The Development Of Computers Accounting Essay


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A significant change has occurred in the development of computers in the past 40 years. The inventions in computer technologies have become a vital element in today's world, out of which one of the most important invention is the Internet which has played a vital role in the development of e-commerce. The internet is simply a network of networks. In a computer network all the computers are connected with each other through wires, fabric optics, phone lines and satellite, so that the data can be easily transferred between them. Now the use of the internet has been expanded to almost all the fields like Business to Business (B2B), Business to consumer (B2C) Consumer to Consumer (C2C) Commerce and Technology. The development of the internet has changed the entire structure of the world. Since 1995, the internet has encompassed all the aspects of an organisational life redefining the way organisations do business and aids interacting with one another and their customers and employees. In late 1990s and even up till 2000 the major focus of the companies was to become internet enabled by investing in internet connectivity and e-commerce application (Key Notes Internet Usage in Business 2006).

1.2 What is E-commerce

According to Sokol, 'E-commerce is the sharing of the information using a wide variety of different electronic technologies, between organizations doing business' (Sokol, 1995). Like traditional commerce, electronic commerce actively involves the following four basic levels: ­

  1. A communication infrastructure, carrying message about prices, quantities, service or product characteristics.
  2. A marketplace, the market coordination environment in which buyers meets sellers and negotiate
  3. Transaction mechanisms to send, execute and settle order (including payments)
  4. Deliverables, the service or merchandise being exchanged

(Farhoomand pg 77). Companies used the internet as a mean of redefining their business, creating a new product, finding new distribution channel and creating new market and they accomplished all of these while cutting back on the cost of doing business. In fact business became the fastest growing segment on the internet. E-commerce has enabled a wide range of sellers and consumers related activities to converge into one place, including marketing, order processing, distributing, and payment. The web had the potential to cut distribution cost or the cost of sale to almost zero. This is especially true for the firms in publishing, information service or digital product categories (Frahamoond, pg45). The emergence of web took e-commerce to new height. Through no other medium could a company market its product globally and receive orders from around the world in such a short period of time. Due to these developments e-commerce is gradually converting into a mainstream business activity. At the same time online consumers are maturing and online e-tailer's are realizing the importance for a professional and customer-oriented approach.

The growing use of internet in UK has provided a development prospects for e­tailers. According to National Statistics 7 in 10 UK businesses have a website ( As customers embrace e-commerce their expectations about the support and service and how to make purchases online are changing. The electronic service that is offered to enhance the shopping experience of the customers includes search support, e-responses to customers queries, orders and transaction, e-payments, e-transaction record management, e-assurance and trust, e-help and other online support in the Business to consumers e-space (Mohini, 2003). The internet will account for 25% of all retail sales by 2009. (

As the competition in e-commerce is increased, it becomes more important for online retailers to understand the consumer adoption and acceptance of online shopping. The total population of UK constitute to 58.8 million out of which 24 million UK customers shopped online in 2005 and it was calculated that they have spent over £19.2bn which was 32% more than that of 2004 (BBC, 2006). Though more people are shopping online than ever before but still they have concerns about the issues regarding the misuse of personal/financial information online shopping.

As a new form of commercial activity, Internet shopping involves more uncertainty and risk than traditional shopping. Consumers' unwillingness to provide their credit card information over the Web has been cited as a major obstacle to online purchases (Maignan and Lukas, 1997). Many consumers believe that it is too easy to have a credit card stolen online [Caswell, 2000]. Moreover, it is difficult for consumers to physically check the quality of a product before they can make purchase, or monitor the safety and security of sending personal and financial data through the Internet to a party whose behaviours and motives may be hard to predict.

The importance of secured online transaction has been emphasised by Sydney Rubin an expert in Online Privacy Alliance (OPA) who states that 'every online transaction should have private and security policy to go with it' (Reda, 1996). Though websites try to guarantee the customers about their security system, still many customers are unwilling to reveal their sensitive information via the internet as they do not trust the security systems that are promoted by the company (Mercuri, 2005). This is because still there are number of security, data information thefts incidents going on a daily basis for example: ­

  • Hackers have stolen information from at least 45.7 million payment cards used by customers of US retailer TJX, which owns TJ Maxx, and UK outlet TK Maxx (BBC, 2007).
  • 'Teenage hackers target security flaws' and downloaded 26000 credit card numbers using the computer (BBC, 2000).
  • Anti-fraud firm Experian said the internet is proving popular with criminals who shop with stolen credit card or using software that generates plausible card number (BBC, 2001).

