A STUDY ON KNOWLEDGE BASE TRUST IN ADOPTING E-TRANSACTION

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1 A STUDY ON KNOWLEDGE BASE TRUST IN ADOPTING E-TRANSACTION Hsiang-Yung Feng 1, Ting-Yuan Chang 2 1 National Pingtung Institute of Commerce, 2 National Cheng Kung University (TAIWAN) s:hyfeng@npic.edu.tw, tychang88@gmail.com ABSTRACT On-line sales are more and more important for marketing strategy around the world than before. As of March, 2010 in Taiwan, the total number of subscribers of wired broadband Internet reaches 6.53 millions, and the household computer penetration rate also reaches 82.8% in That means there are over 63.8% Internet users and 88.8% Internet users at least are on-line at home. Internet users on-line time become longer than it used to be, that make correlative factors between on-line time and on-line purchasing behaviors to be popular issues in these years. This study aims to analyze employees, who work in professional information or communicate technology and non-professional field environment, to adopt e-transaction behaviors by individual e-trust differences. Analyzed statistic data shows that employees, who work in high technology department with further technology knowledge or own positive attitude of e-shopping cognition, will have significantly stronger intention to adopt e-transaction purchasing behaviors than other employees. Therefore, persuading or directing customers cognition to trust e-commerce security will be helpful for them to adopt new e-transaction. Key words: E-commerce, e-trust, reliability, e-transaction 1. INTRODUCTION Some literature recognize the influential factors to purchase on-line products as prediction indicators to make customers trust on e-transaction and to promote purchasing rate on-line in this uncertain security network environment in Taiwan. The customers trust factors are related with human beings cognition of information security. Establishing successful model to improve e-transaction portion of on-line shopping will be critical to save shopping time for busy customers and to sellers for extending marketing scales. This paper will review influential factors for increasing consumer trust in e-commerce, then draw models which build online trust on the Internet environment. Due to uncertainty risk existing in e-environment, apparently Taiwanese high educated level employees, who especially are charge of professional information technology or information communication technology field administrators or engineers, do not prefer adopting e-transaction than ordinary customers. This research purposes aimed to find those influential factors that refused to adopt e- transaction behaviors and promote on-line purchasing. In literature review, e-trust can reduce the levels of perceived risk associated with transaction process (Pavlou, 2003; Koufaris and Hampton-Sosa, 2004). 1.1 On-line trust behaviors Online trust is an important determinant for web sites to succeed in marketplace (McKnight and Chervany, 2001; Balasubramanian et al., 2003; Grabner-Krauter and Kaluscha, 2003; Koufaris and Hampton-Sosa, 2004), and for retaining long-term relationships with consumers (Reichheld and Schefter, 2000; Gefen et al., 2003). A definition of trust is: the willingness of a party to be vulnerable to the actions of another party based on the expectation that the other will perform a particular action important to the trustor, irrespective of the ability to monitor or control that other party (Mayer et al., p.712). A high degree of trust not only stimulates and meets consumers high expectations of satisfying transactions, but also eliminates uncertainty, perceived risks, and interdependences in most online transactions (McKnight and Chervany, 2001; Pavlou, 2003). In addition, the higher the degree of consumers trust, the higher the degree of purchase intentions of consumers, and the easier it is for companies to retain consumers (Jarvenpaa and Tractinsky, 1999; Gefen and Straub, 2004). 1.2 E-trust and perceived technology There are many types of e-commerce such as B2B, B2C, and C2C. Papers which study on trust in e- commerce mostly focus on the intermediate, commercial store and the trusted third party (TTP) of B2C market. In e-commerce, consumers rarely deal directly with any sales people. Essentially, customers depend on an impersonal electronic storefront to act on their behalf (Jarvenpaa et al. 2000). Therefore, an Internet transaction often does not involve the simultaneous exchange of money and goods. Instead, they are transmitted from different locations and at various times (Zhang et al. 2005). This time interval between customer spending money and receiving goods creates the uncertainty of customer. 1.3 E-trust and perceived risks Perceived risk is an uncertainty in the purchase environment where consumers may consider the purchase outcomes and the importance or serious results associated with making a wrong or unsuitable decision (Hunter et al., 2004). Perceived security involves threats that create: circumstance, condition, or event with the potential to 304

