Loughborough University Institutional Repository Understanding the determinants of e-commerce uptake, e-service quality and e-commerce success, in the UK on-line retail sector ThisitemwassubmittedtoLoughboroughUniversity’sInstitutionalRepository by the/an author. Additional Information: • A Doctoral Thesis. Submitted in partial fulfillment of the requirements for the award of Doctor of Philosophy of Loughborough University. Metadata Record: https://dspace.lboro.ac.uk/2134/8604 Publisher: (cid:13)c Mahani B.M.A. Shakur Please cite the published version. This item was submitted to Loughborough’s Institutional Repository (https://dspace.lboro.ac.uk/) by the author and is made available under the following Creative Commons Licence conditions. For the full text of this licence, please go to: http://creativecommons.org/licenses/by-nc-nd/2.5/ Understanding the Determinants of E- Commerce Uptake, E-Service Quality and E- Commerce Success, in the UK On-line Retail Sector by Mahani B.M.A Shakur A Doctoral Thesis Submitted in partial fulfilment of the requirement for the award of Doctor Philosophy of Loughborough University July 2011 ACKNOWLEDGEMENTS In the name of Allah the Most Beneficent Most Merciful First and foremost, I am indebted to Ministry of Higher Education, Malaysia and University Malaysia Sarawak for giving me this golden opportunity to pursue my research degree by awarding me a full scholarship. I owe my deepest, utmost gratitude and appreciation to my supervisors, Prof. Neil Doherty and Dr. Fiona Ellis-Chadwick for their vital encouragement, endless support, commitment and constructive suggestions throughout my research process. It is a great honour to have had the experience of working with such motivational academics. This thesis would not have been possible and successful without their invaluable knowledge, assistance, and inspiration. I wish to extend my sincere and warmest thanks to all my friends and research colleagues for making my life at Loughborough such an enjoyable experience. Many thanks to Loughborough Business School and University Malaysia Sarawak staff for their support, in all respect, during the completion of my study. My deepest appreciation goes to my soul mate, Azman Hussin for his pure love, encouragement, sacrifice, patience and unconditional support. He is the real backbone behind this success. I am also indebted to all my children, Mohammad Khairul Najib, Nabilah Asyiqin, Fatin Nabihah, Farhan Najihah, Najah Farahin Nadiah, Ilham Nadhirah and Muhammad Nabil Zahin for giving me all the strength and inspiration throughout the journey. Not to forget my mother, mother in law, brothers, sisters , uncles, aunts and all my relatives for their love, encouragement and prayers. Above all, I would like to express my heartiest and sincere grateful to God Almighty for answering my prayers and always being there for me. This thesis is dedicated to my late father, father in law and granny who passed away during this journey. iii ABSTRACT The primary aim of this study is to gain important new insights into e-commerce success, by empirically exploring how approaches to e-service quality, when coupled with levels of e-commerce adoption, might affect the overall success of retailers’ on-line operations. This study is governed by positivist epistemological perspective, and therefore, it was undertaken using a quantitative research methodology, based upon questionnaires. The primary data collection generated a total of 225 useable questionnaires, completed by senior managers, working within the UK’s on-line retail sector. Factor analysis and multiple regression analysis were then used to thoroughly explore the relationships between the various constructs, which comprised the research model. The results of the statistical analysis demonstrate that internal factors (e.g. as management strategy and resources) - are a stronger determinant, than external factors, of both. Perhaps more importantly, it has been shown that the perceived success of a retailer’s e-commerce operations is also strongly associated with the management approaches to e-service quality and the level of e-commerce adoption. Finally, a mediation analysis provides interesting new insights into the relationship between adoption levels, e-service quality and success: the management approaches to e-service quality significantly mediates the relationship between the level of e-commerce adoption and the perceived e-commerce success. Given the central role that e-service quality plays in this study, a customer focused study of e-service quality was also conducted, to provide a more complete and holistic view of this complex phenomenon. This supplementary study sought to explore how customers’ perceptions of e-service quality, particularly in terms of identifying those elements of service quality that influence their use of the retailers’ on-line services. An on-line questionnaire survey was designed and pre-tested before targeting it at 800 students, of whom over 25% responded. An ‘importance-performance’ analysis of this data was conducted to explore whether there were significant differences in customers’ perception of the importance against the performance of retailers’ ability to manage e-service quality. By and large, the results of this analysis should provide some reassurance to the on-line