These kinds of incidents reported in the press influences the perception of the customers and have an impact on their behaviour with regards to fully embracing online shopping. Companies need to establish certain amount of trust about the security of transaction information with its customers in order to make online shopping a feasible business medium. A consumer may be rationally influenced to use the Internet shopping as an alternative to the physical store if the convenience and security factors have been satisfied for the customer (Smith, 2004)

Several researchers projected that the online shopping behaviour of the consumer is fundamentally different from the traditional environment (Alba et al., 1997, Winer et al., 1997). Different from traditional shopping, shopping through internet has exceptional feature of uncertainty, anonymity, lack of control and potential opportunism (Sonja and Ewald, 2003). It has been claimed by many researchers that, as far as online shopping is concerned there are various determinant of consumer tendency to shop in online environment and those determinants are transaction security, service quality, trust, website quality, pricing issues, system quality, enjoyment while shopping, and product quality. (Chen and Dubinsky, 2003; Liao and Cheung, 2001; Miyazaki and Fernandez, 2001). These determinants play an important role with respect to behaviour of the consumer and have an impact on their decision making.

The study of consumer behaviour is a broad and complex subject which encompasses the factors such as demographics, lifestyles, personality, values, culture and family which play a part in the consumers behaviour and decision making process (Blackwell et al, 2001). Thus this dissertation uses a small area of a consumer's behaviour, which is the Innovation decision making process to facilitate a feasible comparison with online behaviour.

Chase and Fransson (2000) in one of their article claimed that Internet shopping is no different from any other innovation. It is simply a new/innovative method of purchasing products. Since the internet can certainly be classified as a "new" or "innovative" shopping format, companies with online stores might be very interested to learn how innovative their customers are. Midgley and Dowling (1978, p. 236) described innovativeness as 'the degree to which the individual is receptive to new ideas and makes innovation decisions independently of the communication experiences of others'. Roger classified four categories of innovativeness

  1. Innovators
  2. Early adopters
  3. Late adopters
  4. Laggards

The perceptions of an individual regarding using an innovation are considered to influence their adoption behaviour (Rogers, 1995; Moore and Benbasat, 1991; Agarwal and Prasad, 1998). There are various significant theoretical models developed that tries to explain the relationship between user beliefs, attitudes, intentions, and actual system use include the theory of reasoned action (TRA) (Ajzen and Fishbein, 1980), the theory of planned behaviour (TPB) (Ajzen, 1991), and the technology acceptance model (TAM) (Davis, 1989; Davis et al., 1989).

The Technology Acceptance Model (TAM) (Davis et al. 1989) is the most-widely cited explanatory model of an individual's acceptance of a specific technology as an innovation. As with most information systems, Internet technology acceptance and use can be partially explained by the technology acceptance model. Whereas the technology acceptance model (TAM) initially focused on technology usage in the workplace, it has been found to be an appropriate theoretical foundation for explaining response to web sites. Researchers have successfully applied TAM to understanding web site use (Moon and Kim, 2001; Teo et al., 1999), and online shopping (Chen et al., 2002; Chen and Tan, 2004; Childers et al., 2001; Gefen and Straub, 1997; Koufaris, 2002; Lin and Lu, 2000; Liu et al., 2003; O'Cass and Fenech, 2003; Vijayasarathy, 2004). Therefore, intentions to use the Internet for on-line transactions should consider the major TAM constructs, which theorize that perceived usefulness and perceived ease of use determine actual system use (Davis, 1986).

Trust plays an important role for a website to succeed in a market place (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. Therefore, in E-commerce trust is an important factor to develop a strong relationship between the buyer-seller (Sonja and Ewald, 2003). Lack of trust is one of the most commonly cited reasons as to why the consumers do not in an online purchase (Lee and Turban, 2001) and it plays a significant role in facilitating online transactions. This might be because in an online environment the consumers have no physical interaction with the seller. So the website becomes the only medium for the consumers to interact with the sellers, thus the website plays an important role to gain consumers trust online. The quality of the website can be measured in terms of its design i.e. the look and feel of the site (Day, 1997). Thus the design of the website must be user friendly in order to satisfy consumers need and trust while shopping online. The consumer's pleasant experience with the website design can have positive impact on the consumer's belief towards the website.

The research presented in this paper aims to predict consumer acceptance of e-commerce by integrating TAM(Ease of use) with the constructs of website experience, trust, perceived ease of use, perceived enjoyment, perceived risk and intention to transact online. This research will try to find the factors that influence the consumer's intention to online transact while online and the consumer's innovative decision making processes while shopping online. Thus by understanding what motivates the consumers to adopt online shopping as an innovation will give the marketer the information they need to stimulate online shopping by those who have not yet adopted it. This research will also try to find the important role that consumer's website experience plays in the formation of trust when the concept of familiarity with the website, prior experience, e-tailers brand and loyalty is eliminated. Thus based on this discussion the researcher will propose a model, which will be derived from the theoretical foundations of prior research in the theories of technology acceptance model (TAM). The researcher will then examine the impact of consumers website experience on formation of trust and based on that trust how they perceive ease of use, perceive enjoyment, perceive risk and their intention to transact while online shopping.

1.3 Aim and objectives of the research AIM

To examine the impact of website experience, on consumers intention to transact while shopping online.


