Fostering consumer trust and purchase intention in B2C e-commerce A thesis submitted in fulfilment of the requirements for the degree of Doctor of Philosophy Siddhi Pittayachawan M. School of Business Information Technology Business Portfolio RMIT University August 2007 (ii) Declaration I certify that except where due acknowledgement has been made, the work is that of the author alone; the work has not been submitted previously, in whole or in part, to qualify for any other academic award; the content of the thesis is the result of work which has been carried out since the official commencement date of the approved research program; and any editorial work, paid or unpaid, carried out by a third party is acknowledged. Siddhi Pittayachawan 31 August 2007 (iii) Acknowledgements I would like to express my deepest gratitude to my senior supervisor—Associate Professor Mohini Singh. For the last three years after I changed from the School of Electrical and Computer Engineering to the School of Business Information Technology, she constantly guided me so I could understand how to properly conduct social science research.
Her immeasurable amount of support and excellent input on both planning and writing my research, while teaching me to be thorough, enabled me to complete this research successfully is appreciated. Furthermore, her belief in my research capability consistently encouraged me to overcome many obstacles that I encountered in the research. I also would like to express my deepest gratitude to the head of School of Business Information Technology—Professor Brian Corbitt. His active support and advice motivated me and helped me to complete this research.
I would like to express my appreciation to my second supervisor—Dr France Cheung. His availability for consultation whenever my senior supervisor was not reachable allowed me to obtain constant feedback and support for my research. I also express my gratitude to my former senior supervisor, Professor Richard Harris, at the School of Electrical and Computer Engineering, who helped me start this research. I also would like to express my gratefulness to my former second supervisor—Mr David Jones.
My research journey started as soon as he introduced me to trust issues in e- commerce. I would like to express my indebtedness to Dr Hossein Zadeh, who assisted me with data collection. I express deep gratitude and appreciation to Siridech Kumsuprom and Naruemon Choochinprakarn who kindly helped me in translating the questionnaire, the plain language statement, and the invitation message from English to Thai. Their sound understanding of Thai grammar allowed helped me develop questionnaire in Thai version.
I also would like to thank people who helped me in recruiting participants for the focus groups, particularly Jane Green, David Walter, and staff members of Cross Cultures at St. My thanks to Caroline Tan, Donglin Wu, Hui Chung Liang, Khanh Van La, Muhammed Azizul Islam, Tianshu Liu, and Yue Nan Wang who helped me in pilot testing the online questionnaire. (iv) I express my gratitude to those who helped me administer the survey in Australia, Thailand, and UK: Professor Chris Whitaker, Wanna Learngprach, Associate Professor Vanchai Sirichana, Nuntawan Wongwan, Uthai Moonkaew, Assistant Professor Wichan Lertwipatrakul, Werachart Multitanon, Dr Chavalit Meenuch, Dr Vivat Lauhabut, Sakda Chailaph, Tanyalak Marujiwat, Associate Professor Mondhon Sanguansemsri, Sititee Jean- Ead, Kruawan Yaemprang, Pattaraporn Srinuan, Piyamaporn Suwanjarernporn, Piyapanna Pittayachawan, Associate Professor Pannipa Burapachep, and Jaturong Jarernpap. In the School of Computer Systems Engineering and the School of Business Information Technology, I also would like to thank all research students and faculty who gave me encouragement, useful feedback and support for my research, particularly Ahmad Mousa, Dr Anne Rouse, Dushantha Nimal Dissanayake, Feeba Mootheril, Hieu Tran, Horace King, Irena Atov, Kevin Leung, Kristina Tsoulis-Reay, and Peter Goldsmith, Prue Lamont, and Suresh Venkatachalaiah.
Lastly, my earnest gratitude and feeling, which cannot be expressed in words, go to my family: my parents, Paichit Pittayachawan and Pacharee Pittayachawan, and my late uncle, Mr Pongsak Sammanondha, who supported me financially; and my soul mate, Mi Jin Jung, who provided me moral support throughout this venture. (v) Table of Contents DECLARATION. III LIST OF FIGURES. XI LIST OF TABLES.
