Ferrocarril del Ecuador y su Historia

E-commerce has evolved into several key models:

• Business to Customer (B2C): businesses provide goods or services to

customers, also called e-tailing;

• Business to Business (B2B): both partners in a transaction are organisations,

the majority in the private sector, referred to as e-procurement;

• Customer to Customer (C2C): consumers sell directly to other consumers; • Business to Business to Consumer (B2B2C): a business provides some

product or service to a client business that maintains its own customers;

• Consumer to Business (C2B): individuals use the Internet to sell products or

services to organisations or individuals; and

• Business to Employees (B2E): an organisation delivers services, information

or products to its individual employees (Turban et al. 2010, Schneider 2008, Laudon & Traver 2009).

The Internet and its enabling ICT are now the drivers of business systems and a decisive factor in business models, supplying applications to replace administrative systems in all disciplines and organisations, and providing a range of platforms to launch new products and services. It is clear that productivity is of prime importance as an outcome of IT use and provides a significant commercial advantage. Using ICT systems, synchronisation between organisational aspects increases productivity and meets

46 customers’ and the market’s requirements (Barrile & Cameron 2004). Further, e- commerce facilitates interactive communications between the sellers and buyers. Williams, Rice and Rogers (1988) defined interactivity as the degree to which participants in a communication process have control over, and can exchange roles in, their mutual discourse. Wells, Fuerst and Choobineh (1998) studied IT-assisted customer interaction. They found that an organisation can position its people, business processes, and information systems to establish and take advantage of this emerging paradigm by understanding the IT-enabled elements of customer interactions. Therefore, in a comparison of traditional and e-commerce business models, e-commerce enhances both the situation of an entity advertising its products and services, and a marketing environment where there are many sellers and buyers.

Before e-commerce, larger corporations alone had the resources to expand internationally. Online retailing is now an attractive and cost-effective means for start- ups or smaller firms to access new customers, and e-commerce business models offer competitive advantages for global producers and service providers (Malhotra & Malhotra 2006). The costs incurred establishing a system over the Internet is an important factor in the Internet model. Balboa Travel, Inc in the US estimated that, at the time, ‘setting up a small system can be about $US3,000, and a larger, more sophisticated system could cost close to $US100,000’ (Rodrigues 2002). (See Table 3.1 Comparison of computer-based and Internet-based technologies.)

Table 3.1: Comparison of computer-based and Internet-based technologies

Internet

(since the mid nineties)

Private Connections

(during the 80s and early 90s) Setting up costs <$US100,000 <$US3.5 million

=umber of transactions 4 million per month 83,000 per month

Per-transaction cost $US8 $US40

Competitive advantage Profitability and accessibility Booking Accuracy

Users All tourism stakeholders Providers, wholesalers and retailers

Establishment time 90 days 2 years

Area International International, sometimes national Sources: Rodrigues 2002, Holloway 1988, Internet Retailing 2008 (with calculations)

A key factor in e-commerce adoption is the removal of geographical boundaries. E-commerce across international borders simplifies trading between producers in one country and suppliers, dealers or agents elsewhere (Chen 2001). Internet trading allows

47 24-hour access of products or services, eliminating communications delays and leading to higher business transaction speed (Turban et al. 2010, Schneider 2008, Laudon & Traver 2009). Information is downloadable, conditions of sale clear and the transaction may be fully automated at the seller’s warehouse with shipping information, customers’ confirmations, and payment history readily available.

Productivity with e-commerce is enhanced within all organisations, private and public, through maximising sales or public services and minimising costs (Bu et al 2007, Chaffey 2002). A means of maximising sales and minimising costs is to maintain customers’ loyalty, and e-commerce offers this by the use of clear information to elicit trust and customer satisfaction (Srinivasana, Andersona & Ponnavolub 2002, Kassim & Abdullah 2008). Sales expertise, sales attitude and price fairness are all useful approaches to enhance customers’ trust and loyalty (Doong, Wang & Shih 2008). Product and service sites are enhanced by good customer relations’ the ability to promptly attend to individuals’ requests, and the availability to provide redress to maintain quality products. Trust and other loyalty factors are discussed below.

