Customers online purchasing intention_ an exploratory study on affecting factors in Vietnam

Attitude, Normative Beliefs and Usefulness were identified as three important factors influencing Vietnamese customer’s online purchasing intention... To master actual situation of onlin

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TRẦN THANH SƠN

CUSTOMER’S ONLINE PURCHASING

INTENTION: AN EXPLORATORY STUDY ON

AFFECTING FACTORS IN VIETNAM

THESIS OF MASTER OF BUSINESS ADMINISTRATION

HO CHI MINH CITY – 2013

AFFECTING FACTORS IN VIETNAM

Subject : Master of Business Administration

Code : 60.34.01.02

THESIS OF MASTER OF BUSINESS ADMINISTRATION

ADVISOR: DR TRẦN HÀ MINH QUÂN

HO CHI MINH CITY – 2013

For the successful completion of this thesis, I would like to show my sincere thanks to all those who have supported me during the time I conducted the study

First of all, I would like to express my deepest gratitude to my advisor,

Dr Tran Ha Minh Quan, for his generous and patient guidance to my thesis His inspiring advices are essential and valuable for me to finish this thesis The advisor is very knowledgeable, and nice to me all the time I feel very lucky appreciate him to give a chance to be his student

Secondly, I would like to extend my sincere thanks to respectful lecturers

of University of Economics Ho Chi Minh city, who have empowered me with considerably useful knowledge during the time I studied in University

Thirdly, I would like to send special thanks to my friends, students of the eMBA course of University of Economics Ho Chi Minh city for kindly helping

me collect useful information for the study Specially, Tran Cong Tan, he always encourages me when I have trouble duration of carrying out thesis

Fourly, I would like to send special thanks to Dang Huu Phuc for his strong support in the completion of the thesis

Lastly, I would like the send the most special thanks to my family, who always help me with so much love, care and encouragement

Although I have tried my best to complete my thesis, but errors could not

be avoided Therefore, I am looking forward to receiving the comments from respectful lectures and friends, so that my thesis could be more improved

Trần Thanh Sơn

Ho Chi Minh, December, 2013

COMMITMENT

I hereby would like to commit that the thesis, “Customers’ online purchasing

intention: an exploratory study on affecting factors in Vietnam”, was accomplished

based on my independent and serious studies and researches The data was collected

in reality and it has clear origins In addition to that, the data would be trust-worthily

handled and it has never been released in any menu

Trần Thanh Sơn

ABSTRACT

Vietnam has witnessed rapid development of Internet, in terms of infrastructure, users and internet-based services As for Vietnamese people, Internet gradually becomes a very important channel for shopping, introducing products and services, characterized by the surging numbers of online transactions It inspired the need to study the issues related to the intention of customers for online purchasing

The purpose of the thesis is to study the main factors influencing the intention of customers when they carry out the online shopping The study is based on the data which is collected through google document

Usefulness, Ease of Use and Security are three important factors influencing Vietnamese customer attitude as they purchase online Attitude, Normative Beliefs and Usefulness were identified as three important factors influencing Vietnamese customer’s online purchasing intention

Table of Content

ACKNOWLEDGEMENT i

COMMITMENT ii

ABSTRACT iii

LIST OF FIGURES vii

LIST OF TABLES viii

CHAPTER 1 INTRODUCTION TO THE STUDY 1

1.1 Research background 1

1.2 Problem statement 5

1.3 Research questions and research objectives 6

1.4 Significances of the research: 7

1.5 Research scope 7

1.6 Research structure 8

CHAPTER 2 LITERATURE REVIEW 9

2.1 E-commerce 9

2.2 Theory of Reasoned Action (TRA) 9

2.3 Theory of Planned Behavior (TPB) 11

2.4 Technology Acceptance Model (TAM) 12

2.5 Salient Beliefs of Usefulness and Ease of Use 14

2.6 Salient Beliefs of Compatibility, Privacy and Security 14

2.7 Salient Beliefs Normative-Beliefs and Self-Efficacy 15

2.8 Research model 16

CHAPTER 3 RESEARCH METHODOLOGY 20

3.1 Research design 20

3.2 Pilot study 21

3.3 Measurement 21

3.4 Research sampling 23

3.4.1 Target population 23

3.4.2 Sample size 23

3.5 Collecting data 24

3.6 Data Cleaning 24

3.7 Methods of data analysis 25

3.7.1 Reliability assessment of measurement scales (Cronbach alpha) 25

3.7.2 Explore Factor Analysis (EFA) 26

3.7.3 Multi Linear Regression (MLR) 26

3.8 Summary 27

CHAPTER 4 RESULTS AND DISCUSION 28

4.1 Descriptions of sample 28

4.2 Reliability and validity of the measurement scale 30

4.2.1 Reliability testing (Cronbach Alpha) 30

4.2.2 Exploratory Factor Analysis 32

4.2.2.1 EFA implementation for independent variable 33

4.2.2.2 EFA implementation for dependent variable 35

4.3 The Modified Theoretical Framework and Hypotheses Restatement 35

4.3.1 The Modified Theoretical Framework 35

4.3.2 Hypotheses restatement 38

4.4 Research Hypothesis Testing 39

4.4.1 The first multiple regression analysis 39

4.4.2 The second multiple regression analysis 41

4.4.3 Results of testing the hypotheses 43

4.5 Summary 44

CHAPTER 5 CONCLUSION AND RECOMMENDATION 46

5.1 Discussion of Study Finding 46

5.2 Practical implication 47

5.3 Limitations and future research 48

LIST OF REFERENCE 50

APPENDIX 1 56

APPENDIX 2 65

APPENDIX 3 74

APPENDIX 4 80

LIST OF FIGURES

Figure 2.1 Theory of Reasoned Action from Davis, Bagozzi et Warshaw (1989) 10

Figure 2.2 Theory of planned behavior 12

Figure 2.3 Technology acceptance model (adopted from Davis, Bagozzi & Warshaw 1989) 13