XII LIST OF ABBREVIATIONS. XIV LIST OF PUBLICATIONS .2 MOTIVATION OF THE RESEARCH .3 OBJECTIVES OF THE RESEARCH .5 ORGANISATION OF THIS THESIS. 6 CHAPTER 2 REVIEW OF RELATED LITERATURE .1 STATE OF ONLINE SHOPPING.2 DEFINITIONS OF TRUST .3 FUNCTIONS OF TRUST IN ONLINE SHOPPING .4 CURRENT ISSUES AFFECTING ONLINE TRUST .5 Third Party Intervention .6 PREVIOUS RESEARCH ON TRUST MODELS .2 Trust in Signs .3 Simmelian Model of Trust .5 Rhombus of Trust. 50 CHAPTER 3 RESEARCH METHODOLOGY .1 PARADIGM AND METHODOLOGY OF THE RESEARCH .1 Sampling Frame for the Online Survey .2 Sample Size for the Online Survey.3 Self-selection Sampling.5 Development of the Questionnaire .7 Internet Responses to the Survey.9 Ethics for the Survey Analysis .10 Timeline of Questionnaire .1 Sampling Frame and Sample Size for the Focus Groups .3 Development of Focus Group Questions .5 Ethics for the Focus Group Analysis .6 Process of the Focus Groups.
64 (vii) CHAPTER 4 SURVEY ANALYSIS .1 RESPONSE RATE OF THE ONLINE QUESTIONNAIRE.3 RELIABILITY OF THE QUESTIONNAIRE .2 Non-online Shoppers .5 INTRODUCTION TO THE SEM ANALYSIS .6 SEM PHASE 1: DIMENSIONALITY.7 SEM PHASE 2: MODIFICATION .2 Results from the First Approach .5 Results from the Second Approach .8 SEM PHASE 3: PARSIMONY .9 FINDINGS OF THE SEM ANALYSIS .10 PROPOSITIONS FOR CONFIRMATION. 112 CHAPTER 5 FOCUS GROUP ANALYSIS .2 ANALYSIS OF THE FG1 RESPONSES .6 Identity Theft and Fraud .9 Proof of Real Business .14 Trusted Third Party .3 ANALYSIS OF THE FG2 RESPONSES .6 Identity Theft and Fraud .9 Proof of Real Business .15 Trusted Third Party .4 ANALYSIS OF THE FG3 RESPONSES .4 Identity Theft and Fraud .5 IMPORTANCE OF THE TRUST ISSUES .6 COMPARATIVE ANALYSIS OF THE THREE GROUPS .7 FINDINGS OF THE FOCUS GROUP ANALYSIS. 149 CHAPTER 6 DISCUSSION AND CONCLUSION .1 ANSWERING THE RESEARCH QUESTIONS .3 LIMITATIONS OF THE RESEARCH .4 SUGGESTION FOR FUTURE RESEARCH .1 LETTER OF INVITATION (ENGLISH) .2 LETTER OF INVITATION (THAI) .3 PLAIN LANGUAGE STATEMENT (ENGLISH) .4 PLAIN LANGUAGE STATEMENT (THAI) .5 QUESTIONNAIRE FOR ONLINE SHOPPERS (ENGLISH).6 QUESTIONNAIRE FOR ONLINE SHOPPERS (THAI) .7 QUESTIONNAIRE FOR NON-ONLINE SHOPPERS (ENGLISH) .8 QUESTIONNAIRE FOR NON-ONLINE SHOPPERS (THAI). 229 APPENDIX B FOCUS GROUPS .1 PLAIN LANGUAGE STATEMENT (EXPERIENCED SHOPPERS) .2 PLAIN LANGUAGE STATEMENT (NON-EXPERIENCED SHOPPERS) .3 QUESTIONS OF INTERVIEW.
239 APPENDIX C FREQUENCY STATISTICS. 242 APPENDIX D HISTOGRAMS OF THE NORMALITY. 265 APPENDIX E STATISTICAL TESTS OF THE NORMALITY. 270 APPENDIX F DESCRIPTIVE STATISTICS.
273 APPENDIX G STRUCTURE MATRICES. 283 APPENDIX I RECTIFICATION OF STRUCTURAL MODELS. 288 APPENDIX J STANDARDISED RESIDUAL COVARIANCES. 293 APPENDIX K COMPARISON OF THE FOUR SEM MODELS .1 NON-RECTIFIED MODELS .3 STANDARD ERRORS OF STANDARDISED REGRESSION WEIGHTS.
297 (xi) List of Figures Figure 1: Growth of Internet users. 9 Figure 2: Growth of websites. 10 Figure 3: Quarterly e-tail sales. 11 Figure 4: Number of unique phishing websites.
18 Figure 5: Peirce’ semiotic triangle. 41 Figure 6: Trust in Signs. 42 Figure 7: Simmelian Model of Trust. 44 Figure 9: Rhombus of trust.
46 Figure 10: Research model. 48 Figure 11: Snapshot of the online questionnaire. 56 Figure 12: Snapshot of the Thai online questionnaire. 58 Figure 13: Three phases of the SEM analysis.
69 Figure 14: Scree test. 77 Figure 15: Structural model in SEM-1. 83 Figure 16: Rectified structural model in SEM-1. 88 Figure 17: Structural model in SEM-2.