retailers, as the customers generally believed that the retailers were performing well in the areas that were most important to them. However, when the results of the customer and retailer studies were compared, some interesting imbalances were revealed. For example, the retailers perceived the provision of privacy policies to be extremely important, whilst generally; the customers weren’t too concerned with this aspect of e-service quality. The thesis concludes by highlighting its contribution to the body of current knowledge, reviewing the limitations of the research and exploring the implications for practice of the many interesting new insights generated through this empirical study. iv TABLE OF CONTENT 1 INTRODUCTION...................................................................................... 1 1.1 INTRODUCTION ..................................................................................................... 1 1.2 BACKGROUND OF THE RESEARCH ......................................................................... 1 1.3 SIGNIFICANCE OF THE STUDY ................................................................................ 2 1.4 BROAD RESEARCH OBJECTIVES ............................................................................. 4 1.5 RESEARCH PROCESS .............................................................................................. 5 1.6 FOCUS OF THE STUDY ........................................................................................... 6 1.7 STRUCTURE OF THE THESIS ................................................................................... 7 1.7.1 Part 1: Theoretical Framework .................................................................. 8 1.7.2 Part 2: Empirical Findings .......................................................................... 8 1.8 CONCLUDING REMARKS ........................................................................................ 9 2 LITERATURE REVIEW: E-COMMERCE ADOPTION .................................. 10 2.1 INTRODUCTION ................................................................................................... 10 2.2 DEFINITION OF E-COMMERCE ............................................................................. 10 2.3 THE GROWTH AND SIGNIFICANCE OF E-COMMERCE IN A RETAIL CONTEXT ..... 14 2.4 FACTORS AFFECTING E-COMMERCE ADOPTION ................................................ 16 2.4.1 Environmental Factors: Internal and External ........................................ 16 2.5 THE EXTENT AND LEVEL OF E-COMMERCE ADOPTION....................................... 18 2.5.1 Stages of Adoption .................................................................................. 19 2.5.2 Non Sequential Measures of E-commerce Adoption .............................. 23 2.6 THE EFFECTIVENESS / IMPACT OF E-COMMERCE ............................................... 28 2.6.1 E-Commerce Performance ...................................................................... 29 2.6.2 E-Commerce Benefit ................................................................................ 32 2.6.3 E-Commerce Success ............................................................................... 35 2.7 CRITIQUE TO THE LITERATURE ............................................................................ 38 2.8 CONCLUDING REMARKS ...................................................................................... 39 3 LITERATURE REVIEW: E-SERVICE QUALITY ............................................ 40 3.1 INTRODUCTION ................................................................................................... 40 3.2 AN OVERVIEW OF SERVICE QUALITY ................................................................... 40 3.2.1 Service Quality Measurement ................................................................. 42 3.3 E-SERVICE QUALITY (ESQ).................................................................................... 44 3.3.1 Conceptualisation of E-Service Offering .................................................. 45 3.3.2 Definition of E-Service Quality ................................................................ 48 3.4 CUSTOMER PERSPECTIVE OF E-SERVICE QUALITY .............................................. 49 3.4.1 E-Service Quality Measurement: Retail Context ..................................... 49 3.4.2 E-Service Quality Measurement: Relationships with other variables ..... 50 3.5 MANAGERIAL PERSPECTIVE OF E-SERVICE QUALITY .......................................... 51 v 3.6 CRITIQUE OF THE LITERATURE ............................................................................ 54 3.7 CONCLUDING REMARKS ...................................................................................... 55 4 RESEARCH GAPS, FRAMEWORKS AND HYPOTHESES ............................ 56 4.1 INTRODUCTION ................................................................................................... 56 4.2 RESEARCH GAPS IDENTIFIED ............................................................................... 56 4.2.1 Research Gap 1: The Relationship between Drivers, Scope and Perceived Success of E-commerce ........................................................................... 57 4.2.2 Research Gap 2: Management Approaches to E-service Quality ........... 