  1. To understand the factors that influence the consumer to shop online
  2. To study consumers innovation decision making process while shopping online.
  3. To explore the relation between web design and consumer trust while online shopping
  4. To propose an online shopping model which will show the relationship between consumers website experience and intention to transact while shopping online
  5. To support the proposed online shopping model and hypothesis by using primary research
  6. To project the comparison between secondary and primary research


This chapter review the available literature in order to meet the overall aim of the thesis and achieve the individual objectives that the author felt is necessary to look at.

2.1 What influences the customers to shop online

A Consumer can buy almost every thing from the internet by sitting at the comfort of their home or office. Customers use the Internet not only to buy the product online, but also to compare prices, product features and after sale service facilities that they would receive if they purchase the product from a particular store. Online shopping has attracted many consumers by offering a reduction in search costs for products and product-related information (Janssen and Moraga, 2000; Shankar et al., 1999). The electronic service offered by e­tailers to improve the shopping experience of the customers include search support, e-responses to the queries of consumers, orders and transaction, e-payments, e-transaction record management, e-assurance and trust, e-help and other online support in the Business to consumer's e-space. (Mohini., 2003). Online retail stores have some similar features to traditional retail stores. For example, online retailers offer e-mail addresses of sales associates or frequently asked questions (FAQ) sections to communicate with their customers, just as physical stores have sales personnel (Heejin Lim and Alan J. Dubinsky). Likewise, Web sites typically provide a toll-free telephone number through which their customers may contact sales associates for further information. Customers can also find reviews or feedback of the products, which they are considering to buy from the internet thus making them more aware of the pros and cons of buying the product online. By using the internet for shopping the need to physically visit the shop gets reduced and also the consumer can place the order at any point of time irrespective of the shop being closed. Shopping through the internet allows greater customization of the product, services and promotional messages than older marketing tools. For e.g. Dell now provides the customization of their PC or Laptops (Leon G schiffman pg3).

Shopping via the internet also enables the marketers to collect and analyse data on consumers buying pattern and personal characteristics, through which they can track online customer's behaviour easily (Leon G schiffman pg3). According to Schiffman (2004), in order to succeed today's dynamic and developing marketplace, marketers need to know everything they can about the customer for e.g. what they want, how they think, how they work and spend their leisure time etc. They need to understand the personal and group influence that affects customer decisions and how these decisions are made.

2.2 Consumer Behaviour while shopping online

The issue of consumer behaviour is a key in marketing literature. According to Blackwell et al. (2001) if a retailer needs to be a successful player in the marketplace then it is necessary to understand and research consumer behaviour and consumer's innovativeness. The term consumer behaviour is defined as 'the behaviour that consumers display in searching for, purchasing, using, evaluating and disposing of product and services that they expect will satisfy their needs'(Leon G. Schiffman, 2004 pg 8). According to Schiffman (2004), consumer behaviour aims on how an individual make decisions to spend their resources such as time, money and efforts on consumption related items that includes what they buy, why they buy, when they buy, where they buy it from, how often they buy, how often they use it, how they evaluate it after purchase and the impact of the evaluation on future purchases, and how they dispose it.

Several researchers proposed that the behaviour of a consumer while online shopping is essentially different from the traditional environment (Alba et al., 1997, Winer et al., 1997). Being different from traditional shopping, shopping via internet has got an exceptional feature of uncertainty, anonymity, lack of control and potential opportunism (Sonja and Ewald, 2003). The precedence issue for the e-tailers competing in the fast expanding virtual marketplace must be to understand the concept of online shopping and the behaviour of online consumer. Chen and Zhaobin, (2005) claimed that understanding the consumer behaviour in an online environment cannot be accomplished if the factors affecting the purchase decision are ignored or misunderstood. If E-marketers know the different issues that affect the online consumer decision making process, then they can further develop their marketing strategy to convert the potential customers into real ones and can also further retain their existing customers as well. Since consumer behaviour is a vast and complex subject the researcher will use a small area of consumer behaviour i.e. innovation decision process to conduct a feasible comparison of consumers online behaviour.

2.3 Consumer's innovative decision process while shopping online

The innovation decision process bears its origins from the Innovation diffusion theory which has been used from1950's. Rogers (1995, p20) proposed a model of the innovation-decision process that describes how individuals make a decision to adopt or reject an innovation. He defined innovativeness as 'the degree to which an individual is relatively earlier in adopting new ideas than other member of a system' (Rogers, 1995, p.22). The current literature on consumer's traditional and online purchasing decision mainly concentrates on identifying the key factors that affects the willingness of a consumer to engage in online shopping. According to Schiffman 'decision is the selection of an option from two or more alternatives'. In other words for a person to make a decision a choice of an alternative must be available (Schiffman, P.547). Innovation decision process is an activity of information seeking and information processing, in which information is obtained by an individual to decrease the level of uncertainty about the innovation (Rogers, 1995, p.20). When ever a new technology or a product is launched in the market it often creates uncertainty about its likely consequences in the mind of potential adopters. Therefore in order to decrease the level of risk and uncertainty about the new product or technology, innovation decision process is used by individual's to search and process information about it. Consumers always learn about the innovation before adopting it which helps them to decide whether to buy/use it and whether to repeat the purchase/use in future. In simple terms, they decide whether to adopt it or not (Adam et al., 2001).

