin (1999) also concluded that an organization with rich experiences in the application or adoption of related technologies will have higher adoption in technological innovation

Therefore, this article would expect that explicitness and accumulation of logistics technology might impact on technological innovation adoption

Hypothesis H1: The explicitness of technology has a positive effect on

technological innovation adoption by Vietnam’s logistics service providers

Hypothesis H2: The accumulation of technology has a positive effect on

technological innovation adoption by Vietnam’s logistics service providers

Organizational characteristics

The organizational characteristics describe the characteristics of an organization Common organizational characteristics include firm size, degree of centralization, formalization, complexity of its managerial structure, the quality of its human resources, and the amount of slack resources available internally (Tornatzky and Fleischer, 1990; Chau and Tam, 1997) Organizational

characteristics can constrain or facilitate the adoption and implementation of technological innovation

Before that, Roger (1983) emphasized three groups of adoption predictors relating to organizational characteristics: leader characteristics, internal characteristics and external characteristics of the organization

Zhu et al (2006) identified managerial obstacles as a determinant which influences adoption decision

According to previous studies, Chieh-Yu (2006) found that a firm with higher encouragement from leader board as well as higher quality of human resources will have higher adoption in technological innovation

In actual, higher encouragement from top management is an important factor

in the adoption of innovation and has been found to be positively related to adoption Organizational encouragement can provide a vision, support, and a commitment to create a positive environment for innovation This encouragement also can send signals to various parts of the organizations about the importance of the innovation (Yu-Min, 2010) Likewise, quality of human resource is considered

as main factor to encourage the adoption When employees possess abilities to understand and apply easily the innovative technologies, firms itself is more willing

to adopt the innovation

To summarize, we also would expect that organizational encouragement and quality of human resources might influence technological innovation adoption

Hypothesis H3: The organization encouragement has a positive effect on

technological innovation adoption by Vietnam’s logistics service providers

Hypothesis H4: The quality of human resource has a positive effect on

technological innovation adoption by Vietnam’s logistics service providers

Environmental characteristics

In addition to technological and organizational characteristics, the external environment in which a firm conducts its business will also influence the innovative capability (King and Anderson, 1995)

Miles and Snow (1978) found that organizations would pay more attention

on innovation when they face environments that are vulnerable to instability and chaos Kimberly and Evanisko (1981) concluded that environmental complexity and uncertainty would influence organizational innovation in the case of hospitals Damanpour (1991) found that environments with high uncertainties would have a positive influence on the relationship between organizational structures and organizational innovation Zhu and Weyant (2003) suggest that demand uncertainty tends to increase a firm’s incentive to adopt new technologies

It is clear that environmental uncertainty has been identified as an important determinant of innovation adoption When the competition increases in the market, the firms feel the need to seek competitive advantage through innovation

Provision of government support is another important environmental aspect that bears on technological innovation The government can both encourage and discourage the adoption of innovation in the administration of regulatory mechanisms (Tornatzky and Fleischer, 1990; Scupola, 2003) The government can provide financial incentives, pilot projects and tax breaks to stimulate technological innovation for logistics service providers

Therefore, environmental uncertainty and governmental support can be expected to influence technological innovations

Hypothesis H5: The government support has a positive effect on technological

innovation adoption for Vietnam’s logistics service providers

Hypothesis H6: The environmental uncertainty has a positive effect on

technological innovation adoption for Vietnam’s logistics service providers

Figure 2.2: Research model

H6 H5 H4

H1

H2

Adoption of technological innovation

CHAPTER 3 METHODOLOGY

Chapter 3 describes methodology that uses to examine the measurement scales of concepts and verify research model and hypotheses given

3.1 RESEARCH PROCESS

This research process included two phases The first phase is the pilotresearch and the second phase is the main research The pilot research wasconducted by using the qualitative method The main research used the quantitative method

The pilot research was conducted in February 2011 that used the qualitativemethod , through interviewing directly with seven different logistics service providers in Ho Chi Minh, in order to check the content and meaning of words which were used in the measurement scales

After the pilot research, the main research based on quantitative method was conducted with 150 logistics service providers by qualitative technique throughinterview directly The reason is to verify the measurement model, research model and test the hypotheses The colletected data was tested by Reliability analysis (Delete low-item total correlation item which is lower than 0.30 and items made Cronback alpha lower than 0.60) , Exploratory Factor Analysis (EFA) (Deleted items with low loading factor lower than 0.50) Then, the hypotheses were tested by the linear regression analysis

Figure 3.1 : Process of research

3.2 THE MEASUREMENT SCALES

This research applies the principal construct measures inherited by Chieh-Yu (2006) in the current environment of logistics service providers in Vietnam The survey consists 2 main parts: the first part relates to company’s information, while the second part contains innovation adoption, technological characteristics, organizational characteristics and environmental characteristics There are totally 25 items in the questionnaire survey Besides, the company’s information, the other items were measured using the five-point Likert scales anchored by “strongly disagree” and “strongly agree”

As discussed in chapter 2, there are seven constructs in the theoretical model There are: adoption of technological innovation, explicitness of technology, accumulation of technology, organizational encourage, quality of human resource, governmental support and environmental uncertainty

All measurement items of each construct is employed from the research of Chieh-Yu (2006)

Literature review

(Technological innovation adoption, TOE

framework, research model, hypothesis)