Figure 2.4 Research Model 17

Figure 4.1 Modified theoretical framework 38

Figure 4.2 The updated research model 44

LIST OF TABLES

Table 3-1 Measurement scales of research 22

Table 4-1 Statistical summary of socio – demographic variables 29

Table 4-2 Cronbach alpha coefficients 31

Table 4-3.EFA implementation for independent variables 34

Table 4-4.Cronbach Alpha coefficient of 5 group 34

Table 4-5 EFA implementation for dependent variables 35

Table 4-6 Seven new factor in the research model 36

Table 4-7 Model Summary of first multiple linear regression 40

Table 4-8 ANOVA of first multiple linear regression 40

Table 4-9 Coefficient of independent variables in first multiple linear regression 40 Table 4-10 Model Summary of first multiple linear regression 41

Table 4-11 ANOVA of first multiple linear regression 42

Table 4-12 Coefficient of independent variables in first multiple linear regression42 Table 4-13 Summary of restatement hypotheses testing result 43

CHAPTER 1 INTRODUCTION TO THE STUDY

1.1 Research background

During these last few years, information and communication technology substantially increased the possibilities of playing, communicating and making transactions, etc (Singh 1996) Today Internet is not only a networking media, but also as transaction medium for consumers at global market in the world, and becomes dominant retailers in the future (Yulihasri et al 2011) The coming into being of Internet has been changing the traditional ways of purchasing goods of human beings The users have no longer been restricted by time and geographical factors They could actively buy the products and goods regardless of any time and location factors Internet has brought about news methods of communication and new ways of exchanging everyday information between people The ever increasing number of Internet users would also coincide with the development of online purchasing (Joines, Schere & Scheufele, 2003) Electronic commerce, normally known as E-commerce, involves of the buying and selling of product or services over electronic systems such

as the Internet and other computer networks A wide variety of commerce is conducted in this way, spurring and drawing on innovations in electronic funds transfer, supply chain management, Internet marketing, online transaction processing, electronic data interchange, inventory management systems, and automated data collection systems Modern E-commerce typically uses the World Wide Web at least at some point in the transaction's lifecycle, although it can circle a wider range of technologies such as e-mail as well E-commerce that is conducted between businesses is referred to as business-to-business or B2B B2B can be open

to all interested parties (e.g commodity exchange) or limited to specific, qualified participants (private electronic market) E-commerce that is conducted between businesses and consumers, on the other hand, is referred to as business-to-consumer or B2C This is the type of E-commerce conducted by companies such as Amazon.com The most necessary element of e-retail offers a direct interactive channel as well as no time definition, people and place

pre-Online shopping is the process whereby consumers directly buy goods or services from a seller in real-time, without an intermediary service, over the Internet Online shopping is a type of E-commerce used for business-to-business (B2B) and business-to-consumer (B2C) transactions Shopping on Internet becomes an alternative for consumers since it is more comfortable than conventional shopping which usually attributed with anxious, crowded, traffic jam, limited time, parking space and etc… ( Yulihasri et al 2011)

Using Internet for purchasing goods has become a key component of business strategies In principle, the internet can be used to facilitate purchase transactions among all kinds of actors: among consumers, among businesses, between businesses and consumers But by far the biggest and most successful area of application has been in the business-to-business domain In the business-to-consumer area, business development has been more concentrated on certain niche areas (Butler & Peppard 1998) Many of the sites run with a deficit or have even had to close down Especially

in connection with the sale of food and other products for daily use on the internet, there have been few breakthrough successes According to the U S Department of Commerce (2004, 2006a, 2006b, 2007) total retail e-commerce sales in 2007 were

$136 billion, an increase of 25.6% from the previous year and an amazing 207% increase compared to 2002 E-commerce sales as a percentage of total retail sales also continued to increase and, for 2007, were at 3.3% of total retail sales Despite the continued growth in e-commerce and the potential for future growth in E-commerce, companies have reported problems in attracting new customers and retaining existing ones (Devaraj, Fan & Kohli 2002) and face challenges in converting online visitors

to real purchasers (Chen 2003)

Purchasing intention is a psychological process of decision-making (Engel et al 1990) Consumers are motivated by the fulfillment of demands to search relevant information according to personal experience and the external environment They begin to evaluate and consider after accumulating a certain amount of information Finally, they make the decision on certain products after comparison and judgment

This is known as the “purchasing decision process” of consumers Purchasing intention is the probability of customer’s willingness to purchase (Dodds et al 1991) And the higher perceived value, the more purchasing intention Because of the rapid growth of the Internet and its use as a channel for shopping, today’s consumers are able to shop from anywhere at any time with just a few clicks of their fingers

In Viet Nam, E-commerce and the IT industry are given our fair share of attention and support Recent initiatives taken by the Vietnam government toward boosting this sector include the formation of the E-commerce Board, the introduction of a new Internet management decree, entering into the E-ASEAN Framework Agreement, and the lowering of Internet access charges

According to Vietnam NetCitizens report (Cimigo 2011), the number of Internet users in Vietnam accounted for 31% of the total population in 2010 The percentage

is similar to some other countries like China, the Philippines and Thailand Over the past few years, in comparison with other countries in the region, we have witnessed rapid development of Internet in Vietnam and Vietnam becomes a country whose Internet development ranked top of the world

