Ecommerce Support And Maintenance Frequency

Published Date: 02 Nov 2017

4.0 Introduction

Reliability according to classical test theory, any score obtained by a measuring instrument (the observed score) is composed of both the "true" score, which is unknown, and "error" in the measurement process. The true score is essentially the score that a person would have received if the measurement were perfectly accurate. The process of developing and validating an instrument is in large part focused on reducing error in the measurement process. According to Crocker and Algina, the test developer has a responsibility to "identify the sources of measurement error that would be most detrimental to useful score interpretation and design a reliability study that permits such errors to occur so that their effects can be assessed. Pretesting or pilot testing an instrument allows for the identification of such sources. Refinement of the instrument then focuses on minimizing measurement error. In this chapter, the author will critically analyze the data collected from 118 respondents and tabulate his findings accordingly.

4.1 Description of the Respondents’ Profile

4.1.1 Types of Business

The total number of respondents was 118 and the demographic profile of the respondents is shown in table 4.1.1a. Out of the total sample investigated, majority of the business sector, approximately 20%, were involving in wholesale activities and the second highest respondents were followed by F&B and retails, which representing 19.5% respectively. The remaining business sectors that represented in the sample were involved in transportation for 16.9%, professional for 14.4% and Tourist and leisure services for 9.3% respectively. Out of which, most of the company (32.2%) has been established in the market in five to eight years. Total of 16% of the entrepreneur just started its businesses in the market with less than four years. The longest business establishment are those companies in the market for more than twelve years. This group representing 24% of the entire samples collected. Table 4.1.1b is also showing that 43% of the respondents are private limited (Sdn Bhd) and it follows by partnership for 31.4% and lastly sole proprietor for 25.4%.

4.1.2 Position

Despite the survey form purposely addressed to the owner or manager of the company, however most of the sample collected are filled up by middle level manager which representing 52% of the group. There were approximately 37% of the respondents are returned by higher manager or owners of the company. Part of the reason could be due to the decision maker is lacking of time to initiate the feedback in view of their busy schedule and more time being allocated on the direction and business activity of the company. The author is in his opinions that the survey is showing a good mixture of demographic as the author is able to obtain moderate feedback from different position in the company.

4.1.3 E-commerce Usage

Table 4.1.3a is showing the type of E-commerce applications that currently used by the company. Of which, approximately 21% of the group is still remains in conventional way of doing business and yet to implement any E-commerce application. The survey is also showing that most of the company using website (20.3%) and E-catalogue (16.9%) to publish the company's information and product via Internet. Approximately 15% of the company is leveraging the online capabilities to provide enquiries or support services to its consumers and very low percentile of the company (9.3%) is providing online payment and purchase facilities to its clients or suppliers. It could be due to the low level of trust and confidence of the entrepreneurs towards online payment capabilities. With the low level of trust on online payment facilities, the company would rather stay with the conventional way of doing business. Other reasons of low usage of online payment facilities would be transaction fees or cost that incurred within or facing difficulty in managing internal process. Furthermore, the result is also showing minimal of suppliers in the market currently adopting e-commerce. It was reflected in the table 4.1.3a where majority of the respondents revealed that small group of suppliers that are currently applying E-commerce for the business to business (B2B) and high percentile of the suppliers, representing 50.8%, are still remain in conventional way of doing businesses.

4.1.4 E-commerce Support and Maintenance Frequency

In terms of E-commerce system support, 49.2% of the company responded that the firm is employing external vendor to provide system maintenance for its E-commerce application. Please see table 4.1.4a for the summary. Only 25% of them are having its own internal IT department to support the system. It could be due to the company's strategy to avoid fix costing and hence opting for external help. The other possible reason is the company facing difficulty to employ skills and knowledgeable staff from the market or even if any, higher salaries may incurred. Table 4.1.4b is also showing that most of the company, approximately 40%, is maintaining its E-commerce application on yearly basis. It follows by 24.6% on quarterly, and lastly 22.9% on monthly. The data is showing that the company does not seems to having rely much on the E-commerce application in view that yearly maintenance is consider rather long period occurrence in the IT practices. System maintenance on reasonable periodically manner is necessary as the company can update the firm's information and latest product offered in the market and it help to boost the confidence level of its clients. Furthermore, periodical system maintenance will ensure its security software is up to date. It is to avoid potential cybercrime on the company’s data being stolen or client's personal information within the organization being pinched by cybercriminal. Furthermore, undesired situation such as service interruption that caused by poor system maintenance would led to bad customer experience and subsequently affect company’s reputation and consumers’ confidence level. The author is in opines that higher cost of maintenance support charging by external vendor served part of the possible reason that hinders the company to proceed with on-going system maintenance.