The advantages of e-commerce are sometimes peripheral to traditional business models, and this remains a challenge for company resources to maintain existing distribution channels whilst pursuing e-commerce growth. The e-commerce literature also raises issues regarding the use of e-commerce, such as that of a lack of relationships between manufacturers and suppliers, as the manufacturer supplies its products online (Benslimane, Plaisent & Bernard 2005). Purchasing from online shops raises issues of trust concerning fraud, privacy, security, payment, identity and contract and these points are particularly relevant to the research question (Shalhoub 2006, Kassim & Abdullah 2006, Alfuraih 2008, Pittayachawan & Singh 2004). There is also a price to pay by firms moving to e-commerce in losing experienced and knowledgeable staff, as more and more websites take the roles of employees (Abofara 2004, Rodrigues 2002). An issue raised through implementing e-commerce information systems is the risk of outsourcing (Bahli & Rivard 2005, Belcourt 2006). In a comment on service operations associated with e- commerce, Milligan and Hutcheson (2006, p.205) state that ‘outsourced consumer service operations can cost almost a third more than those retained in-house’. Arguably, small and medium enterprises cannot cope with the hidden costs of IT/IS outsourcing, such as the quality of support, and they have different intentions to participate in IT/IS

48 outsourcing (Rohde 2004). These issues of trust and cost are findings which impact planning and implementation strategies for e-commerce.

Not all businesses adopt e-commerce, some avoiding it completely whilst others use part of the infrastructure and, with time, increase their IT-based functionality (Sumner & Klepper 1998, McKay & Marshall 2004). However, progressive organisations accept the technology in its very early stages when it contribute to the organisation’s strategy and further benefits are expected from implementation (McKay & Marshall 2004). Theorists attempt to identify behaviours that lead to adoption or refusal of new technology (Davis 1989, Davis et al. 1989, Venkatesh, Morris, Davis & Davis 2003). Findings identify organisations that rely on the technology facilities as the acceptance driver, whilst others consider organisation or external technology readiness as the acceptance motivation factor (Roger 1962, Molla & Licker 2005, Kurnia 2007, Selim 2008). The following sections discuss relevant theories and findings on technology adoption.

3.3.

Culture and =ational Influences

As e-commerce is a global phenomenon, discussion regarding the forms of adoption of its technology should consider the socio-economic environment of each country (Shareef et al 2009). Corbitt (2003) argued that ‘E-business is a technical solution, but culture can challenge and differentiate that’ (p.14), implying that, without appropriate attention to social mores, the marketing channel may not connect with its intended audience. Kurnia (2007) argued that developed economies offer the tangible and intangible infrastructure that encourages the technology to thrive. This infrastructure is affected by the national culture (Png, Tan & Wee 2001). For example, in a culture where shopping is viewed as a leisure activity, e-commerce may be viewed as removing an opportunity to socialise (Boerhanoeddin 2002). Shareef et al. (2009) concurred: ‘the diffusion of (e-commerce) has multi-dimensional aspects, and the process of diffusion is controlled by cultural diversity’ (p.81).

Cultural differences are manifest in global trade and require careful managing to avoid pitfalls. Geertz (1973, p.89) defined culture as ‘an historically transmitted pattern of meanings embodied in symbols, a system in inherited conceptions expressed in symbolic forms by means of which individuals communicate, perpetuate, and develop

49 their knowledge about and attitudes toward life’. Hofstede (1980, p. 25), a key theorist of culture, defined culture as ‘the collective programming of the mind that distinguishes the members of one group or category of people from another’.

Whilst there are many conceptualisations of culture, Gallivan and Srite (2005) stressed the contribution of Hofstede. Ford, Connelly and Meister (2003) agreed, although they question the strength of the linkages. Hofstede’s cultural dimensions nevertheless form the ground for cross-cultural management and information system research. Cultural dimensions therefore impact the adoption of innovations such as e- commerce in a country, a position which is well documented in the literature. Hofstede’s five cultural dimensions are:

• power distance: the extent to which power inequality is acceptable to society; • individualism: individuals are more important than the groups to which they

belong, the reverse is collectivism;

• masculinity: focuses on the degree to which traditional gender roles are assigned

in a culture; the balance is influenced by femininity;

• uncertainty avoidance: the extent to which a culture values predictability and

these cultures have strong bureaucratic rules; and

• long-term orientation: how the group invests for future with commitment and

patience, balanced against a short-term orientation (Hofstede 1980).