Over 50% of urban population had their Internet connections in the urban areas (including 12 cities mentioned in Cimigo (2011)) According to information publicized in the Vietnam E-commerce report 2011 by Ministry of Industry and Commerce, 100% of surveyed enterprises were equipped with computers, 98% were connected with Internet with different ways, in which 89% had their broadband technology connections (ADSL) Over 81% of enterprises used e-mails in their business and manufacturing activities, the number was 96% for big enterprises and 80% for small and medium enterprises According to the survey, the percentage of enterprises accepted the bookings via e-mails accounted for 52% and the number was 15% for website-based bookings, the percentage of enterprises made the bookings via e-mails accounted for 53% and the number was 21% for website-based bookings The enterprises were also aware and paid much attention to the development and promotion of their images and products in the Internet environment by developing

their own websites; participating in e-commerce portals, social networks; advertising

in e-newspapers and famous searching engines like google.com, yahoo.com… Statistics showed that 38% of enterprises developed their own websites, 14% participated in e-commerce portals

Vietnamese users are becoming more familiar with online shopping activities provided by domestic and oversea websites Over the past few years, online shopping enjoys strongest growth rate in comparison with other businesses According to the Vietnam NetCitizens report carried out by Cimigo (2011), online shopping volume was doubled since 2007

Vietnamese customers are also more familiar with electronic payment systems, which is a very important factor of online shopping At the present moment, customers have many options to choose the electronic payment gateways when they purchase online Some payment gateways are highly trusted becoming popular, such

as NganLuong, BaoKim, VNPay, Payoo, OnePay… Thanks to the development of these electronic payment gateways, Vietnamese individuals and enterprises could easily develop Internet-based websites selling and buying products and services The selling process is automated in a higher level as transactions could be totally completed online, replacing the previous method in which the products are introduced

in the Internet and the cash is collected after the delivery of product

Many big foreign companies are looking for business opportunities in the commerce market of Vietnam Some of the big names in the world, such as Google, Alibaba, Rakuten, eBay and Amazon, quickly promote their appearance in the market In June 2012, Google became member of Vietnam E-commerce Association and had their plans to develop online shopping activities with other members They expected that they could earn 30 million USD per year in Vietnam market, in which their potential customers are small and medium-sized enterprises

e-The official representative of Alibaba was announced while eBay just bought 20% of Peacesoft Solution’s shares, who is the owner of the website chodientu.com Amazon already approached domestic e-commerce service providers to explore the

opportunities to buy the shares or become their partners This would be the catalyst for the development of Vietnam e-commerce

Although the number of Internet users is huge and ever increasing, the majority

of them only use Internet to look for information and communications (Cimigo 2011) Internet plays an important role in choosing and buying the products, but the trust is still low for online payment methods Buying Internet-based products is still not popular in Vietnam

The other obstacle is low awareness of Vietnamese people and the unfriendliness

of the social environment and business practices Although enterprises are very active

in applying information technology and e-commerce, more time spans and necessary steps are needed to achieve advanced business and consumption environment Online security and privacy is still not ensured It shows a fact that enterprises are aware of the importance of online security for the application of e-commerce

1.2 Problem statement

With the development for E–commerce, many products have sold Various goods, including books, CDs, DVDs, hobby-related goods, clothing items, event tickets, electronic goods, and even food items are being sold at online shops However, some people regularly make purchases at online shops, but some others do not, even if they regularly use the Internet Some consumers do not purchase goods

at online shops even when prices are low and orders are easy to submit The question about the reasons behind consumers’ reluctance to opt for online purchasing needs to concern of many To increase the understanding in this area, it’s very important to have a correct answer for the question To master actual situation of online shopping

in Vietnam, I study the thesis: “Customers’ online purchasing intention: an exploratory study on affecting factors in Vietnam” This study want to know the reasons, why the Vietnamese accept or refuse internet shopping application? And what are dominant factors that influence the customer to shop on internet in Vietnam The necessary to do is to identify the factors affecting customer’s purchasing intention in online environment in Vietnam Through the review of previous studies,

author used the paper “Factors that influence customers’ buying intention on shopping online” (Yulihasri et al.2011) as the key paper to refer In this paper, Yulihasri et al (2011) used model research from research of Vijayasarathy (2003) to investigate in Malaysia In theoretical framework of Vijayasarathy (2003), factors affecting customer’s online buying intention are usefulness, ease of use, compatibility, privacy, security, normative beliefs, self-efficacy, and attitude However, in Vietnam, what are factors that affect customer’s online purchasing intention, those are also similarly or not With this thesis, author would like to clarify these issues

1.3 Research questions and research objectives

In this study, author examines the factors affect online shopping in Vietnam The study aims at answering the below 2 research questions:

 Question 1: Which factors affects attitude and intention of Vietnamese customers when they purchase online?

 Question 2: How do these factors influence the attitude and intention of Vietnamese customers when they purchase online?