In decision making process, the individual first forms the knowledge of an innovation, which is followed by an attitude towards the innovation that helps them to decide to adopt or reject the innovation, which leads to the implementation of the new idea and concluding with the confirmation of the decision (Rogers, 1995).

An Innovator individual is a person, who initially adopts a new product or an innovation. An identification of these individuals (innovators) can help marketers concentrate the firm's resources on those groups that have been primarily targeted for its new product. This identification will help market researchers to focus on those groups who are early adopters and those which are not.

Online shopping is similar to innovative behaviour because it is more likely to be adopted by innovators rather than non-innovators. Roger (1995) has broken down the Innovation decision making process into five stages:

  1. Knowledge stage
  2. Persuasion Stage
  3. Decision stage
  4. Implementation stage
  5. Confirmation stage

2.3.1 Knowledge stage

Innovation decision making process begins with the 'knowledge stage which occurs when an individual is exposed to the innovation and gains some understanding of how it functions' (Roger, 1995, p.162). In this stage the individual based on his prior experiences such as previous practice, innovativeness, recognition of problem identify the existence of innovation and develops an understanding of its function. If one applies this to the internet for shopping, the individual becomes aware of using the internet for shopping based on their previous conditions such as internet usage, previous in-home shopping experience and personal characteristics of the shopper such as general innovativeness and demographic (H.Young and S.Leslie, 2004). In this stage consumers search for product information based on the product they need or one which interests them. In an online environment the consumer has no physical interaction with the seller, so in-depth search is done by the consumer to reduce the perception of risk. The factors that may reduce the risk perception of the consumers while shopping online can be the website appearance which comprises of quality of information, pictures, images and the video clip of the product (Lohse and Spiller, 1998; Kolesar and Galbraith, 2000). The previous experience and knowledge of consumers makes them target certain brands thus increasing their confidence towards online shopping. This may further reduce the perception of risk and the need to conduct pre-purchase information searches. It has been claimed by many researchers that the perceived risk while shopping online can be reduced by knowledge, skill, and experience on the internet and with the computer (Senecal 2000; Ratchford et al. 2001; Sukpanich and Chen 1999; Han et al. 2001; Dickerson and Gentry, 1983; Bobbitt and Dabholkar, 2001).

2.3.2 Persuasion Stage

In this stage, either a favourable or unfavourable attitude is formed by an individual against innovation based on the perception of characteristic of the innovation obtained in the knowledge stage. So in relation to online shopping, the knowledge gained from the 'knowledge stage' will be used as an input to the 'persuasion stage', whereby the consumer will form certain attitude towards online shopping by evaluating the attributes of shopping online (W.C. May et al., 2005). Some of the well known characteristics that influence adoption as proposed by Rogers (1995) include: ­

  1. Relative advantage -Relative advantage is defined as 'the degree to which an innovation is perceived as been better that the idea it supersedes' (Rogers, 1995, p.212). The rate of adoption of an innovation may increase rapidly if the consumers perceive the innovation to be relatively advantageous. This bears resemblance to one of the beliefs of Davids Technology acceptance model which speaks about the perceived usefulness. It has been stated by Venkatesh et al,2003 that perceived usefulness is similar to the relative advantage of perceived characteristics of Rogers Innovation diffusion theory. The adoption of internet shopping may increase rapidly if the consumer perceives the advantages of saving time, money and avoiding the inconvenience of shopping physically.
  2. Compatibility -Compatibility refers to 'the degree to which an innovation is perceived as consistent with the existing value, past experience and needs of potential adopters' (Rogers, 1995, p.224). In this phase, individuals may rapidly adopt the internet for purchase if they perceive internet shopping to be compatible with their life style. This can be further supported by Rogers (1995) who claims that individuals are likely to adopt an innovation that they are more comfortable with and in tune to the other technologies they already use. Greater compatibility results in a faster rate of adoption. The compatibility of an innovation with the existing ones will influence the consumer to increase the speed of its adoption or alternatively slow down the rate of adoption. In other words, Individuals may avoid using a new technology if they are not comfortable with it even though they may see it as having distinct benefits. Compatibility basically can be related to Davis's TAM by using a cultural context. In a cultural context if an individual is familiar with an environment which is more knowledge based the culture that prevails in such a scenario will induce him to try web based shopping. This would emanate from the premise that he/she would experience his peers using the internet for shopping and his perception of the ease of use of the internet would be improved thus lying in accordance with the TAM model of Roger.
  3. Complexity - Complexity refers to 'the degree to which an innovation is perceived as relatively difficult to understand and use' (Rogers, 1995, p.242). The consumer may rapidly adopt an innovation if they think that the innovation is easy to use i.e. it is less complex (Roger, 1995; Agarwal and Prasad, 1997; Teo et al., 1999). The intention to adopt or reject particular technology is based on the perceived ease of use of technology. Complexity is referred to as the notion of perceived ease of use. Rogers' evaluation principle speaks of perceived innovation complexity, which predicts a faster adoption when a technology is easier to use. In addition, strong evidence supported that perceived ease of use (PEOU) was also found as a direct determinant of usage behaviour (Adams et al., 1992; Davis 1989; Gefen & Keil 1998; Gefen & Straub 1997; Hendrickson & Collins 1996; Igbaria, Parasuraman & Baroudi 1996; Igbaria et al.
  4. 1997; Lederer et al. 2000; Teo, Lim & Lai 1999; Thompson, Higgins & Howell 1991). As per Venkatesh et al (2003), PEOU is analogous to the complexity of perceived characteristics of Rogers' Innovations Diffusion Theory, although in the opposite direction. In the complexity phase the individuals may rapidly adopt online shopping if they pursue an ease of finding information, an ease of using the customer service, an ease of ordering and overall an ease of use.