57 4.2.3 Research Gap 3: The Relationship between the Management of E- Service Quality and E-Commerce Success ............................................... 58 4.2.4 Research Gap 4: The Use of Mediation to Better Understand the Relationships between the Research Constructs. ................................... 58 4.2.5 Research Gap 5: Comparing the ‘Importance’ and ‘Performance’ of E- Service Quality Features .......................................................................... 59 4.2.6 Research Gap 6: Comparing the Retailers’ and Customer’s Perceptions of the Management of E-Service Quality. ................................................... 59 4.3 THEORETICAL FOUNDATION: A CONTINGENCY THEORY .................................... 60 4.4 SPECIFIC OBJECTIVES OF THE STUDY .................................................................. 63 4.5 CONCEPTUAL FRAMEWORK ................................................................................ 64 4.5.1 Relationships between Constructs of the Main Study ............................ 65 4.5.2 Mediating Role of a Construct ................................................................. 67 4.5.3 Relationship between the Retailer and Customer Studies ..................... 67 4.6 CONSTRUCT DEFINITIONS ................................................................................... 68 4.6.1 Management Approaches to E-Service Quality ...................................... 68 4.6.2 Level of E-Commerce Adoption ............................................................... 69 4.6.3 Perceived E-Commerce Success .............................................................. 69 4.6.4 Adoption Factors ..................................................................................... 70 4.7 RESEARCH HYPOTHESES FOR THE RETAILER STUDY ........................................... 71 4.7.1 Factors Affecting Adoption ...................................................................... 71 4.7.2 External Pressures ................................................................................... 71 4.7.3 Internal Pressures .................................................................................... 72 4.7.4 The Level of e-Commerce Adoption ........................................................ 73 4.7.5 Management Approaches To E-service Quality ...................................... 73 4.7.6 Mediating Effect of the Level of E-commerce Adoption ......................... 75 4.7.7 Mediating Effect of Management Approaches to E-service Quality ....... 76 4.8 CONCLUDING REMARKS ...................................................................................... 76 5 RESEARCH DESIGN ............................................................................... 78 5.1 INTRODUCTION ................................................................................................... 78 5.2 PHILOSOPHY OF RESEARCH ................................................................................. 78 5.3 RESEARCH METHODOLOGIES .............................................................................. 82 5.3.1 Quantitative Research ............................................................................. 83 5.3.2 Qualitative Research ............................................................................... 83 vi 5.3.3 Mixed method Research ......................................................................... 83 5.3.4 The Chosen Research Methodology ........................................................ 84 5.4 TYPES OF RESEARCH DATA .................................................................................. 84 5.4.1 Primary Data ............................................................................................ 84 5.4.2 Secondary Data ........................................................................................ 85 5.4.3 The Type of Data Chosen for the Study................................................... 86 5.5 RESEARCH METHODS AND STRATEGIES.............................................................. 86 5.5.1 Experimental Research ............................................................................ 86 5.5.2 Case Studies ............................................................................................. 87 5.5.3 Phenomenological Studies ...................................................................... 87 5.5.4 Forecasting and Future Research ............................................................ 88 5.5.5 Surveys ..................................................................................................... 88 5.5.6 The Chosen Methods and Strategy ......................................................... 89 5.6 TEMPORAL CLASSIFICATION OF SURVEY TIME HORIZON ................................... 89 5.6.1 Cross-sectional......................................................................................... 89 5.6.2 Longitudinal ............................................................................................. 90 5.6.3 The Classification Of Survey For the Study .............................................. 90 5.7 THE ADMINISTRATION OF THE SURVEY .............................................................. 91 5.7.1 Research Instrument ............................................................................... 91 5.7.2 Survey Strategy ........................................................................................ 