The research objectives of this study is conducted to identify factors influencing attitude and intention of customers towards online shopping in Vietnam It seeks to examine and understand whether factors such as usefulness, ease of use, compatibility, privacy, security, normative beliefs, self-efficacy, attitude influent customers’ purchase online intention The specific objectives are:

 To examine the relationship between usefulness and customer’s attitude

 To examine the relationship between ease of use and customer’s attitude

 To examine the relationship between compatibility and customer’s attitude

 To examine the relationship between privacy and customer’s attitude

 To examine the relationship between security and customer’s attitude

 To examine the relationship between usefulness and customer’s online purchasing intention

 To examine the relationship between normative beliefs and customer’s online purchasing intention

 To examine the relationship between self - efficacy and customer’s online purchasing intention

 To examine the relationship between attitude and online purchasing intention of customer

1.4 Significances of the research:

The results of the study are practically meaningful for e-commerce in Vietnam Assist managers and traders of Internet-based products/services to master the main factors influencing online shopping intention of Vietnamese customers This study helps e retailers adjust their e-retailing strategies by learning this research results The expectation of this study is to provide relevant results to the e-retail company to engage the customers to shop online and to help the sellers to keep their current customers and attract new potential ones

This study will also provide compulsory knowledge for people who are doing their e-commerce business in Vietnam, which is new and lack of official studies on this field in Vietnam

1.6 Research structure

Chapter 1: Introduction will provide the research background, problem statement, research questions objectives, significances of the research as well as research scope

Chapter 2: Literature review provides theoretical and empirical background and the hypothesized research model

Chapter 3: Methodology gives the methodologies the author use to conduct this research

Chapter 4: Results are conducted based on the collected data to test the hypotheses and answer the research questions

Chapter 5: Conclusion; author provides practical implication, and possible directions for future research

CHAPTER 2 LITERATURE REVIEW

This chapter presents the theories behind customer intention It will also discuss online purchasing intention of customer in order to identify influencing factors The

research framework and hypotheses will also be proposed in this chapter

2.1 E-commerce

Most creative technology that has reached a big impact at all of us is Internet innovation Yu and Abdulai (2000) mentioned that the most significant result of the rapid innovations in information and communication technology is electronic-commerce What is e-commerce? E-commerce basically refers to trade that takes place over the Internet where a buyer visits a seller’s web site, orders and makes the payment of the product over the internet and finally, goods are delivered physically

to the customers Anil (2000) said that electronic commerce is an important part of the growth of the Internet Brown, Pope and Voges (2003) mentioned that the key feature of e-retailing, the consumers is facilitated by information with regard to product attributes, comparative pricing, availability and overall value added According to Oinas (2002) internet retailing seems to be growing in all places on the world, including developing countries There were many changes taking place in the business in connection with the technological opportunities provided by the Internet which in the future it becomes the dominant shopping practically

2.2 Theory of Reasoned Action (TRA)

The Theory of Reasoned Action (TRA) is a model that finds its origins in the field of social psychology This model developed by Fishbein and Ajzen (1975) defines the links between beliefs, attitudes, norms, intentions, and behaviors of individuals According to this model, a person’s behavior is determined by its behavioral intention to perform it This intention is itself determined by the person’s attitudes and his subjective norms towards the behavior Fishbein and Ajzen (1975,

p 302) define the subjective norms as “the person’s perception that most people who

are important to him think he should or should not perform the behavior in question” (Fishbein & Ajzen 1975, p.302)

This theory can be summarized by the following equation:

Behavioral Intention = Attitude + Subjective norms

According to TRA, the attitude of a person towards a behavior is determined by his beliefs on the consequences of this behavior, multiplied by his evaluation of these consequences Beliefs are defined by the person’s subjective probability that performing a particular behavior will produce specific results This model therefore suggests that external stimuli influence attitudes by modifying the structure of the person’s beliefs Moreover, behavioral intention is also determined by the subjective norms that are themselves determined by the normative beliefs of an individual and

by his motivation to comply to the norms

Figure 2.1 Theory of Reasoned Action from Davis, Bagozzi et Warshaw (1989)

TRA also claims that all other factors which influence the behavior only do so in an indirect way by influencing the attitude or subjective norms Fishbein and Ajzen (1975) refer to these factors as being external variables These variables can be for example, the characteristics of the tasks, of the interface or of the user, the type of development implementation, the political influences, the organizational structure, etc (Davis, Bagozzi & Warshaw 1989) A meta-analysis on the application of the theory of reasoned action showed that the model can produce good predictions of

choices made by an individual when facing several alternatives (Sheppard, Hartwick

&Warshaw 1988)

2.3 Theory of Planned Behavior (TPB)

A center factor in Theory of Planned Behavior, TPB, (Ajzen 1985; Ajzen 1991)

is determined by individual intention to execute the behavior The intention is proposed to explain factors that influencing behavior TPB is an extension of the Theory of reasoned action According to the author, the need for this new model results from limitations on behaviors on which people had little control Ajzen added therefore a third element to his model, which according to him has an influence on a person’s intention to perform a behavior which he called perceived behavioral control Perceived behavioral control refers to readily available resources, skills, and opportunities as well as the person’s own perception towards the importance of achieving the results The concept of Perceived Behavioral Control is close to the concept of self-efficacy of Bandura (1982) Beliefs of an individual concerning his self-efficacy can have an influence on his choice of activities, his preparation for the activity and finally on the effort that he will exert during the activity in question Ajzen and Madden (1985) found that perception of control, like attitude towards the behavior and subjective norm can have an important impact on an individual’s behavioral motivation Perceived behavior control, the importance of behavior control, is self-evident and refers to people’s perception of the ease or difficulty performs the interest behavior (Ajzen & Madden 1985) According to the theory of planned behavior that the behavior is a joint function with intentions and perceived control behavioral The two perceptions and intention conduct behavior can make important contribution to behavior prediction Ajzen (1991) mentioned that the central factor in the TBP is the person’s intention to perform a behavior Intention is assumed to capture the motivational variables that influence a behavior They are indications of how hard people are willing to perform the behavior In addition, the stronger the intention to engage in a behavior, the more likely must be its performance

Figure 2.2 Theory of planned behavior 2.4 Technology Acceptance Model (TAM)

