UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ Tran Huy Anh Duc FACTORS AFFECTING CUSTOMER’S TRUST IN E-COMMERCE IN VIETNAM MASTER OF BUSINESS (Honours) Ho Chi Minh City – Year 2012 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ Tran Huy Anh Duc FACTORS AFFECTING CUSTOMER’S TRUST IN E-COMMERCE IN VIETNAM ID: 60340102 MASTER OF BUSINESS (Honours) SUPERVISOR: Tran Ha Minh Quan Ho Chi Minh City – Year 2012 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com i ABSTRACT No one can deny that internet and websites are the most important tools of electronic commerce (e-commerce), to help e-commerce develop effectively. The internet has been widely used from 1994 and e-commerce had been contributing to the growth in many countries. Although there are opportunities for e- commerce growth, it did not achieve its full potential. What did reasons prevent the development of electronic commerce? Having many reason, but an important reason is customer’s trust.
The necessary to do is that identify what factors affecting customer trust in the online environment. Based on the research of Cuiping Chen (2007) and F Meziane & Kasiran (2008), this study combine the research model of two studies to form the research model. The main survey was launched on October 2012. For main survey was collected in a month, 272 responses were received in both methods, email and hard copies, in which 32 were rejected because of incomplete responses.
After all, 240 samples were usable. After pilot study, the research model had 4 factors affecting customer’s trust, as: Affiliation, Existence, Policy, and Website Design. The results show support for Hypothesis 2, 3, and 4, mean that Affiliation of website, Policy of website, and Website design attitude of company, all emerged as significant predictors of Customer’s Trust. Key word: e-commerce, trust, B2C, customer, factors affecting LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com ii ACKNOWLEDGMENTS It is my pleasure to express my sincere gratitude to my supervisor Dr.
Tran Ha Minh Quan for his support throughout the research process. He had devoted his valuable time and efforts in patiently guiding me to complete this study. I would like to convey my special thanks to him for his assistance and encouragement. I would like to thank the faculty of International School of Business (ISB) – University of Economic Ho Chi Minh City.
And my special thanks to Professor Nguyen Dinh Tho PhD., who has instructed me how to do a research clearly and simply. Besides, I would like to express my thanks to the ones who have helped me to distribute the questionnaires. Also, I would like to thanks all respondents, who spent their valuable time in filling out the questionnaire. I thank my friends and colleagues who provided much needed inspiration and support during this time.
Finally, no words of thanks are ever enough for the dedication of my parents and younger brother who pushed me through each step of my academic journey and wanted to see me get the Master’s degree. December 20, 2012 Tran Huy Anh Duc LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com iii TABLE OF CONTENTS ABSTRACT………………………………………………………………….ii TABLE OF CONTENTS………………………………………………….iii LIST OF TABLES………………………………………….v LIST OF FIGURES……………………………………………………………………vi CHAPTER I: INTRODUCTION………………………………. OUTLINE OF STUDY………………………………………….4 CHAPTER II: LITERATURE REVIEW………………………….MODEL OF CUIPING CHEN (2007)………………….MODEL OF F MEZIANE (2008)……………………………………….BUILDING THE RESEARCH MODEL………………………………….DEFINITION OF TRUST………………………………………………….CONSUMER TRUST IN E-COMMERCE.16 CHAPTER III: RESEARCH METHOD…………………………………………….SAMPLING & DATA COLLECTION……………………………………….25 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.25 CHAPTER IV: DATA ANALYSIS & RESULT…………………………………….DESCRIPTIVE STATISTICS SURVEY RESULTS………………………….THE RATING SCALE…………………………………………………………28 4. CRONBACH’S ALPHA COEFFICIENT……………………….
EXPLORETORY FACTOR ANALYSIS………………………………32 4.36 CHAPTER V: DISCUSSION, IMPLICATIONS, RECOMMENDATIONS……….IMPLICATIONS FOR FURTHER RESEARCH……………….47 APPENDIX: RESULT OF DATA ANALYSIS………………………………………53 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com v LIST OF TABLES Table 3.1: Measurement scales of research .2: Cronbach’s alpha of EXIS .3: Cronbach’s alpha of AFFI .4: Cronbach’s alpha of POLI .5: Cronbach’s alpha of WEDE .6: Cronbach’s alpha of TRUS.7: KOM and Pattern Matrix result of final .8: Total Variance Explained .9: Summarized EFA analysis. 38 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com vi LIST OF FIGURES Figure 2.1: Research model of Cuiping Chen.2: Research model of F.3: Research model of Customer Trust in e-commerce .1: Research model after revised .1: The correlations of the research model. 38 LUAN VAN CHAT LUONG download : add luanvanchat@agmail. INTRODUCTION In the first chapter, the overview of e-commerce and its importance for the growth of economy will be introduced.
Moreover, the causes that restrict the development of e-commerce will be found out in order to find effective solutions to overcome such limitations. It can be seen that these issues are also the research problems and research objectives for this study. Background The development of information technology and internet has formed a new form of transaction in the business environment. It is called as online transactions.
No one can deny that internet and websites are the most important tools of electronic commerce (e-commerce), to help e-commerce develop effectively. The internet has been widely used from 1994 and e-commerce had been contributing to the growth in many countries. Amongst emerging economies, China's e-commerce presence continues to expand. For example, with 384 million internet users, China's online shopping sales rose to $36.