  5. Trialability -Trialability refers to 'the degree to which an innovation may be experimented with on a limited basis' (Rogers, 1995, p.243). Based on the consumer's perception, the degree to which consumers can try out the innovation will make them more comfortable to adopt it. In other words the greater the opportunity for a customer to try an innovation it would be easier for them to evaluate it and further adopt it. Hansen, 2005 viewed Trialability as the extent to which an online shopping can be experienced by the consumer on a limited basis. If the consumers can try out internet then they may be more comfortable using the internet for purchasing the product. The innovations that are tested are less risky for the adopters to adopt it.
  6. Observability - Observability refers to 'the degree to which the results of an innovation are visible to others' (Roger, 1995, p.244). Consumers may adopt an innovation if they observe a result from adopting it. They may also rapidly adopt online shopping if they observe the results of adopting the internet for actual purchasing. Roger, 1995 stated that observation in an innovation is an important factor in early adoption of innovation

2.3.3 Decision Stage

'Decision stage in an innovation decision process occurs when an individual engages in activities that lead to a choice to adopt or reject an innovation'

(Roger, 1995, p.171). As per Roger (1995) 'adoption' is a stage where an individual decides to make full use of the innovation as a best course of action available and 'rejection' is a decision made by an individual not to adopt an innovation. In this stage, based on the attitude developed in Knowledge and persuasion stage, the individual makes a decision whether to adopt or reject an innovation. Roger (1995), stated that if an individual attains a positive effective state from the innovation stage then an intention to adopt the new product or technology will be greater. Moore and Benbasat, (1991) stated the factors that influence the adoption of an innovation include image, result demonstration, visibility and voluntaries. In relation to online shopping Lei-da Chen et al., (2002) stated that the technology centred view explains and predicts the consumers acceptance by investigating the technical specification of the online store. These specifications include the user interface of online store (Huizingh), usability (Nielsen, 2005) ability to effectively communicate with the consumer (Alba et al, 1997; Baty and Lee, 1995) and security measures (Kakalik and Wright, 1996; Seldon, 1997). It is important to understand user expectations and how the users feel about the Web sites they use. Since the success of electronic market largely depends on a consumer's willingness to accept it therefore the more positive attitude towards the website will lead to higher intention to revisit the website.

2.3.4 Implementation stage

'Implementation stage occurs when an individual puts an innovation into use'

(Roger, 1995, p.172). Until this stage, innovation decision process has strictly been a mental exercise. At this stage an individual decides whether to adopt or reject the innovation/technology in actual practice. Applying this stage of Rogers' model to online shopping, if the consumers actually make a purchase online that means they are accepting and using online shopping as an innovation.

The most widely used model of an individuals acceptance of a specific technological innovation is the Technology Acceptance Model (TAM) (Davis et al. 1989). The study by Davis (1995) suggests that TAM delivers highly consistent results on the acceptance behaviour of the users towards new systems. T.D.Ahn et al., (2003) stated that the TAM has emerged as a powerful tool for investigating the acceptance and use of information technology, including the innovation decision theory. Because of the technological characteristics of the Internet, the TAM is increasingly applied to account for the main background and source of Internet usage (Venkatesh and Davis 2000; Venkatesh et al. 2002).

Research has been used on the TAM to describe individuals' perceptions and intentions toward the use of Internet services (Muthitacharoen and Palvia 2002; Pavlou 2003). As discussed above, it is a highly valid approach to use TAM as the basis for studying consumer acceptance of virtual stores.

2.3.5 Confirmation stage

The 'innovation' as described above, is reconsidered by an individual based on the satisfaction of the previous decision, and then a new decision is made whether or not to continue to adopt the innovation. In this stage, the consumer evaluates the performance of the product in the light of their own experience. According to Schiffman there can be three possible outcomes of these evaluations: ­

  1. If the Actual performance matches the expectation, then it will lead to a neutral feeling.
  2. If the Performance exceeds the expectations, it will lead to a positive disconfirmation of expectations (which further leads to satisfaction)
  3. If the Performance is below the expectation it will lead to a negative disconfirmation of expectations (dissatisfaction). Thus in case of online shopping the consumers evaluate the performance of the product based on their personal experience and will decide whether to continue the shop online or not.