Based on the theory of reasoned Action, Davis (1989) developed the Technology Acceptance Model which deals more specifically with the prediction of the acceptability of an information system The purpose of this model is to predict the acceptability of a tool and to identify the modifications which must be brought to the system in order to make it acceptable to users A key purpose of TAM is to provide

a basis for tracing the impact of external factors on internal beliefs, attitude and intention, more TAM consist that two particular beliefs, perceived usefulness and perceived ease of use are primary relevance for computer acceptance behaviors, (Davis, Bagozzi & Warshaw 1989) Usefulness, ease of use is expected that they can

be influence individual’s attitude at using that system; they also explain difference intention to use that system

Perceived usefulness is defined as being the degree to which a person believes that the use of a system will improve his performance Perceived ease of use refers to the degree to which a person believes that the use of a system will be effortless Several factorial analyses demonstrated that perceived usefulness and perceived ease

of use can be considered as two different dimensions (Hauser & Shugan 1980; Larcker & Lessig 1980 )

As demonstrated in the Theory of Reasoned Action, the Technology Acceptance Model postulates that the use of an information system is determined by the behavioral intention, but on the other hand, that the behavioral intention is determined

by the person’s attitude towards the use of the system and also by his perception of its utility According to Davis, the attitude of an individual is not the only factor that determines his use of a system, but is also based on the impact which it may have on his performance Therefore, even if an employee does not welcome an information system, the probability that he will use it is high if he perceives that the system will improve his performance at work The Technology Acceptance Model also figures in

a harmony link between ease of use and usefulness, proposed individual’s perception how easy or difficult to use that system will influence their perception about usefulness of that system (Vijayasarathy 2003)

Vijayasarathy (2003) furthermore mentioned a set of variables in TAM possible for explaining technology adoption at work, where usage at the time of technology in most cases, compulsory its user, otherwise was compelled In good arrangement, felt usefulness and ease of use are good for possible dominant predictor

Figure 2.3 Technology acceptance model (adopted from Davis, Bagozzi &

Warshaw 1989)

2.5 Salient Beliefs of Usefulness and Ease of Use

According to Davis (1989) perceived ease of use also influences in a significant way the attitude of an individual through two main mechanisms: self-efficacy and instrumentality Self-efficacy is a concept developed by Bandura (1982) which explains that the more a system is easy to use, the greater should be the user’s sense

of efficacy Moreover, a tool that is easy to use will make the user feel that he has a control over what he is doing (Lepper 1982) Efficacy is one of the main factors underlying intrinsic motivation (Bandura 1982; Lepper 1982) and it is what illustrates here the direct link between perceived ease of use and attitude Perceived ease of use can also contribute in an instrumental way in improving a person’s performance Due

to the fact that the user will have to deploy less efforts with a tool that is easy to use,

he will be able to spare efforts to accomplish other tasks (Davis 1989)

It is however interesting to note that the research presented by Davis (1989) to validate his model, demonstrates that the link between the intention to use an information system and perceived usefulness is stronger than perceived ease of use

In other hand, usefulness was significantly more strongly associated to usage than was ease of use

Ramayah, Aafaqi and Jantan (2003) found perceived usefulness and perceived ease of use have significant impacts student’s acceptance and usage of course online among higher education institution student and when perceived ease of use and perceived usefulness are combined together was found that perceived usefulness acts

as partial mediator

2.6 Salient Beliefs of Compatibility, Privacy and Security

Chau and Hwa (2001) identified compatibility as a necessary factor for innovation adoption also included in the decomposed model The effect of compatibility on user technology acceptance decisions has been reported by many previous studies reported a strong relationship between compatibility and relative advantage Karyanni (2003) found also that compatibility was successful in distinguishing between Web shopper and non-shopper Anil (2000) explained that

Internet shopping activities often lead to several ways of processing personal data Protecting the privacy is very important and these personal data are used with care, required for legitimate purposes They were not disclosed to the wrong people and not processed without agreement of the person concerned Therefore, the processing

of personal data should be to deal with certain conditions Fatimah (2000) Ramayah, Dahlan, Teck and Aafaqi (2003) described that the major barrier to adoption of e-retail belief on the security and privacy issues Besides, the technology has to be improved, the users have to be convinced and guaranteed of their security and privacy for growing internet shopping

Security concerns are one of the main reasons why web users are not purchasing over the Internet Udo (2001) mentioned that, there is a close relationship between security and privacy While privacy is related to what a company purposely decides

to do with consumer data, security is concerned with any accidental comprises of consumer data to a third party (e.g.Hacker and identify thief) and Salim (2000) mentioned that we have to realize that in that future, the hackers are not from inside

the company but also it can be from outside or somewhere else where can not identify

Consumers’ privacy issues are not new and consumer have worried about how personal data are used by government and more recently by business Internet users

want to feel that their privacy are being protected The government must also protect

the privacy and security of consumers as one of the main roles it can contribute in growing internet shopping, Yu and Abdulai (2000)

2.7 Salient Beliefs Normative-Beliefs and Self-Efficacy

Ajzen (1991) mentioned normative-beliefs include three kinds of salient beliefs are distinguished: behavioral belief which are assumed to influence attitudes toward behavior, normative beliefs which constitute the underlying determinants of subjective norms and control beliefs which provide the basis for perceptions of behavioral control Budd (1985) found also personal normative-beliefs significantly contribute to the theory of reason’s predictive power, a variable which mediates the relationship between attitudes, subjective norm and intention