2 cause economic hardship to data or network resources in the form of destruction, disclosures, and modification of data, denial of service, and/or fraud, waste, and abuse Perceived privacy is defined as the consumers ability to control: 1. Presence of other people in the environment during market transaction or consumption behaviour; 2. The dissemination of information related to or provided during such transactions or behaviors to those who were not present (Goodwin, 1991, p. 152). 2. LITERATURE REVIEW AND RESEARCH MODEL Online trust could play a key role in creating satisfied and expected outcomes in online transactions (Pavlou, 2003; Gefen and Straub, 2004); Yoon (2002) describes the mechanisms of online trust as: security assurance, reputation, web searching, fulfillment (i.e. willingness to consume), presentation (i.e. web quality), technology, and interactions (e.g. e-forums). These mechanisms are categorizes into three dimensions of online trust: (1) technicalbased: web searching, technology and presentation; (2) uncertainty of transactions and security: security assurance; and (3) competency-based: reputation, fulfillment, and interactions. 2.1 Theory Applied on Trust in E-commerce There are many theories has been applied for studying trust in e-commerce, they are Social Exchange Theory (SET), Expectation-Confirmation Theory (ECT), Theory of Reasoned Action (TRA), Theory of Planned Behavior(TPB) and Technology Acceptance Model (TAM). These theories are discussing the people use or purchase some things the possible influencing factor. These factors may divide into two parts, the intrinsic individual factor and the external environment factor. The external environmental factor will become individual knowledge or a cognition emotion part finally, thus to purchase or not is individual decision. For this reason, this study would choice knowledge-based trust and cognition-based trust to discuss the people s behavior of e-commerce. 2.2 Knowledge-based Trust Doney et al. (1997), referring to knowledge-based trust as a prediction process to trust. Trust is created in this process when some person s knowledge about the other party allows it to predict the behavior of the other party. Knowledge-based trust is base on previous experience of e-commerce. Familiarity and social presence should be some kinds of knowledge-based trust antecedents. Familiarity counteracts concerns that the other party may be opportunistic, based on a reliance on past joint activities when that did not happen. Familiarity is an understanding, often based on previous interactions, experiences, and learning of what, why, where and when others do what they do (Luhmann, 1979). 2.3 Cognition-based Trust Cognition-based trust is formed via categorization and illusions of control. Categorization processes (McKnight et al. 2001) suggest that individuals place more trust in people similar to themselves and assess trustworthiness based on second-hand information and on stereotypes (Zucker 1986). Illusions of control describes how, in the absence of significant first-hand information, trusting beliefs can be over-inflated. In an effort to gain some sense of personal control in an uncertain situation, individuals will assess a person s trustworthiness by observing and attending to cues that might confirm this person s trustworthiness (McKnight et al. 1998). This cognition-based trust antecedent has also been called as characteristic-based trust (Luo 2002). 2.4 Research Structure In terms of knowledge-based trust and cognition-based trust theory, this study builds a research structure. Besides personal attributes are independent variables, participants daily involvement in information technology time will be a consideration point. Research structure as below: Fig.1. Research Structure B a k u, A z e r b a i j a n 305

3 3. METHODOLOGY To investigate the e-trust (knowledge-based trust and cognition-based trust) and e-transactions (adoption and perceived trust) differences between professional engineers and technical experienced administrators, 320 participants were asked to fill questionnaires. The survey adopted a sample framework of professional technology engineers and related technical experience administrators in technology development department (aged from 21 to 55; individual income ranking into 5 levels from 650 to 2,000 USD monthly). 3.1 Sampling Data Collection Process Data collection lasted two weeks. In part 1 of the questionnaire survey, participants were required to fill-in personal information. In part 2, the researchers joined their routine working environment and observed each participant s online operation and business discussion for the purpose of examining their online trust (Koufaris and Hampton-Sosa, 2004). Each respondent was required to calculate their daily usage of Personal computers, and physical on-line shopping or on-line purchasing intension times. Table 1 Summarize the theoretical development of the instrument. The research utilized statistical analysis and SPSS software to examine this research hypothesis. The data analysis included: (1) Descriptive statistics; (2) ANOVA (Analysis of variance) and (3) Regression analysis. Content Knowledge-Based Trust (KBT) Table 1. The theoretical development of the instrument Professional Technology Knowledge (KBT1) Related technical working experience (KBT2) Source of surveys items and/or theory Van der Heijden et al. (2003) and Koufaris Van der Heijden et al. (2003) and Koufaris Cognition-Based Trust (CBT) Reliable on news of Internet(CBT1) Koufaris Doney and Cannon (1997), Jarvenpaa et al. (2000) and Koufaris Reliable on e-shopping(cbt2) Zwass (1998), Gefen (2000), Shim et al. (2001), Pavlou (2003) and Gefen and Straub (2004) Perceived Internet cheating(cbt3) Yousafzai et al. (2003) e-transaction Adoption Intention (eta) e-transaction belief (eta1) Yousafzai et al. (2003) Intention to use e-transaction (eta1) Zwass (1998), Gefen (2000), Shim et al. (2001), Pavlou (2003) and Gefen and Straub (2004) 3.2 Questionnaire Design and Measurement The survey questionnaire contained four parts. Part I included of questions survey about Information Technology (Abbr. IT) or Information Communication Technology (Abbr. ICT) related professional knowledge, include participants professional background and non-professional knowledge background but with related working experiences investigation. Questionnaires part II survey demographic information. Each sample will be required to response age, gender, marriage status, individual income information. The part III mainly survey participants e-line trust, include e-transaction trust, e-news belief degree and e-commerce cheating cognition status. The questions were rated on a 5-point Likert scale ranging from 1 (strongly NOT agree) to 5 (Very strongly agree) for different degree. And Part IV survey the e-transaction adoption and reliable on e-transaction. 4. ANALYSIS AND RESULTS 4.1 Description of Sample Primary data collection focused on professional IT/ ICT technical background or related working experience employees at high technology departments in Taiwan (Table 2); these users tend to have high levels of internet experience. All questionnaires were collected and analyzed percent were male and 53.1 percent were female. The professional IT/ ICT background engineers were 43.7 %, and 56.3% of the respondents do administration job with related IT/ ICT working experience

4 Item Table 2. Characters of sample Administrators with IT/ ICT working experiences Professional IT/ICT background engineers Gender Female 34.4% 18.7% 53.1% Male 21.9% 25.0% 46.9% Income Under 650USD 0% 3.1% 3.1% 651~1,000USD 18.8% 6.2% 25% 1,001~1, % 18.8% 43.8% 1,501~2,000USD 9.4% 6.2% 15.6% Over 2,001USD 3.1% 9.4% 12.5% Total 56.3% 43.7% 100% 4.2 Test of Hypothesis Subtotal The influences of personal characteristics and IT involvement variables on KBT/CBT were analyzed through one-way ANOVA. Only indicator marriage situation shows significant influence (p<0.1). Marriage situation will significantly impact respondents to believe security of e-transaction and to own on-line shopping willingness. And Scheffe test shows unmarried respondents own more degrees than married ones. However, all parts indicators of personal characteristics and IT involvement variables were no significant difference on KBT/CBT. These outcomes mean this study can ignore personal characteristics and IT involvement variables to directly observe the effects of KBT/CBT on e-transaction adoption. Table 3. e-transaction Adoption influential factors by Individual characteristics Variables KBT(knowledge-based trust) CBT (cognition-based trust) Age F=1.618 F=0.694 Gender F=1.072 F=0.185 Marriage F=1.806* F=1.802* Income F=1.033 F=1.144 Furthermore, the outcomes of regression analysis (see table 4), model I and model II show that both knowledge-based trust and cognition-based trust significantly influence to adopt e-transaction. Adjusted R 2 values were and It exhibits that cognition-based trust is more effective estimated to e-transaction adoption. That is, those who own professional technical background will be easier to adopt e-transaction, because of their knowledge filled with technology useful Internet security and low risky uncertainty. Nevertheless, those who don t own professional technical background but cognition-based trusting on webs will accept shopping on-line more high frequency. Model III combines knowledge-based trust and cognition-based trust factors to process, both F-values affect significantly to adopt e-transaction. But, the adjusted R 2 value of model III is lower than the value of model II. It seems that knowledge and cognition significantly influence to adopt e-transaction by itself, but reduceto believe in e-transaction by combining both. 5. CONCLUSION On-line sales and shopping are important for this popular e-commerce era. Research results display that knowledge-based trust and cognition-based trust factors will affect online transaction. The study adopted regression analysis to test research hypotheses. The model III shown below had a good fit (P<0.001) and a high adjusted R 2 value of Knowledge-based trust and cognition-based trust will influence website visitors to adopt e-transaction behavior. Meanwhile, each participant individual income, age, gender won t significantly affect their on-line purchasing behavior, but e-trust from KBT (knowledge-based trust) or CBT (cognition-based trust) have significantly affect to adopt e-transaction. CBT has stronger influential degree than KBT on e-transaction. Actually, it means professional IT or ICT knowledge has less influential degree to adopt e- transaction than e-shoppers trust with positive cognition on Internet environment. Table 4. Results of regression analysis Model Variables β F - Value Adj. R 2 Model I KBT ** eta = KBT1+KBT2 KBT Model II CBT eta = CBT1+CBT2+CBT3 CBT *** CBT Final Model CBT *** eta = CBT+KBT KBT ** B a k u, A z e r b a i j a n 307

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