93 Figure 18: Rectified structural model in SEM-2. 95 Figure 19: Structural model in SEM-3. 100 Figure 20: Rectified structural model in SEM-3. 102 Figure 21: Structural model in SEM-4.
106 Figure 22: Rectified structural model in SEM-4. 108 Figure 23: Guide for e-vendors to promote trust and intention to shop online in B2C e- commerce. 164 Figure 24: Guide for e-vendors to promote trust and intention to shop online in B2C e- commerce (a simplified version). 168 (xii) List of Tables Table 1: Incomes of some well-known e-commerce companies.
10 Table 2: Categories of the trust definitions. 12 Table 3: Examples of TTPs. 24 Table 4: Summary of the previous research. 27 Table 5: Summary of the components in the trust theories.
45 Table 6: Research hypotheses and the survey questions. 55 Table 7: Reliability of the questionnaire. 66 Table 8: Online shopping experiences of the respondents. 67 Table 9: Reasons of not shopping online.
68 Table 10: Intercorrelation tests in EFA-1. 73 Table 11: Ratios of items per factor. 74 Table 12: Reliability of the factors after dropping untested items. 74 Table 13: Eigenvalues in EFA-1.
76 Table 14: Extracted factors and their items in EFA-1. 79 Table 15: Factor correlation matrix in EFA-1. 80 Table 16: GOF values in SEM-1. 85 Table 17: GOF values after rectification in SEM-1.
88 Table 18: Construct validity after rectification in SEM-1. 89 Table 19: Square of correlation estimates in SEM-1. 90 Table 20: Hypothesis validation in SEM-1. 90 Table 21: GOF values in SEM-2.
94 Table 22: GOF values after rectification in SEM-2. 96 Table 23: Construct validity after rectification in SEM-2. 96 Table 24: Square of correlation estimates in SEM-2. 97 Table 25: Hypothesis validation in SEM-2.
97 Table 26: Intercorrelation tests in EFA-2. 98 (xiii) Table 27: Extracted factors and their items in EFA-2. 99 Table 28: Factor correlation matrix in EFA-2. 99 Table 29: GOF values in SEM-3.
101 Table 30: GOF values after rectification in SEM-3. 102 Table 31: Construct validity after rectification in SEM-3. 103 Table 32: Square of correlation estimates in SEM-3. 104 Table 33: Hypothesis validation in SEM-3.
104 Table 34: GOF values in SEM-4. 107 Table 35: GOF values after rectification in SEM-4. 108 Table 36: Construct validity after rectification in SEM-4. 109 Table 37: Square of correlation estimates in SEM-4.
109 Table 38: Hypothesis validation in SEM-4. 110 Table 39: Comparison between the findings of the three focus groups. 141 Table 40: Summary of the research findings. 152 (xiv) List of Abbreviations ABN Australian business number AMOS Analysis of Moment Structures ATM automated teller machine B2B business-to-business B2C business-to-consumer C2B consumer-to-business C2C consumer-to-consumer CFA confirmatory factor analysis CFI Comparative Fit Index CITS consumers’ trust in Internet shopping CSS Cascading Style Sheet df degrees of freedom DNS domain name system EDI electronic data interchange EFA exploratory factor analysis GLS generalized least squares GOF goodness-of-fit HREC Human Research Ethics Committee IFI Incremental Fit Index IRC Internet Relay Chat ISP Internet service provider KMOMSA Kaiser-Meyer-Olkin measure of sampling adequacy MI Modification Indices ML maximum likelihood PCFI Parsimonious Comparative Fit Index PKI Public Key Infrastructure (xv) RMSEA Root Mean Square Error of Approximation S.
standard error SEM structural equation modeling SMS short message service SPSS Statistical Package for the Social Sciences SSL Secure Sockets Layer TTP trusted third party ULS unweighted least squares W3C World Wide Web Consortium XHTML Extensible Hypertext Markup Language XSS cross-site scripting (xvi) List of Publications Pittayachawan, S, Singh, M, & Corbitt, B 2007 ‘A multi-theoretical approach for solving trust problems in B2C e-commerce’, International Journal of Networking and Virtual Organisations. Pittayachawan, S, & Singh, M 2004, ‘Trust models in the e-commerce environment’, proceedings of the 4th International Conference on Electronic Business, Beijing, China, 5– 9 December. Fostering consumer trust and purchase intention in B2C e-commerce -2- Abstract Due to the increased adoption of the Internet over the last decade, business-to- consumer (B2C) e-commerce has become a popular medium for consumers to purchase products or services. However, despite a growth in e-commerce, trust is a critical problem discouraging consumers to commit a purchase online.
It is also an important barrier affecting the growth of B2C e-commerce.