Psychologist Albert Bandura (1982) has defined self-efficacy as one's belief in one's ability to succeed in specific situations One's sense of self-efficacy can play a major role in how one approaches goals, tasks, and challenges According to Bandura's theory, people with high self-efficacy—that is, those who believe they can perform well—are more likely to view difficult tasks as something to be mastered rather than something to be avoided The Theory of Planned Behavior places the constructs of self-efficacy belief or perceived behavioral control within a more general frame work of the relations among beliefs, attitude, intention and behavior (Ajzen 1991) Self-efficacy is associated with beliefs and behaviors (Bandura 1986) Gist (1989) suggests that self-efficacy is an important motivational variable, which influences individual affect, effort persistence and motivation Self-efficacy has significant impact on decisions involving computer usage and adoption (Davis 1989)

2.8 Research model

The research model was adopted from Vijayasarathy (2003), because of two reasons:

 Firstly, this model is an extended TAM model (Vijayasarathy 2003)

 Secondly, in this model an integrated model of three models such as: TAM, theory of reasoned action (TRA) and TPB It indicates that in addition to the two salient beliefs that comprise the core TAM (usefulness and ease of use), three other beliefs should be relevant to shop on internet (compatibility, privacy and security) Furthermore, normative-beliefs, a key variable of TRA, and self-efficacy, which is an important component of TPB, are combined to provide a more complete set of factors that could show significant role in predicting customer’s intention to shop on line

This thesis is a replication research Author used research model of previous study, Vijayasarathy (2003) to investigate in Vietnam Theoretical framework of this research is as follows:

Figure 2.4 Research Model Usefulness: In the context of on-line shopping, usefulness is the extent to which

a consumer believes that on-line shopping will provide access to useful information, facilitate comparison shopping, and enable quicker shopping

Ease of use: Ease of use is defined as the extent to which a consumer believes

that on-line shopping is free of effort’

Compatibility: compatibility is defined as the extent to which a consumer

believes that shopping online fits/matches his/her lifestyle, needs, and shopping preference

Privacy: Privacy is defined as the extent to which a consumer believes that

shopping on line will not compromise his/ her privacy

H8H7

H9

Security: A consumer’s belief about security afforded on the Internet is

considered salient, since his/her comfort level with transmitting credit-card information is crucial for the consummation of an online retail transaction For this study, security is defined as the extent to which a consumer believes that making payments online is secure

Normative Beliefs: In this study, normative beliefs is defined as the extent to

which a consumer believes that people who are important to him/her would recommend that the consumer engage in online shopping

Self – Efficacy: In this research model, self – efficacy is defined as a consumers’

self – assessment of his/ her capabilities to shop online

Attitude: Attitude is defined as the extent to which a consumer likes online

shopping and considers it to be a good idea

Intention: Intention is defined as the extent to which a consumer’s intent to use online shopping

According to the proposed model and literature review, the following hypotheses are constructed in online shopping market in Vietnam:

 H1: There is a positive association between customers’ attitude towards online shopping and their beliefs about its usefulness

 H2: There is a positive association between customers’ attitude towards online shopping and their beliefs about its ease of use

 H3: There is a positive association between customers’ attitude towards online shopping and their beliefs about its compatibility

 H4: There is a positive association between customers’ attitude towards online shopping and their beliefs on privacy afforded by online shopping

 H5: There is a positive association between customers’ attitude towards online shopping and their beliefs about security of online shopping

 H6: There is a positive association between customers’ intention to use online shopping and their beliefs about its usefulness

 H7: There is a positive association between customers’ intention towards online shopping and their normative beliefs about it

 H8: There is a positive association between customers’ intention to use online shopping and their self-efficacy about using it

 H9: There is a positive association between customers’ intention to use online shopping and their attitude toward it

CHAPTER 3 RESEARCH METHODOLOGY

This chapter outlines the research methodology used to test the hypotheses developed in chapter two The content of this chapter includes: research design, pilot study, measurement, research sampling, collecting data, data cleaning, methods of data analysis and summary

3.1 Research design

This study is conducted in 2 stages: a qualitative study and the main study Firstly, in order to analyze consumers’ purchase intention in Vietnam Step 1 of pilot test was carried out by translating the questionnaire from the previous study into Vietnamese The previous study was performed in Malaysia The translation was performed independently by 2 people The purpose of this step is to check the content and meaning of words which were used in the measurement scales Based on the results, the draft questionnaire would be adjusted to prepare for the next step of pilot test

Step 2 is conducted using online survey method to test the clarity of the survey questions This survey with a small sample of about 20 interviewees to ensure that the content of the questions to be understood literally, the contents of the study The feedback and responses have been used to adjust again Based on the results, necessary adjustments were made and the final questionnaire could be completed for the main study in next step

After the pilot study, the main study was conducted using online survey method supported by Google Docs (online web-based survey at docs.google.com) The purposes of this study were to assess the measurement scales, to test the hypotheses and to confirm the proposed research model

With online survey, the respondent completed the questionnaire without assistance of an interviewer Online survey was selected as it proved to be an appropriate research method for this study It has several advantages over traditional surveys: not restricted to a particular geographical location, lower costs, faster

responses (Shankar et al 2003), more effective in identifying and seeking online shoppers (Szymanski & Hise 2000), and more interesting (Edmonson 1997)

3.2 Pilot study

When the translation of the questionnaire was completed, the pretest or called alpha test would be carried out with the participation of 2 people studying in the same MBA course who are experienced in online shopping The comments related to the translation of the questionnaire were mainly suggestions concerning words and phrases that make the translations better and the questions more understandable for Vietnamese respondents, e.g “Internet làm cho tôi mua hàng nhanh chóng” revised

to “Internet giúp tôi hoàn thành việc mua hàng nhanh chóng”, “Học sử dụng Internet cho việc mua sắm rất dễ đối với tôi” revised to “Tôi cảm thấy học sử dụng Internet cho việc mua sắm rất dễ”, “Sử dụng internet mua hàng rất bực mình.” revised to “Tôi cảm thấy khó chịu khi sử dụng Internet để mua hàng”…