4.2 Reliability Test Result

Reliability is concerned with the ability of an instrument to measure consistently. It should be noted that the reliability of an instrument is closely associated with its validity. An instrument cannot be valid unless it is reliable. Reliability analysis was conducted on piloted survey instruments prior to official data collection as per preceding discussion. According to Nunnally and Bernstein (1994) who stated that one should strive for reliability values of 0.70 or higher and the higher the reliability value the more reliable the measure. In overall, the results seem at satisfaction level where the listed variables are above 0.70. As per table 4.2a, the organization factor which consists of 5 items were showing alpha at 0.912, Financial factor (5 items) with alpha at 0.910, Technical (5 items) at 0.924, Environment (5 items) at 0.908, and lastly E-commerce adoption (5 items) at 0.736. Generally, the technical factor is appearing as the highest scoring comparing with other variables where e-commerce adoption is showing at moderate reliability level.

4.3 Correlation Test Result

A correlation coefficient is a statistical measure of co-variation, or association between two at least internal variables. It measures the strength and direction of a relationship between variables. The correlation coefficient, r, ranges from -1.0 to +1.0. If the value of r equals +1.0, a perfect positive relationship exists. If the value of r equals -1.0, a perfect negative relationship exists. At the other extreme, an r of zero implies an absence of a correlation. There are many interpretations but Pallant (2007:132) suggests that correlation results can be interpreted as follows:

r = 0.10 to 0.29 small correlation

r = 0.30 to 0.49 medium correlation

r = 0.50 to 1.00 high correlation

The table 4.3a has displayed a medium positive correlation between ‘Organization, Technology, Finance and Environment’ as to the adoption of E-commerce. Hence, it is likely to summarize as followings:

There is a medium positive correlation between Organization and E-commerce Adoption with the Pearson r-value of +.453

There is a medium positive correlation between Technology and E-commerce Adoption with the Pearson r-value of +.400

There is a medium positive correlation between Financial and E-commerce adoption with the Pearson r-value of +.436

There is a medium positive correlation between Environment and E-commerce adoption with the Pearson r-value of +.428

4.4 Result of the Hypothesis Test

The hypothesis test is aimed to determine whether each independent variable – Organization, Technology, Financial and Environment) has significant influenced towards the adoption of E-commerce in SME services industry. Multiple regression analysis concentrates on a model that has more than one independent variable and the independent variables are used to predict the dependent variable. The four identified predictors (Organization, Financial, Technology and Environment) are significant to predict the outcome of the dependent variable - E-commerce adoption. This is essential as the result of regression is an equation that represents the best prediction of dependent variable from several independent variables. To further assess the model, the adjusted R-Square test was utilized to determine the proportion of mean variance of the dependent variable that is explained by the independent variables. The result of adjusted R-Square (0.765) as shown in table 4.4b indicates a strong predictive power of independent variables on the dependent variable.

Furthermore, as shows in table 4.4c, the result of coefficients indicate that all factors (Organization, Financial, Technology and Environment) have significant influence (p< 0.05) towards e-commerce adoption with high beta of 0.433, 0.479, 0.406 and 0.468 respectively. As for the interpretation, the test indicates that organization, technology, financial and environment have significant influence towards the e-commerce adoption of SMEs in services industry. By examining the t statistic for all the independent variables, it also apparently confirmed that these variables have significant relationship due to strong significant level (p < 0.05) with e-commerce adoption. Hence, it is likely to state that the following hypothesis can be accepted:

Organization factor has strong relationship towards E-commerce adoption in SME services industry at significant level of p = [.000] < 0.05 and null hypothesis to be rejected.

