UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ Tran Minh FACTORS AFFECTING CUSTOMER TRUST IN ONLINE SHOPPING IN VIETNAM MASTER OF BUSINESS (Honours) Ho Chi Minh City – Year 2012 TIEU LUAN MOI download : skknchat@gmail.com Ho Chi Minh City – Year 2012 UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ Tran Minh FACTORS AFFECTING CUSTOMER TRUST IN ONLINE SHOPPING IN VIETNAM ID: 60340102 MASTER OF BUSINESS (Honours) SUPERVISOR: Dr. NGUYEN HUU LAM Ho Chi Minh City – Year 2012 TIEU LUAN MOI download : skknchat@gmail.com Acknowledgement Apart from the efforts of me, the success of this thesis is depended largely on the encouragement and guidelines of many others. Nguyen Huu Lam and Associate Prof Dr. Nguyen Dinh Tho have been instrumental in the successful completion of this study.
I would like to take this opportunity to express my gratitude to them and I really appreciate with their tremendous support and help. I feel motivated and encouraged every time I attend his meeting. Without his encouragement and guidance, this project would not have materialized. Besides, I would like to thank my close classmates and staffs working at International School of Business – UEH including Nguyen Thanh Huong, Huynh Ngoc Duy, Thai Thi Thu Giang, and Nguyen Thi Ngoc Lien for their guidance and support.
Ho Chi Minh City, Jan 1 st 2013 Tran Minh i TIEU LUAN MOI download : skknchat@gmail.com Table of Contents Abbreviations. iii List of Tables. iv List of Figures. v List of Appendix.
vi Chapter One: Introduction. The Internet in Vietnam. Online shopping in Vietnam. Statement of purpose.
Significance of the study. Scope of the study. Structure of the study. 3 Chapter Two: Literature Review.
Trust in online shopping. Definition of trust in e-commerce. The importance of trust in e-commerce. Trust antecedents identified in the literature.
Perceived privacy and security protection. Perceived risks and benefits. 18 Chapter Three: Methodology. Samples and data collection procedures.
24 Chapter Four: Results. Characteristics of the sample population. Reliability of measurement instruments. 28 ii TIEU LUAN MOI download : skknchat@gmail.
Exploratory factor analysis. Tests of regression assumptions. Test of multicollinearity. Test of normality of residual & heteroscedasticity.
Evaluating demographic variables’ impacts on customers’ trust. Summary of the results. 41 Chapter Five: Discussion. Limitations and directions for future research.
46 iii TIEU LUAN MOI download : skknchat@gmail.com Abbreviations WTO World Trade Organization APEC Asia-Pacific Economic Cooperation ASEM Asia-Europe Meeting SPSS Statistical Package for the Social Sciences PP Privacy Protection SP Security Protection PR Perceived Risk PB Perceived Benefit CTIS Customer Trust in Internet Shopping EFA Exploratory Factor Analysis TVE Total Variance Extracted VIF Variance Inflation Factor iii TIEU LUAN MOI download : skknchat@gmail.com List of Tables Table 2. Summary of prior conceptualizations of trust. Privacy protection and security protection scales. Perceived risk and perceived benefits scales.
Customer trust scale. Distribution of respondents based on demographic characteristics. Item-Total Statistics. Total Variance Explained.
Item-Total Statistics. 40 iv TIEU LUAN MOI download : skknchat@gmail.com List of Figures Figure 1. Results of testing the conceptual model. 42 v TIEU LUAN MOI download : skknchat@gmail.com List of Appendix Appendix A.
Customer Survey Form. Regression Standadized Residual. Normal P-P plot of regression standardized residual.58 vi TIEU LUAN MOI download : skknchat@gmail.com Chapter One: Introduction 1. The Internet in Vietnam It has been more than one decade since the Internet started to have been used in Vietnam.
Vietnam connected the world in 2000, the Internet users was a small figures, just 0.3% of the population in 2000. However, the Internet is growing fast, much faster than in any other Asian countries in 2011. Over the last ten years 2000-2010, Internet usage has grown by 12.4 times in Vietnam. This is the highest level of penetration in the Asian countries.
After five years from 2000, this number was up to 12.7% of Vietnam population in 2009. Impressively, este et al. (2012) suggest that a large number of Vietnamese Internet users accounted for 30.8 million at the end of Feb 2012, equivalent to 34% of Vietnam population. More and more people are online and in Vietnam, they spend a massive amount of time on the Internet.
There is a huge, targetable population of consumers online. As to Feb 2012, 30.8 million Vietnamese people can be reached on the Internet, with a strong growth every year. In addition, these are not just the teenagers, but also more and more also their parents and in general, the household decision makers, an interesting target audience for marketing activities. They are also increasingly comfortable with making purchases online.
Online shopping in Vietnam The internet is changing the way consumers shop and buy goods and services, and has rapidly evolved into a global phenomenon and even in Vietnam. Many companies have started using the Internet with the aim of cutting marketing costs, thereby reducing the price of their products and services in order to stay ahead in highly competitive markets. Customers use the Internet not only to compare prices, 1 TIEU LUAN MOI download : skknchat@gmail.com product features, after sale service facilities they will receive, but they can save time and cost for buying products from a particular store. In 2010, every second Internet user in Vietnam has already visited sites that offer online shopping, buy and sell activities or auctions.
Este et al. (2012) suggest that the most of customers purchasing online is just a small piece of big potential e-commerce market and online shopping activities are mainly common in the north and in big cities, whilst in smaller cities it is not yet frequent. Hanoi is the undisputed leader in e-commerce with 60 per cent of Hanoi net citizens using these sites. To advance its e-commerce to improve businesses’ competitiveness thus boosting the country’s industrialization and modernization, Vietnam government approved a plan on e-commerce for the next 5 years 2011 – 2015 last year.