Due to their strong relationship with technology adopters, Hofstede’s cultural dimensions are widely used in studying development and acceptance of information systems, (Tan et al. 1998, Al-Gahtani, Hubona & Wang 2007, Silvius 2008). In an exploration of the impact of a country’s culture on the level of implementation, or maturity, of business-IT alignment, using Hofstede’s five cultural dimensions, Silvius (2008) warned of complexities in communicating the intent, process and expected outcomes of business-IT alignment. The researcher mapped selected countries’ business- IT alignment maturity criteria against the cultural dimensions, concluding that cultural aspects, particularly those involving social interaction, impact several business-IT alignment maturity criteria.

Other studies used the cultural dimensions to compare the use of information systems between two different cultures. Al-Gahtani et al. (2007) compared IT acceptance between developed and developing economies, using a modified model of Technology

50 acceptance model (TAM) which was the Unified Theory of Acceptance and Use of Technology (UTAUT), (Venkatesh et al. 2003), to examine the effects of social influence and cognitive constructs on perceived usefulness and usage intentions. Hofstede’s cultural dimensions were also used to show the degree of difference between North American and Saudi Arabian adoption of IT. The authors found behavioural intention and usage determinants impact IT adoption in the developing economy.

To explore national culture differences between USA and Singapore groups on computer-mediated communication Tan et al. (1998) used Hofstede’s individualism and collectivism measures. The results showed that the majority influence was stronger using computers in the individualistic culture, thus concluding that culture impacts ICT acceptance. Straub (1994) also found differences in technology acceptance between US and Japan, based on the dimension of uncertainty avoidance. Using a multinational survey, Png et al. (2001) confirmed that dimensions of national culture impact corporate adoption of IT infrastructure. These studies confirm that cultural values influence technology adoption. Tredinnick (2008) expressed it thus: ‘a certain kind of transformation to social practices and cultural values that accompanies the rapid adoption of computing technology is on one level difficult to deny’ (p. 21).

However, Myers and Tan (2002) challenged Hofstede and his supporters’ primacy in theory and findings that the five cultural dimensions or other cultural dimensions are representative of national culture. Myers and Tan cite the sample base that generated Hofstede’s (1980) five cultural dimensions; that is, data collected from 40 organisations across 40 different countries. Myers and Tan (2002) found that 39 of those organiszations were subsidiaries of IBM, quoting Huo and Randall (1991, p. 159) who describe the 116,000 respondents within IBM thus ‘shared the same corporate superstructure and policies, belonged to the same occupational categories, did the same kind of work, were of the same educational level and varied only marginally in age and gender’. The homogenisation of IBM’s corporate culture influenced the study to a degree

that its findings reflected only internal differences of IBM’s culture and did not reflect the overall nature of the societies involved. Myers and Tan (ibid) reviewed a wide range of literature to confirm their challenge and ‘propose that IS researchers should adopt a more dynamic view of culture – one that sees culture as contested, temporal and emergent’.

51 As an illustration of cultural effects on the global scale, reminiscent of the IBM world mind-view, Law and Perez (2006) reported that an international service organisation acquired an Asian subsidiary. A new information system was required to integrate the subsidiary with the corporation and system requirements were outsourced on the recommendation of the consultant, tested in the USA headquarters and deployed. However, the instructions were not translated to allow for regional Asian users, and differences were such that an alternative regional system was eventually required. Cognition and management of cultural and national differences are fundamental to the successful integration of global organisations. Slack and Wise (2005) nominated three issues which frequently accompany new installations of information systems:

• technologies are developed to meet the needs of some and not others;

• technologies are not distributed evenly: there are technology haves and have-

nots; and

• assumptions are made about who will use technologies and how they will be

used.

These procedural issues are confirmed by Lin (2002) who argued that innovation attributes cannot translate into actual technology adoption without the individual personality attributes; the latter also affect the group’s adoption decision.

In summary, the individual and social interactions form the decision-making paradigm for acceptance or rejection of change. Thus, this research considers Hofstede’s cultural dimension as a theoretical lens to understand the cultural norms in practice and believes that impact technology adoption in Saudi Arabia.

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