Technology factor has strong relationship towards E-commerce adoption in SME services industry at significant level of p = [.000] < 0.05 and null hypothesis to be rejected.

Financial factor has strong relationship towards E-commerce adoption in SME services industry at significant level of p = [.000] < 0.05 and null hypothesis to be rejected.

Environment factor has strong relationship towards E-commerce adoption in SME services industry at significant level of p = [.000] < 0.05 and null hypothesis to be rejected.

4.5 Model Specification

4.6 Discussion of the Finding

In this research, the results showed that adoption factors such as organization, technology, financial and environment are positively related to e-commerce adoption and organization factor is having the highest ranking with beta of xxxx. It follows by the environment factor with beta of xxx, the technology factor with beta of xxx and lastly, the financial factor with beta of xxx. The findings have made a contribution in terms of creating an understanding of which factors has influenced the adoption of e-commerce among SMEs services industry in Klang Valley Malaysia and the results are consistent with the previous research outcome.

4.6.1 Organization

Of the factors significantly associated with E-commerce adoption, the one with the highest score is Organization factor. The organization factor is inclusive of support from top management and their characteristic and knowledge towards ICT, the perceived of benefit and availability of skills staff within the organization. Top management support is generally found to be a strong influence both on adoption of technologies and as the CEO or higher management usually owns the decision making power to determine the direction of the company. The managements’ belief about the benefits of electronic commerce compels them to spend time and resources in the establishment processes, and activities which would promote business environment. The degree of relative advantage is often expressed in terms of profitability, cost reduction or transaction acceleration. As suggested by Lubbe et al (2003), the adoption of e-commerce relies heavily on the acceptance of the technology by the business owners. Their characteristics and knowledge of information technologies possessed by managers have a positive effect on the adoption of E-commerce as the commitment and perceived of usefulness of the technology will create a conductive environment within the firm to smoothly implement and adopting the new process of the technology. A similar study in Malaysia by Alam (2009) to 272 companies in manufacturing sector and 96 service oriented SME companies in Klang Valley, Malaysia which discovered that organization culture (including its readiness) and perceived benefit have significantly influenced the internet adoption. Hence, the vision shaping and development of strategic plans would heavily lie among the combination of both. Furthermore, it is very important for organization to determine its employee’s knowledge or skills of ICT because those knowledge or previous experiences may influence organization in adopting new technology. Small business owner or managers are unlikely to adopt more sophisticated technologies if the company has limited employees with technical knowledge. It is not surprising as the lack of suitable technical staff with sufficient ICT expertise represent one of the strongest inhibiting factors for small firm to implement new system application. It was supported by Allison (1999) where a skilled and knowledgeable work force was closely linked with the successful implementation of technology. Human and technology resources play a very important role in the adoption of electronic commerce especially in the case of SMEs.

4.6.2 Environment

Secondly, external pressure such as pressure from business trading partners is one of the important predictor that has positive influence on adoption of E-commerce. The business owner may perceive the technology as a waste of resources if there are limited trading partners utilizing IT in doing business. Prior literature is suggested that industry sector tends to show its interest in adopting new technology if the competitors and trading partners or a whole industry are adopting e-commerce. The above survey by the respondents shown that minority of the suppliers is currently applying E-commerce technology and majority of them still assumed the conventional way of doing businesses. It also explains that the lacking of pressure from its trading partners in SME services industry to adopt new technology and it could be a factor that hindering the adoption of E-commerce.

Consumers are another form of influencing factor that contributing to the future direction of electronic commerce. Each consumer that visits an e-commerce website has different needs and intention. Whether it is just to search for information about certain product or purchase the product that fulfills their needs. Consumers act and behave in a different way when engaging in business actions, which involve different trading atmosphere. The behavioral patterns and intention differs in conventional business activities (purchasing from physically located stores) and online business activities (purchasing from internet merchant). Hence, consumers possessed the power to decide which online business will emerge as the top player in the market and which will face its downfall.