This decision helps concretize Vietnam’s commitments for international integration with WTO, APEC and ASEM. Although e-commerce purchases in early stage market in Vietnam, the high young generation population and great coming opportunities closer promises the strongest growth in online shopping area. However, the major problem in the area of online shopping is the low confidence in online payment systems. Este et al.
(2012) suggest that one of the key factor to explain for this is that people does not trust in Internet shopping. Therefore, studying trust is considered as a vital key for individuals or organizations to maintain and build customer’s trust so in Internet shopping that the growth of e-commerce can be speeded up for the coming years in Vietnam. Statement of purpose This study aims to identify which ones of the four antecedents of trust (privacy protection, security protection, perceived risk, and perceived benefits) have impacts on customer trust in online in shopping in Vietnam. 2 TIEU LUAN MOI download : skknchat@gmail.
Research question Is customers’ trust affected by perceptions about privacy, security protection, perceptions about the risks and benefits during the transaction on the Internet. Significance of the study In terms of theory, this study provides an empirical understanding role of factor trust towards online shopping; And in terms of practice, this study presents strategic implications and directions for the development of online shopping in Vietnam. Scope of the study The study focuses on collecting people having experience in the online shopping Ho Chi Minh City. The city is selected due to the highest Internet penetration rate.
Este et al. (2012) suggest that the Internet penetration rate is more than 50% the population have used the Internet already in urban Vietnam. The city is higher than the average rate of 50% of the population with the rate 62% in 2011. Structure of the study The thesis consists of five chapters.
Chapter 1 introduces an overview of the background, statement of purpose, research question, the significance of the study, and scope of the study. Chapter 2 reviews existing literature on trust, online customer trust, and the four antecedents of trust. These literatures summarize briefly the knowledge of recent studies, describes the conceptual model, and hypotheses. Chapter 3 presents who participate in this study, instruments used to measure the research constructs, the description of the samples, data collection procedures and data analysis.
Chapter 4 describes characteristics of the sample. In addition, validity and reliability of measures will be checked by coefficients of Cronbach‘s Alpha and EFA (Principle Axis Factoring with Promax). Then testing the assumption of regression, evaluating 3 TIEU LUAN MOI download : skknchat@gmail.com demographic variables’ impacts on customers’ trust, and testing hypotheses are presented. Chapter 5 presents discussions on the research findings.
Theoretical contributions, practical implications, and limitations of the current research are also discussed. Suggestions for future research will conclude this dissertation. 4 TIEU LUAN MOI download : skknchat@gmail.com Chapter Two: Literature Review 1. Trust in online shopping 1.
Definition of trust in e-commerce Trust definition in Internet shopping is a quite complicated concept in e- commerce field. Depending on different contexts, researchers offer different meanings.1 shows below, trust is viewed as 1). A set of specific beliefs (Doney & Cannon 1997; Ganesan 1994). A general belief that another party can be trusted (Gefen 2000; Hosmer 1995; Moorman et al.
Affect reflected in “feelings” of confidence and security. A combination of three elements mentioned above. Based on trust objects, trust has been conceptualized as a specific and general belief. Some of them describe the specific beliefs as antecedents to the general beliefs (Jarvenpaa and Tractinsky, 1999; Mayer and Davis, 1999; Mayer et al., 1995; Jarvenpaa and Tractinsky, 1999) or sometimes conceptualize the specific beliefs as antecedents to trusting intentions (McKnight et al.
The others conceptualize trust as general beliefs in e-commerce contexts that leads to behavorial intentions (Gefen, 2000); as a combination of intergrity and caring that leads to an increase in behavioral intentions to vulnerability (Javenpaa and Tractinsky, 1999); as a specific belief dealing with benevolence, competence, and intergrity that results in trusting intentions (McKnight et al. However, the distinction between trust as a set of specific and general belief is primarly happened dealing with interpersonal trust in organizational settings (McAllister, 1995; McKnight et al. However, this distinction is seldom occured in economic transaction settings because the definition of trust is used in these contexts is an extension of trust definition rather than the original definition of interpersional trust (Hosmer, 1995; Williamson, 1985). Consequently, some researchers stated that actual behavior in ongoing economics alliances is a proxy for trust, defined in that 5 TIEU LUAN MOI download : skknchat@gmail.com context as confidence or an overall belief (Gulati, 1995).
This study has adopted the conceptualization of trust as a set of specific beliefs because it deals with going economic relationships (Crosby et al., 1990; Doney and Cannon, 1997; Ganesan, 1994; Schurr and Ozanne, 1985) and this set of specific beliefs is most widely used in the literature. Therefore, Trust as a feeling (Rempel et al., 1985) has been previously studied in the context of interpersonal relationships. It is arguably irrelevant to business transaction. Summary of prior conceptualizations of trust Study Trust Conceptualization Trust Object Measures Anderson Expectations about the Business Overall trust and Narus behavior of the other relationships (1990) company.
Bustler Two sub-constructs: Organizational Measure of overall (1991) 1. Attitude affective trust trust 2. Cognitive specific trust Crosby et Confidence that the trusted Buyer-seller Empirical: overall al. (1990) party will behave in the relationships trust, caring, integrity interest of the customer.
Doney and Perceived credibility Buyer-seller Honesty, caring, Cannon (integrity) and benevolence. relationships trustworthy (1997) Source: Gefen, David; Karahanna, Elena; Straub, Detmar W. 56-59) 6 TIEU LUAN MOI download : skknchat@gmail. Summary of prior conceptualizations of trust (Cont.) Study Trust Conceptualization Trust Object Measures Doney et Willingness to rely and be Culture Conceptual at.
(1998) dependable upon another.