After the revision finished, the author had the final draft questionnaire Author collected pilot data from 20 respondents via Google Docs The respondents were encouraged to make comments on any questions that they thought were ambiguous

or unclear Some minor wording modifications and measurement scales adjustments were made as a result of this process A final version of the questionnaires is in Appendix 1 of this study

3.3 Measurement

Author used questionnaire from previous study in Malaysia, Vijayasarathy (2003) Some adjustments were made to suit with the research environment in Vietnam The questionnaire consists of three sections The first part consisted of total

22 items divided into 9 groups: Usefulness, Ease of Use, Compatibility, Privacy, Security, Self Efficacy, Attitude, Intention, Normative Beliefs In this section, the respondents were asked to identify the extent to which they agree/disagree with the statements Each item was measured on seven-point Likert-type scales on which 1 represents “strongly disagree” and 7 represents “strongly agree” The second section investigates Internet usage of respondents such as: usage time, product/ service

bought through Internet, online payment The third section comprised of demographic questions such as: gender, age, marital status, income, education level The measurement scales are listed in Table 3.1 as below

Table 3-1 Measurement scales of research

Ease1 Learning to use the Internet for shopping was

(would be) easy for me

Ease2 I believe that Internet shopping is (will be)

cumbersome/ not very efficient

Ease3 Using the Internet for shopping is (will be)

Comp2 Using the Internet to shop fits (will fit) with my

6 Self Efficacy

Self1 I am (expect to become) proficient/be able in

using the Internet for shopping

Self2 I fell (would feel) confident that I can use the

Internet for shopping

9 Normative

Beliefs

Norm1 My Friends who are important to me and would

recommend that I use the Internet for shopping

Norm2 My Family who are important to me and would

recommend that I use the Internet for shopping

Norm3 My Colleague who are important to me and would

recommend that I use the Internet for shopping

3.4 Research sampling

3.4.1 Target population

The target population of this research is the customers who are used online accounts to shop online, take online services, people who have knowledge about e-commerce or shopping online and will used it in the future and have education level from High School to Doctor of Philosophy

3.4.2 Sample size

A data set is considered to be suitable for Exploratory Factor Analysis when the sample size should be at least 50, at best 100 and the observations: items rate

should be 5:1 (Hair et al 2006) It means that each item would require at least 5 observations

n > 100 samples and n=5k (with k = the number of variables) Thus, the minimum sample size required by EFA in this research is: 110

In addition, for standard multiple regression analysis, the required sample is recommended by Green (1991) is:

n > 50 + 8m (with m = number of independent variables) There are 7 independent variables in this research So the minimum sample required to run multiple regression in this study is: 106

So, the minimum sample size required for this study was 110

Therefore the total of 304 valid responses for sample size the author received

in this study was satisfied

3.5 Collecting data

As mentioned in the methodology section of the Chapter 1, the author used online survey tool of Google Docs (docs.google.com) in order to survey the research subjects The Google online survey allows respondents answering the questionnaire over the Internet There are some advantages of collecting data from Google Docs:

 The answers of the questionnaire would be automatically updated in the spreadsheet application of Google Docs in the form of encoded data, so that the errors of data inputting could be minimized

 Google online survey also enables interviewers to download the result of surveys in the Excel formatting (.xls, xlsx), so that the data analysis software could be easily used (e.g SPSS)

 In case the option “required” was formed in the questions raised by Google online survey, respondents would be asked if any answer was missed, so that the missing of questions would be avoided in the step of data cleaning

3.6 Data Cleaning

Thanks to online survey tool of Google Docs for collecting data of this study, the frequent errors of data cleaning could be avoided (e.g missing data, invalid inputting

data…) Web-based surveys require the least amount of data cleaning (Sue & Ritter 2007) All of questions were pre-defined multiple choices questions, where the respondents had to select the predefined answers Thus, data cleaning was mainly done for all questions The author also reviewed the reverse-scored questions to double check if they were logically answered Based on the evaluation criteria, the author eliminated 1 irrelevant received questionnaires, because the answers only responded with one single value for all questions Because the author put “required” option for all questions, the respondent could not submit the survey if all questions had not been fully answered, meaning there were no possible missing-answer response Finally, 304 usable responses were drawn from the total of 305 received responses

3.7 Methods of data analysis

Descriptive Statistic is the statistical technique that used in the analysis of this research After collecting responses of questionnaire, all analyses using SPSS version 20.0 For data processing, four statistical techniques were used for different purposes These included frequency, descriptive statistics, validity and reliability test, correlation analysis and multiple linear regression analysis

3.7.1 Reliability assessment of measurement scales (Cronbach alpha)

Reliability refers to the extent to which a scale produces consistent results if repeated measurements made (Malhotra 1996) Examining the internal consistency

or homogeneity among the items is the common measurement of reliability (Cooper & Schindler 2006) The Cronbach alpha reliability coefficient is traditionally reported in statistics as the measure of internal consistency of responses across the set of items (Schumacker & Lomax 2004) This method allowed the analyst to eliminate irrelevant variables and restrict junk variables in the scales For variables that the item-total correlations were higher or equivalent

to 30, they would be qualified (Nunnally & Bernstein 1994) According to Nunally & Bernstein, if the Cronbach alpha is bigger or equivalent to 60, the scale

is acceptably reliable Measurement scales would be considered good reliable if Cronbach alpha coefficient varies from 70 to 90