2.4 Technology acceptance model

TAM was developed by Davis et al. (1989) by adapting the Theory of Reasoned Action by Fishbein and Ajzen, (1975), which predicted usage of computer technology systems at workplace. The initial model of TAM was developed to provide the explanation of user acceptance of computer technology within a workplace. TAM consists of two beliefs i.e. Perceived Usefulness and perceived ease if use. Perceived usefulness is defined as 'the prospective user's subjective probability that using a specific application system will increase his or her job performance within an organisational context'. Perceived ease of use is defined as 'the degree to which the prospective user expects the target system to be free of effort' (Davis et al. 1989, pg 985).

Davis (1989) found that perceived usefulness has a strong and consistent relationship with the computer usage. Similarly, Adams et al., (1992) and Igbaria et al., (1995) found that perceived usefulness is positively related to system usage. For example, a person will use a computer only if he/she perceives that the usage will help them to achieve the needed task performance. Similarly in relation to online shopping, perceived usefulness enables the user to accomplish shopping or information more quickly than traditional stores i.e. it saves time and money.

Perceived ease of use refers to the degree to which the user expects the use of the system to be user friendly (T. Teo 2001). Davis (1989) claimed that perceived ease of use can influence the usage of the computer directly. For example, if a system is easy to use then it will require less efforts for a user to understand and operate, thereby increasing the likelihood of usage and adoption. On the other hand, If the system that are complex or difficult to use are less likely to be adopted this is because it requires effort and interest on the part of the user (T. Teo 2001). Similarly in online shopping if the retailer's website is easy to browse/navigate, well designed and have got all the detailed information listed then these factors will influence the consumers to adopt online shopping.

2.5 Role of trust in online shopping

The significant growth in e-commerce has also introduced many new challenges. Attracting new customers and then retaining them is critical for the success of e-commerce (Jarvenpaa, et al, 1997; Reichheld et al, 2000). Trust plays very important role in the success of e-commerce. Lynch and Lundquist, 1996 stated that besides other academic discourses which surround security, confidence and promise fulfilment, at the core of e-commerce lies trust. Trust may be defined as 'one party's belief that its needs will be fulfilled in the future by actions undertaken by the other party' (Sahay, 2003). Trust is a crucial element of most economic and social interactions in which uncertainty is present. All relationships involve an element of trust especially those which are conducted in the uncertain environment of electronic commerce (Hoffman et al,. 1999; Friedman et al, 2000; Lee et al., 1998; Ba and Paylou 2002; Schoder et al., 2000). The basic premise of trust lies in its ability to behave in an ethical manner and is the expectation that undue advantage is not taken by individuals or companies with which interaction is undertaken (Hosmer, 1995).

Trust in a particular business increases based on the consumers past experience as well as by third party recommendations (S. Srinivasan., 2004). Trust plays a significant role in influencing consumer behaviour in an uncertain environment like the internet. Online trust takes time to develop and it is not easily measurable. Consumers trust in e-commerce is twofold i.e. one should encourage the potential buyer to purchase for the first time and secondly to encourage the existing buyers who have already purchased earlier from the e­tailers (Centeno, 2002). One of the major obstacles identified in the adoption of online shopping is the lack of trust in online transaction and the e-retailers (B. Friedman et al, 2000; D.L.Hoffman et al, 1999; D.Schoder et al, 2000). Hassanein, (2005) stated in one of his articles that, in Business to Consumer i.e. B2C online trust is more difficult to establish than Business to Business i.e. B2B online trust, because B2C relationships are of a short term nature and transaction based as opposed to B2B relationship. Yoon (2002) in one of his articles describes the mechanisms of online trust as security assurance, reputation, web searching, fulfilment (i.e. willingness to customize), presentation (i.e. web quality), technology, and interactions (e.g. e-forums). Many researchers stated that trust varies from country to country and is cultural (Jarvenpaa, et al., 2000; Lynch, et al., 2001). A consumer who belongs to a distinctive culture might have a greater degree of trust while conducting an online transaction from that of a collectivistic culture. Establishing a trust is very important in online environment to positively influence consumer's behaviour and purchase intensions (Bart et al., 2005; Corritore et al., 2003). There are various factors like inadequate infrastructure, lack of trust and security and privacy concerns that often leads to loss of sales. According to Chang et al., (2004) the factors which positively influence the consumers trust are familiarity with the website, structural assurance, perceived reputation, transaction security and site quality.