91 5.7.3 Internet Survey ........................................................................................ 92 5.7.4 Mail Survey .............................................................................................. 92 5.7.5 Potential Disadvantages of Mail Survey .................................................. 93 5.8 THE SAMPLING PROCESS ..................................................................................... 94 5.8.1 Step 1: Define the Population ................................................................. 95 5.8.2 Step 2: Identify the Sampling Frame ....................................................... 96 5.8.3 Step 3: Select a Sampling Procedure ....................................................... 97 5.8.4 Step 4: Determine the Sample Size ......................................................... 97 5.8.5 Step 5: Select the Sampling Elements ..................................................... 97 5.8.6 Step 6: Collect the Data from the Respondents ...................................... 98 5.9 CONCLUDING REMARKS ...................................................................................... 98 6 QUESTIONNAIRE DESIGN AND DATA COLLECTION ............................... 99 6.1 INTRODUCTION ................................................................................................... 99 6.2 FRAMEWORK FOR DEVELOPING QUESTIONNAIRE ............................................. 99 6.2.1 Step 1: Specify What Information Will Be Sought ................................... 99 6.2.2 Step 2: Determine the type of Questionnaire and Method of Administration ....................................................................................... 101 6.2.3 Step 3: Determine Content of Individual Questions ............................. 101 6.2.4 Step 4: Determine Form of Response to Each Questions ..................... 102 6.2.5 Step 5: Wording of Each Question ........................................................ 102 6.2.6 Step 6: Sequence of Questions .............................................................. 103 6.2.7 Step 7: Physical Characteristics of Questionnaire ................................. 104 6.2.8 Step 8: Re-examine Steps 1-7 and Revise if Necessary ......................... 104 6.2.9 Step 9: Pre-Test the Survey, and Revise where necessary .................... 105 6.3 THE LEVELS OF SCALE MEASUREMENT ............................................................. 106 vii 6.4 STRUCTURE OF THE QUESTIONNAIRE ............................................................... 108 6.4.1 Section A: Company Characteristics ..................................................... 109 6.4.2 Section B: Extent of E-Commerce Adoption .......................................... 110 6.4.3 Section C : Factors of affecting E-Commerce Adoption ........................ 110 6.4.4 Section D: Management Approaches to E-Service Quality ................... 110 6.4.5 Section E: Success Realised of E-Commerce Adoption ......................... 115 6.5 VALIDATING THE QUESTIONNAIRE ................................................................... 116 6.5.1 Pilot Study .............................................................................................. 116 6.6 MAIN STUDY ...................................................................................................... 118 6.6.1 Summary of the Data Collection Process .............................................. 119 6.6.2 Unexpected Problems ........................................................................... 120 6.7 CONCLUDING REMARKS .................................................................................... 120 7 DATA EXAMINATION AND DESCRIPTION ............................................ 121 7.1 INTRODUCTION ................................................................................................. 121 7.2 SURVEY RESPONSES .......................................................................................... 121 7.1 TESTS FOR NON-RESPONSE BIAS ....................................................................... 122 7.2 PROFILE OF RESPONDING UK RETAILERS .......................................................... 125 7.2.1 Product Range ....................................................................................... 125 7.2.2 Sales Channel Strategy .......................................................................... 126 7.2.3 Number of Full-time Employees ............................................................ 126 7.2.4 Number of Years in On-line Business Established ................................. 127 7.3 DESCRIPTIVE FINDINGS FOR THE MAIN VARIABLES .......................................... 127 7.3.1 Mean Score of the Level of E-Commerce Adoption .............................. 128 7.3.2 Mean Score for External Factors ........................................................... 129 7.3.3 Mean Scores for Internal Factors .......................................................... 130 7.3.4 Mean Score of Perceived E-Commerce Success.................................... 131 7.3.5 Mean Score of Management Approaches to E-Service Quality ............ 131 7.4 CONCLUDING REMARKS .................................................................................... 