Test the Hypothesis

Final Measurement

3.2.1 Adoption of innovation

This variable includes two measurement items coded from AI1 to AI2

The willingness to innovate or acquire new technologies AI1

3.2.2 Explicitness of technology

This variable includes four measurement items coded from ET1 to ET4

It is easy to find books or other resources about the technology ET1

It is easy to learn the application of the technology from the books ET3

It does not need too many experiences to learn the technology ET4

3.2.3 Accumulation of technology

This variable contains three measurement items coded from AT1 to AT3

Our company has implemented many related technologies AT1

It is necessary to have experiences in using related technologies AT2

It is easy to integrate that technology with company’s current logistics system AT3

3.2.4 Organizational encouragement

This variable employs four measurement items coded from OE1 to OE4

Company’s leaders encourage employees to learn new information OE1Our company provides supports for employees to learn new information OE2Company’s leaders can help employees when they face new problems OE3Our Company provides rewards for innovative employees OE4

3.2.5 Quality of human resource

This variable consists of four items coded from QH1 to QH4

Employees possess abilities to use technologies to solve problems QH1

3.2.6 Governmental support

This variable contains four items coded from GS1 to GS4

Government helps training manpower with logistics skills GS1Government encourages companies to propose projects of logistics

This variable includes four items coded from EU1 to EU4

3.3 THE PILOT RESEARCH

As discussed in chapter 2, the measurses of concepts in this research had been tested in many previous researches Therefore, it was considered that the pilot

modify to be suitable with the context of logistics services providers in Vietnam

The questionnaire was initially designed in English The translation was supported by professional translator to ensure the accuracy of its meaning and content The original English version was translated into Vietnamese and then was translated back into English by another The original and back-translated English versions of the questionnaire were compared to ensure the equivalence of meaning

of the items, and were refined if necessary The questionaire in Vietnamese is illustrated in the appendix 1 The article uses the questionnaires with thisVietnamese translation in order to conduct survey

The pilot research was conducted in Ho Chi Minh using the qualitative method by directly interviewing seven independent providers, in order to test thewords used in the measurement scales (unable to understand, difficult to answer or not, etc)

In conclusion, the pilot research results would help to eliminate possibleweaknesses and flaws The pilot showed that the questionnaires were clear and easily understood by interviewees However, some translation should be corrected

to be better understood and suitable for Vietnam’s context For example, the term

“our company” in the original questions should be eliminated the word “our” and translated to “the company” only, because the interviewee can understand that the questionnaires are mentioning about their firm Then, the final questionnaire would

be used in the main research

The pilot research result

The logistics services providers who were interviewed about adoption of technological innovation, explicitness of technology, accumulation of technology, organizational encouragement , quality of human resource, governmental support and environmental uncertainty , well understood the content and the meaning of each statement of the measurement scales Thus, these measurement scales were officially used in the main research

3.4 THE MAIN RESEARCH

3.4.1 Sampling

Firstly, the population of the study needs to be identified “A population was

a group of potential participants to whom you want to generalize the results of a study” (Salkind 2006) Or a population could be defined as including all people or items with the characteristic one wishes to understand This study focuses on logistics service providers to investigate the determinants of technological innovation adoption Therefore, the population of this research is logistics service providers

Generally, logistics service providers are companies which carry out logistics activities for their customers Logistics activities associated with logistics service providers include warehousing, transportation, inventory management, order processing and packaging (Sink, Langley and Gibson, 1996; Delfmann et al., 2002)

In some conditions we couldn’t access all the units of the population because

it could waste a lot of time, or some others factors that constraint our efforts In this case, a sample was a good solution, sample was defined as a small percentage of a population Sample is a subset of a population (Salkind 2006)

The second step in the sampling process is to choose the sample frame The sample frame is drawn from the relationship between author and logistics service providers in Ho Chi Minh regions where the development of logistics service providers in this region are more mature than in other regions in Vietnam Via the Internet, we also searched several companies, whose business model conforming to the logistics services

The third step is to identify the sampling method for this research According

to the Salkind (2006), two general sampling strategies are probability and probability In this study, the non-probability method was selected due to the elements in the population do not have a known or predetermined chance of being selected as subjects This means that the findings from the study of the sample cannot be confidently generalized to the population When time or other factors

non-rather generalisabilty become critical, non-probability sampling is generally used (Canava et al 2001) There are two main types of non-probability sampling designs: convenience sampling and purposive sampling Convenience sampling is the least reliable of all sampling designs in terms of generalisability, but sometimes it may be the only viable alternative when quick and timely information is needed, or for exploratory research purposes (Canava et al 2001) Therefore, convenient sampling

is used for this research

In order to adapt to the sample size criterias above, the sample size research targeted in this research was from 125 upwards

This questionnaire delivery has been selected as the main method in

obtaining the primary data because it is relatively inexpensive, easy to administer and the identity of the respondents will remain anonymous (Chieh-Yu et al, 2008)

In order to get a higher rate of response, we also personally administered questionnaires to some logistics companies Their addresses were acquired the sample frame as indicated above

3.4.4 Data collection and analysis

The main research was conducted with 150 logistics service providers through qualitative technique

The collected data from the main research was analysed by using SPSS 17software (Descriptive Statistics, Reliability analysis, Correlation analysis,Exploratory Factor Analysis (EFA), the linear regression analysis) The purpose is

to verify the scales to measure the constructs, to test the research model and thehypotheses

CHAPTER 4 RESEARCH RESULT AND FINDING DISSCUSSION

4.1 Descriptive statistics of sanple

4.1.1 Final sample

There was 170 logistics service providers who were mailed/delivered to answer the questionnaires In total, 150 completed questionnaires were returned The missing rate is 11.76% However, of these responses, all 150 questionnaires were useable The analyses reported in this chapter had been conducted on the final sample of 150 responses The useable response rate to the research interview was therefore 100 percent

Table 4.1 : Case Processing Summary

Case Processing Summary