The Government could play a significant role in driving e-commerce adoption through the industry. Its principal role is to ensure the provision of an adequate infrastructure, enabling industry to function efficiently with minimum interference, while also assuring enough support equitably addressed. SMEs usually suffer from lack of information on available support and markets signal, including those for local and export markets. According to the survey conducted by ACCCIM in 2012 revealed that 22% or 212 respondents does not know the existence of SME Corp Malaysia whom is designated to play an active role in assisting Malaysian SMEs (ACCCIM, 2012). Hence, with more efficient flows of information, it will lead to more efficient and equitable markets. Furthermore, electronic commerce raises many issues regarding the application of existing regulations and issues such as tax law, commercial codes and consumer protection which have received a lot of attention. In many cases, these regulations need to be re-examined in light of the realities of electronic commerce. The formulation of regulations and tax structures will attracts more entrepreneurs in the markets to switch its existing conventional business models towards electronically.

4.6.3 Technology

The complexity of implementing a new application and ease of use is often the crucial determinant in adopting e-commerce. User friendly e-commerce systems usually can promote SMEs to adopt e-commerce much faster in their business operations. If the firm has to make minimal changes or adjustment for the new innovation, then there naturally will be less resistance to the adoption. Based on the percentile in the usage of E-commerce among SMEs services industry in Klang Valley region, it appears that SMEs tend to start E-commerce with the simplest technologies, for example, the use of web browsing or e-catalogue. Furthermore, the launch of an informational website and e-catalogue would represents a easiest move towards one to many communication and this communication suits the task of promotion, where the members of the target market may not yet be known individually and unreachable through conventional approach. The companies can market and sell products and services on a globally hence it levels the playing field by enabling any companies irrespective of size or location to participate and compete in the global market. Customers can browse through SMEs’ catalogue and email enquiries online with a 24 hour a day, 7 days a week. The order of adoption of e-commerce’s components is perhaps, driven more by a technological rationale than by conscious choice of where the greatest benefits would lie (Wilson et al, 2008). Hence, the complexity of new technology will determine the level of adoption in electronic commerce.

The establishment of competitive electronic infrastructure, standards and applications environment is essential for adoption and implementation of electronic commerce. Electronic infrastructure refers to computer hardware and software, servers, routers, and network technologies. The type, cost and availability of infrastructure significantly affect the adoption of electronic commerce as it supports the processes and activities. Faster and more reliable electronic communication increases SMEs adaptability to the changes in the market landscape, reducing in production cost and increase in economies of scale. Slow internet connection and data transfer discourages users in online trading. Hence, the decision to adopt a technology depends not only on what is available in the market, but also on how such technologies fit with the technologies that a firm already possesses.

Security is one of the most addressed issued in implementing trust mechanisms because the main concern about e-commerce is whether it is safe to conduct online transactions as to protect businesses from fatal blow to business. As the entrepreneur decided to move towards adopting online trading, the issues of online transaction security become more important. Online trading can lead to security threats, crime, loss of sensitive business information, harm to corporate or brand name reputation, and loss of privacy as hacker would able to retrieve information freely to pursue any agenda. According to the survey by The Associated Chinese Chambers of Commerce & Industry of Malaysia (ACCCIM), 30% of the respondents revealed that the main obstacle for adoption of electronic commerce are poor bandwidth, its cost and e-payment security concern.

4.6.4 Financial

Lastly, the lack of access to finance and budget constraint is relatively common issues for smaller firm to embark into new technology. Furthermore, financing institutions are usually not able to meet the SMEs need for seed money and investment capital to venture capital funding as well as carry out research and development. As a result, the entrepreneurs will have to source for funding through own saving or obtain borrowing from other relatives or illegal sources and adopting new technology such as electronic commerce becoming the least priority in view of the perceived return on investment is unpredictable. In this regards, it’s necessary for government to offer incentives or tax exemption to the targeted segment so that the SMEs in services industry can start doing business electronically with least burden. In addition to these regulations are those that continue to apply to communications. For e-commerce to function properly, cheap and easy access to information and communication technologies is need; conditions that increase their cost will slow the diffusion of e-commerce and place industries that use information technologies at a disadvantage.