2.6 Impact of web-design on consumer trust while shopping online

As a virtual online environment has no provision for physical interaction with the seller, the user has to base his purchases on the appearance of the website and its components such as the images, quality of information, video footing and pictures (Lohse and Spiller, 1998; Kolesar and Galbraith, 2000). The lack of physical interaction sometimes makes it difficult for the consumers to check the identity of the seller. Interaction between the buyer and the seller in an online environment can be referred to the degree to which they communicate with each other at a given point of time. For the E-tailers, the quality of the website is influenced by the degree of interaction from the buyers (Ghose and Dou, 1998; Blattberg and Deighton, 1991). To interact with buyers, e-tailers provides variety of services such as e-form inquiry, Consumers comments, order status tracking, feedback from other consumers, FAQ sections and toll free numbers (Lohse and Spiller, 1998).

As there is no provision for the buyer to touch/feel the product the basis for his potential purchase is based on the web design of the e-tailer. In addition to this, payment of all the purchases is made with the use of debit or credit cards prior to the delivery of goods. Researchers have also claimed that majority of the users worry about information privacy issues related to the potential misuse of sensitive data (Smith, 2004; Miyazaki and Fernandez, 2000; Smith and Rupp, 2002). Thus to regain the trust and confidence of the customers the E-tailers may develop various commercial level policies, procedure and practices such as money back guarantee policy or credit card protection guarantee, information security policy etc. The website is the main medium to convey all its policies to the customers and must provide evidence regarding its security. For e.g. Is the website secure or uses Hyper text transfer protocol over secure socket layer (https) at the time of accepting payment from the consumers or the website is using any third party trust certificate? It has been claimed by many researchers that the effectiveness of third-party trust certification (e.g., TRUSTe or Verisign) is a central success factor for building consumer trust in Internet shopping (Hoffman et al. 1999; Smith, 2004) and it is especially true if a consumer intends to purchase from unknown E-tailers (Durkan et al., 2003). Jarvenpaa et al, (2000) in his journal article claims that the perceptions of the store's reputation and size were supposed to affect consumer trust of the retailer. The Retailers assurance to reimburse the consumer for any unauthorized charges made to their credit card via the retailers secure system would motivate consumers to increase purchases via that e-tailer. Examples of this type of guarantees are's safe shopping guarantee and Wal-Mart's online security guarantee (Smith, 2004). Therefore, a good structured website, Quality of information provided, well-known or reputable web-site and a trusted brand can compensate the lack of personal contact in online environment and at the same time it can act as a reassurance of the quality of product and service to the end-user (Alba et al., 1997; Reynold, 2000; Durkan et al., 2003). These factors try to reduce some of the doubts and increase the level of trust among the customers shopping online.

Third party brands are playing very significant role on influencing the assurance of the consumer in relation to online shopping. (Pavlou et al., 2003). The level of consumers trust can be increased with the use of brands that are well known in the physical world (Durkan et al., 2003). A well known brand name can help the consumers in increasing their confidence to share their information with another party by participating in online shopping. Dholakia and Rego (1998) investigated the factors which make commercial web pages popular and they found that a high daily hit-rate is strongly influenced by the number of updates made to the website in the preceding three month period.

2.7 Website Experience And Consumer Trust

Web experience can be defined as 'the consumer's total impression about the online company resulting from his/her exposure to a combination of virtual marketing tools' (Watchfire Whitepaper Series, 2000). Various elements like browsing, finding, searching, selecting, comparing and evaluating information together with the interacting and transacting online constitutes a Web experience which is essential in determining a consumers behaviour on a Web site (Novak et al., 2000). A research by Cho and Park, (2001) showed that an online customer is not simply a shopper but also an information technology user. He further argued that the online shopping experience is a more complicated process than the physical shopping experience. In an online environment the transparency of relaying the information to the customer, his past experience, the trust between the website and the consumer and also the trust between the consumer and the internet is very important. The experience of shopping online develops a greater understanding of what the web site offers leading to greater knowledge of the websites products and services (Hairong, et al., 1999).

As per McKnight et al. (2002), initial trust is the period in which the consumer visits a website for the first time. At this point the consumer's online experience (Huang 2003; Lynch et al. 2001; Xia 2002) and flow (Hoffman and Novak 1996; Novak et al. 2000) play an important role in the online navigation process and help determine whether a transaction will be finally carried out or not. Many researcher stated that web site layout design and information content are important in order to arouse initial consumers interest to further explore a site (Huang, 2000; Menon and Kahn, 2002; Iyer et al., 2005). Navigation of website also plays an important role in influencing the trust. Navigation include page loading speed, ease of travel, return to home page, search engine, links to products, and the shopping basket. Bhatnagar et al. (2000) found that customers' perceived convenience of shopping on the internet had a positive impact on online purchase behaviour. Thus on this ground we can state that consumers positive website experience influence trust.

H1: Website experience is positively related to trust in the e-tailer

2.8 Trust and Technology Acceptance Model

The two main belief variables of TAM are perceived usefulness and perceived ease of use of the technology (Davis et al. 1989, pg 985; Koufaris and Hampton-Sosa, 2004).