134 8 FACTOR ANALYSIS .............................................................................. 135 8.1 INTRODUCTION ................................................................................................. 135 8.2 USES OF FACTOR ANALYSIS IN THE STUDY ....................................................... 135 8.2.1 Data Summarization .............................................................................. 135 8.2.2 Data Reduction ...................................................................................... 136 8.3 GENERAL REQUIREMENTS PRIOR TO CONDUCTING FACTOR ANALYSIS .......... 136 8.3.1 Items Measures ..................................................................................... 136 8.3.2 Sample Size ............................................................................................ 137 8.3.3 Correlation Matrix Assessment ............................................................. 138 8.4 STEPS IN CONDUCTING FACTOR ANALYSIS ....................................................... 139 8.4.1 Suitability of the Data for Factor Analysis Assessment ......................... 140 8.4.2 Factor Extraction Method Determination ............................................. 140 8.4.3 Determination of Number of Factors .................................................... 141 8.4.4 Factor Rotation ...................................................................................... 142 viii 8.4.5 Factor Interpretation ............................................................................. 143 8.5 FACTOR ANALYSIS FOR THE PRIMARY CONSTRUCTS ........................................ 143 8.5.1 Factor Analysis for External Pressures (EXTERNAL) .............................. 144 8.5.2 Factor Analysis for Internal Pressures (INTERNAL) ............................... 146 8.5.3 Factor Analysis for the Level of E-Commerce Adoption (LEVEL) ........... 147 8.5.4 Factor Analysis for Management Approaches to E-Service Quality (MANAGEMENT ESQ) ............................................................................ 148 8.5.5 Factor Analysis for Perceived E-Commerce Success (SUCCESS) ............ 151 8.6 STRATEGY FOR RECONCILING THE TWO SAMPLES ........................................... 152 8.7 VALIDITY AND RELIABILITY ASSESSMENT .......................................................... 154 8.7.1 Reliability Assessment ........................................................................... 154 8.7.2 Validity Assessment ............................................................................... 155 8.8 CONCLUDING REMARKS .................................................................................... 157 9 HYPOTHESIS TESTING: MULTIPLE REGRESSION .................................. 158 9.1 INTRODUCTION ................................................................................................. 158 9.2 AN OVERVIEW OF MULTIPLE REGRESSION ....................................................... 158 9.3 STATISTICAL ASSUMPTIONS: CHECKING THE REGRESSION MODEL ................. 159 9.3.1 Multicollinearity .................................................................................... 159 9.3.2 Normality, Linearity, Outliers and Homoscedasticity ........................... 160 9.4 STRATEGY FOR APPLYING REGRESSION ANALYSIS............................................ 161 9.5 EVALUATING THE REGRESSION MODEL (225 CASES) ....................................... 162 9.5.1 The Relationship between Factors Affecting Adoption and the Level of E- Commerce Adoption ............................................................................. 162 9.5.2 The Relationship between External Pressures (EXTERNAL) and Internal Pressures (INTERNAL) ............................................................................ 163 9.5.3 The Relationship between External Pressures (EXTERNAL) and the Level of E-Commerce Adoption (LEVEL) .......................................................... 164 9.5.4 The Relationship between Internal Pressures (INTERNAL) and the Level of E-Commerce Adoption (LEVEL) .......................................................... 165 9.6 EVALUATING THE REGRESSION MODEL: 194 CASES ......................................... 166 9.6.1 The Relationships between Factors Affecting Adoption and Perceived E- Commerce Success ................................................................................. 166 9.6.2 The Relationships between Factors Affecting Adoption (FACTORS) and Management Approaches to E-service quality (MANAGEMENT ESQ) .. 167 9.6.3 The Relationship between the External Pressures and Perceived E- Commerce Success ................................................................................. 168 9.6.4 The Relationship between External Pressures and the Management Approaches to E-service quality ............................................................ 168 9.6.5 The Relationship between Internal Pressures and Perceived E-Commerce Success ................................................................................................... 169 9.6.6 The Relationship between Internal Pressures and Management Approaches to E-service quality ............................................................ 170 9.6.7 The Relationship between The Level of E-Commerce Adoption and the Management Approaches to E-service quality...................................... 171 ix