In US e- commerce and Online Retail sales projected to reach $226 billion, an increasing of 12 percent over 2011 ( Mulpuru, 2012). Clearly, the e-commerce has an important role in the development of economy in many countries. Although occurrence of internet in Vietnam later than other developed countries (from 2003), it also had a positive contribution to the national economy. More specifically, revenue from e-commerce in Vietnam reached nearly 2 billion USD, equivalent to 2.5% of GDP, and it is forecasted that the revenue will be 6 billion USD in 2015 (A sleeping e-commerce giant, 2012).
These numbers, though still relatively modest compared with many countries, it shows the potential of e- commerce development in Vietnam. Especially, when the percentage of the population using the internet in Vietnam reached 35.49% in September 2012 (report LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 2 on internet statistics of Vietnam, 2012), the growth potential of e-commerce is based. Research problems Although there are opportunities for electronic commerce growth, it did not achieve its full potential. What reasons prevent the development of electronic commerce? To find out the answer, a direct interview was conducted including four people aged from 21 to 27, in which 3 females and 1 male.
In four of the interviewees, one person used internet banking services, one person often purchases online and two other know the service/ purchase online but do not use. Obviously, results of the interviews shows that one of the most important reasons influences the customer's decision to use or not to use the online service and online purchasing is the trust. In many studies about customer’s behavior in e-commerce, they also showed that customer’s trust is as a key factor, which impacts customer’s behavior in e- commerce. Marchewka, Ku (2004) compared American and Taiwanese perceptions concerning online privacy and how it relates to the level of trust with a company's electronic commerce website.
Their study suggested that trust is an important intermediary variable that influences behavioral intentions for online transactions. Ling (2010) also mentioned in his study that impulse purchase intention, quality orientation, brand orientation, online trust and prior online purchase experience were positively related to the customer online purchase intention. Through the review of previous studies and the actual interview, we can conclude that trust is an important factor affecting customers in online activities. So to help online activities develop more, we need to increase the trust of customers.
However, to increase the trust of customers, what is necessary to do? The necessary to do is to identify the factors affecting customer trust in the online environment. This issue has been explored in numerous studies in many countries, many different areas. Flick (2009) has found that perceived site quality was LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 3 confirmed to be positively related to trust in the website. It was confirmed as important factor.
In other research of C. Chen (2007), it mentioned that the trust of online customers for the seller derives not only from their website experience but also from their experience outside the website. Specifically, the components: website design, fulfillment/ reliability, privacy/ security, and customer service are the basis of forming the trust of customers. The study also indicates that trust is intrinsically beneficial and if a consumer trusts an e-retailer, he/she will come back in the future or even become loyal to the e-retailer.
Earlier, in the study on the subject of “Consumers' attitudes towards online shopping in New Zealand”, Shergill and Z. Chen (2005) also mentioned these factors: website design, website reliability/fulfilment, website’s customer service and website security/privacy are the four dominant factors which influence consumer perceptions of online purchasing in New Zealand. Generally, some of many studies about factors that affect customer’s trust in online environment were defined. However, in Vietnam, what do factors affect customer’s trust, those are also similarly or not.
With this study, I would like to clarify that issues. Research objectives In the previous section, research problem has been identified. There are opportunities for electronic commerce growth, but it did not achieve its full potential. So, what reasons do prevent the development of electronic commerce? The research questions of this study are as follows: - What factors that affect customers' trust in e-commerce in Vietnam? - How is the relationship between these factors and customer’s trust in e- commerce? Which will influence customer’s trust the most? Therefore, the objectives of this research are as follows: - To identify the factors that affect customers' trust in e-commerce in Vietnam.
- To determine the influence of each factor on the customer's trust. LUAN VAN CHAT LUONG download : add luanvanchat@agmail. Research scope: Due to the limitations of research funds and time, the scope of this research is therefore limited to all Vietnamese customers in the Southern Area of Vietnam, specific in Ho Chi Minh City and Binh Duong province. Respondents of this research include all of customer whom their own procurement decisions.
Outline of study: This research will be composed of 5 Chapters: Chapter 1: Introduction to give research background, research problem, research question as well as research objective. Chapter 2: Literature review. This chapter reviews theories and previous studies, then formulates the research hypothesis and model. Chapter 3: Research methodology.
This chapter provides general idea how the research will be designed and implemented. Chapter 4: Data analysis and result. This chapter translates data collected from survey, analyses data and discusses the result finding in connection with theory. Chapter 5: Conclusion, implication, limitation.
This Chapter concludes the research finding; provide further suggestion as well as research limitation. LUAN VAN CHAT LUONG download : add luanvanchat@agmail. LITERATURE REVIEW This chapter will review e-commerce literature involving the emergence of ecommerce, customer trust. Based on the review of literature, customer trust in e- commerce context is identified.
From that the research model was built for this study. Model of Cuiping Chen (2007) Consumer trust in an e-retailer derives not only from a consumer’s website experience but also from his/her experience outside the website (C. Specifically, a consumer’s attitudes toward the key components of his/her entire online purchase experiences constitute the key drivers of consumer trust. The key components that Cuiping Chen has listed in research are: website design, fulfillment/reliability, privacy/security, and customer service.
Findings also indicate that trust is intrinsically beneficial. If a consumer trusts an e-retailer, he/she will come back in the future or even become loyal to the e-retailer. Further, findings suggest that though trust has a direct effect on future intentions and loyalty, part of its effect is conditional on its ability to reduce transaction costs.