3.7.2 Explore Factor Analysis (EFA)

Content validity is used to assess the correspondence between individual items and the concept (Hair et al 2006) The objective is to ensure the selection of scale items include theoretical and practical considerations

Factor analysis is a multivariate statistical method whose primary purpose is

to define a structure within a set of observed variables It is an interdependence technique in which all variables are simultaneously considered (Hair et al 2006) According to Hair et al (2006), factor analysis techniques can be achieved from either an exploratory or confirmatory perspective Exploratory factor analysis is normally used when the underlying dimensions of a data set are unknown Confirmatory factor analysis is appropriate for theory building by testing hypotheses about the structure of a data set that has been formed by prior research After the reliability of the scale was evaluated by using the Cronbach alpha analysis, the author implemented the exploratory factor analysis (or shorted as EFA) to assess the validity of the scales and at the same time downsize and summarize the data The EFA method would help to identify the collection of variables necessary for the study matters and find out the relations between variables

3.7.3 Multi Linear Regression (MLR)

Multiple Linear Regression analysis will be used to test the hypotheses in this study Multiple regressions will determine the significant relationship between dependent and independent variables, the direction of the relationship, the degree

of the relationship and strength of the relationship (Sekaran 2006) In this study, it was employed with ENTER method to examine the influence of independent factors on specific dependent factor by carefully considering the weight of each

respondent variable Regression inputs were the scores of each scale, the score was computed by the mean value of observed variables in each scale

3.8 Summary

This chapter shows the research methodology used to test the hypotheses developed in chapter two The research was conducted in two main stages: pilot study and main study The pilot study used qualitative method to adjust the questionnaire from previous study in order to appropriate with research environment Main study was accomplished by quantitative method using online questionnaire The questionnaires were distributed via Google Docs to the research’s subjects There were total of 304 responses suitable for the research The author used Cronbach alpha’s coefficients and EFA to verify the reliability and validity of the measurement scales In addition, multiple linear regression analysis was the method using to test the proposed model and hypotheses of the research All data analyzing techniques

were processed by SPSS software (version 20.0)

CHAPTER 4 RESULTS AND DISCUSION

Chapter 4 gives an overview of the results from data processing This chapter will discuss about the analysis of data related to the evaluation of measurement scales, research model and hypotheses Data description presents an overview of respondent’s socio-demographic in this survey Next, author assess the reliability and validity of scale through Cronbach alpha coefficients and EFA (Exploratory Factor Analysis) method, testing the research model and hypotheses with correlation analysis and multi linear regression analysis SPSS software version 20.0 was the tool using for this data analyzing process

4.1 Descriptions of sample

The subject of this research are Vietnamese people who are used online accounts

to shop online, take online services regardless of their ages and geographical locations

or people who have knowledge about e-commerce or shopping online and will used

it in the future The respondents have education level from High School to Doctor of Philosophy

A total the 304 qualified respondents, 157 respondents (51.6%) were male, and

147 (48.4%) were female There are 5 age groups, most of respondents in age group

25 to 34 This group has 158 respondents (52%) The least groups, from 45 to 54, has

1 respondent (0.3%) In terms of educational level, most of respondents’ educational qualification was university graduation (54.9%) Master had 56 respondents (18.4%), Doctor of philosophy had 3 respondents (1%) Remain respondents (25.7%) are below university graduation In terms of month salary or income, most respondents (137 respondents) in the group has income less than 5 million VND (45.1%) 78 respondents (25.7%) are in “from 5 to 10 million VND” group Remain groups are 29.2% Detailed characteristics of the qualified samples are described in Table 4-1

Table 4-1 Statistical summary of socio – demographic variables

Socio – demographic Frequency Percentage (%) Gender

4.2 Reliability and validity of the measurement scale

In this study, the reliability and validity of the measurement scale which associated with customers’ online purchasing intention were evaluated by two methods: Cronbach alpha coefficient analysis and Exploratory Factor Analysis (EFA)

4.2.1 Reliability testing (Cronbach Alpha)

The Cronbach alpha was used to measure internal reliability by unit weighting items with salient loadings in a factor The coefficient helps to eliminate disqualified observed variables with regards to the reliability of the scale The measurement scales required the use of Cronbach alpha coefficient, in which junk variables could be dismissed before EFA method could be applied If this order is not respected, the junk variables could create fake factors For variables that the item-total correlation value is less than 30, they would be expelled Furthermore,

a measurement scale is considered good if the Cronbach alpha coefficient varies from 70 to 80 If the Cronbach alpha is bigger or equivalent to 60, the scale is acceptably reliable (Nunnally & Bernstein 1994)

The Cronbach alpha coefficients in Table 4-2 (see details in Appendix 2) shows that measurement scales are reliable except compatibility variable (shorted Comp) was measured by 2 items (Comp1, Comp2) had a Cronbach Alpha of 0.59

Author eliminates “Compatibility” variable because it’s Cronbach Alpha coefficients is low (less than 0.6), which had no sufficient reliable The corrected

item- total correlation values are satisfied (corrected item –total correlation values

of all items ≥ 30)

Customer’s online purchasing intention variable (shorted as intention) was measured by 3 items (Int1 to Int3) and had a Cronbach alpha of 913 Usefulness variable was measured by 3 items (Use1 to Use3) and had a Cronbach alpha of 822 Ease of use variable was measured by 3 items (Ease1 to Ease3) and had a Cronbach alpha of 762 Compatibility variable was measured by 2 items (Comp1