2.8.1 Usefulness

The impact of trust on perceived usefulness is based on the reliable dimensions of trust. Gefne et al (1997) claimed that in an online environment trust is one of the important determinants of TAM variable i.e. perceived usefulness. The benevolence of the e-tailers is not sufficient, they not only have to fulfil the needs of the consumers but also have to be able to do so in terms of product of service quality, timely delivery, availability, preventing the risk related to the usage of internet etc (Hallegatte et al). If the e-tailer cannot be trusted to behave in accordance to the customer's confidence and beliefs, then there is no reason why consumers should expect to gain any utility from that e-tailer (Paul, 2003).

2.8.2 Ease of Use

Ease of use in the context of online search includes web design, format, template and user friendly program. One key feature is interactivity, which allows consumers to personalize their information search, thereby increasing the perceived benefits of a search (Widing and Talarzyk, 1993) Ease of use in context of purchasing comes from making the transaction process simple and reassuring. The unpleasant surprises can be averted by the full disclosure of the process and an explanation of what is involved which would inform customers of what they need to expect from the process. Chircu et al (2000) and Pavlou (2003) stated that consumers trust in ecommerce increases perceived ease of use. According to their judgment, if trust develops in a particular website then that would reduce the need for the consumer to monitor, understand, and control the situation by facilitating the transaction and making it effortless. For example, on a trusted website the consumer will not waste their time and efforts to read the terms and condition, privacy policy and thus experience higher ease of use (D.Hallegatte et al). On the other hand if the trust is low consumers need to pay special attention towards reading all the terms and condition, monitoring all the transaction process thus increasing their time efforts. Many researchers stated that trust is positively related to perceived usefulness and ease of use (Pavlou, 2003; van der Heijden et al., 2003; Chircu et al., 2000). According to the original TAM, it is expected that the perceived ease of use with the website would be positively related to the intention to transact with the system (Paul, 2003). Thus on this base we can say that trust is positively related to perceived ease of use and perceived ease of use if positively related to intention to transact with the e-tailer.

H2: Trust is positively related to perceived ease of use with the website H3: Perceived ease of use is positively related to intention to transact with e-tailer

2.9 Trust and Perceived Enjoyment

To many consumers, shopping is often not simply a task but also a form of entertainment and/or social interaction (Chen et al., 2002) and it is not unreasonable to assume that consumers may also have similar expectations of online shopping, especially those already using the Internet for entertainment and interaction (Shang et al., 2004). Shopping enjoyment is defined by Beatty and Ferrell (1998) as 'the pleasure one obtains from the shopping processes.' According to Huang and Oppewal, (2006), 'enjoyment' results from the fun and playfulness of the online shopping experience, rather than from shopping task completion. Shopping enjoyment can have a significant impact on customer attitudes and behaviour on the web and can increase customer intention to return (Jarvenpaa and Todd, 1997; Childers et al., 2001, Koufaris, 2002). If consumers enjoy their online shopping experience, they have a more positive attitude toward online shopping, and are more likely to adopt the internet as a shopping medium. Enjoyment has been identified as an important determinant of why consumers shop online (Doolin et al. 2005; Mathwick & Rigdon 2004; Monsuwe et al. 2004; Mathwick et al. 2002; Jarvenpaa & Todd 1997; Hoffman & Novak 1996). Hirschman and Holbrook, 1982 has classified internet shoppers into various categories such as 'Problem solvers' and shoppers who use the internet for 'fun, fantasy and enjoyment'. Among these, Babin et al, 1994 described Problem solvers as shoppers who shop online with an intention to acquire a particular product or service. This group of shoppers look at their shopping as an errand or work and are concerned with the purchase of the product in a timely and efficient manner with minimum trouble. In contrast, the second category looks online shopping as an enjoyment and derives fun from the internet shopping experience. The consequences of online shopping such as the outcome of the online purchase is not so much of a consideration as compared to the experience gained in the process.

Koufaris (2002) found shopping enjoyment to strongly predict intention to return to a website and measured the dimension in terms of the experience being exciting, fun, enjoyment and interesting. Enjoyment of technology is regarded as a factor motivating a consumer's desire to transact online. (Venkatesh and Davis, 2000; van der Heijden et al., 2003). Many online purchasers said that they would not shop on a particular website next time if they had an unpleasant experience with it. On the web, shopping enjoyment is positively and significantly related both to attitudes and intentions toward shopping on the web (Eighmey, 1997). As seen above, the bottom line is that once consumer's trusts an e-tailer, they will enjoy shopping on it. Before consumers start looking for price and product information, the trust and enjoyment are the key tenets to carry forth a transaction.

H4: Trust is positively related to perceived enjoyment with the website H5: Perceived enjoyment is positively related to intention to transact with e-tailer

2.10 Perceived Risk and Trust

Bauer (1960) originally introduced the concept of perceived risk. 'He defined risk in terms of the uncertainty and consequences associated with a consumer's actions'. Risk is a multidimensional construct and shopping via internet involves more risk and uncertainty (H.Assael, 1992). Consumer's risk perception and concerns regarding online shopping are mainly related to the security and privacy of personal/sensitive information over the internet. Bhatnagar et al, (2000) stated that shopping through internet has got two types of risk i.e. