A cross-cultural study of E-commerce - Exploring factors that influence individuals to buy through the internet or to avoid E-commerce

Postgraduate

Abstract

This is a cross-cultural study that aims to investigate the factors that influence individuals to buy through the Internet or to avoid e-commerce and whether these factors play the same role in different cultures. The original sample consisted of 103 international students from 35 different nationalities studying in the east of The Netherlands. Based on the cultural dimensions of Hofstede, participants were classified as low or high UAI (Uncertainty Avoidance) and as low or high IDV (Individualism - Collectivism). The final sample consisted of 24 low and 28 high UAI participants and 26 low and 24 high IDV participants. The outcome is that ‘better prices’ is the main factor influencing e-commerce adoption for all cultures. However, there is disagreement regarding to the second most mentioned factor. For low UAI and high IDV is ‘availability’, whereas for low IDV and high UAI is ‘convenience’. Conversely, there is agreement related to factors influencing individuals to avoid e-commerce: worries about privacy/security on the Internet. Moreover, offering privacy guarantees on the Internet is very important for all individuals independent of their cultural values. It is remarkable that cultures adopt e-commerce influenced by different factors but avoid e-commerce influenced by the same kind of factors. 


Introduction

 

With the advent of Internet the distance barrier between countries has disappeared. Information can be sent anywhere almost instantaneous and online shopping can be done from everywhere. Electronic commerce has been primarily influenced by Western culture since that is where the majority of web sites were developed and users clustered. Consequently, many web pages have a design to appeal to North Americans (Simon, 2001). As a matter of fact, this is a problem for those companies that want to succeed worldwide; it is necessary to considerer the cross-cultural differences. Many companies have failed in differentiating their online operations (Merrilees, 2001).  

For instance, the simple translation of a web site into a foreign language may be a disaster. Likewise, ignorance about colour associations may be a problem (Horton, 1993). For example, while the colour white represents purity in the United States, in Japan this colour is associated with death (Chau, Cole, Massey, Weiss & O’ Keefe, 2002).

Additionally, beyond the interface factors it is necessary to investigate to what extent other factors influence people to buy, or not, through the Internet. For instance, availability is the main factor positively influencing Internet users in Singapore to buy through the Internet (Teo, 2002). Conversely, this same factor ranked as the least important for Internet users from Malaysia. (Wiszniewski, 2002). It seems that the influencing factors to buy though the Internet differs within cultures.  

On the other hand, for people who do not buy through the Internet, privacy, security and fear of using credit cards have been main factors negatively influencing individuals to buy through the Internet (Udo, 2001; Lebo, 2004; Swinyard & Smith, 2003). It seems that individuals avoid Internet purchases influenced by the same sort of factors. However, to what extent? 

 

Therefore, this study aims to answer the following research questions: 

 

What factors influence the individual decision to purchase online?

 

To what extent do these factors play the same role in different cultures?

 

In order to develop this study in a cross-cultural perspective, the basic framework used is Hofstede’s cultural dimensions (Hofstede, 1984, 2001). He developed five dimensions in order to measure cultural values. These dimensions were derived from an analysis of data collected in more than 50 countries over 100.000 employees from the IBM company.  Summarily, these dimensions are defined as following:

Power Distance Index (PDI): It focuses on the degree of equality or inequality between people in the country‘s society. A High Power Distance ranking indicates that inequalities of power and wealth have been allowed to grow within the society.

Individualism - Collectivism (IDV): It focuses on the degree the society reinforces individual or collective achievement and interpersonal relationships. A High Individualism ranking indicates that individuality and individual rights are superior within society.

Masculinity – Femininity (MAS): It focuses on the degree that society reinforces, or does not reinforce the traditional masculine work role model of male achievement, control and power. A High Masculinity ranking indicates the country experiences a high degree of gender differentiation.  

Uncertainty Avoidance Index (UAI): It focuses on the level of tolerance for uncertainty and ambiguity within society. A High Uncertainty Avoidance ranking indicates the country has a low tolerance for uncertainty and ambiguity. This creates a rule-oriented society with laws, rules, regulations and control in order to reduce the amount of uncertainty.  

Long versus Short-Term Orientation (LTO): It focuses on the degree that society embraces  long-term devotion to traditional, forward thinking values. High Long-Term Orientation ranking indicates the country has values as respect for tradition and long-term commitments.

Based on the characteristic from each dimension, each country involved in Hofstede’s study received a value called index (see Appendix A). For instance, The Netherlands has an Uncertainty Avoidance (UAI) index 53 whereas Brazil has 76, which means that Brazil is less tolerant to uncertainty than The Netherlands. On the other hand, The Netherlands has a much higher index than Brazil according to Individualism - Collectivism (IDV), 80 comparing to 38. It indicates that in The Netherlands individual initiatives are socially encouraged and that Dutch citizens have more individualistic attitudes than Brazilian people (Hofstede, 2001).

Considering that e-commerce is a new way of shopping  in which the product cannot be touched, the sales person cannot be personally reached, payments are not in cash and there is no social interaction, it can be said that e-commerce involves high degrees of uncertainty and that it is an individual task. Based on these characteristics of e-commerce, two dimensions from Hofstede are selected to form the basic framework of this study: Uncertainty Avoidance and Individualism - Collectivism.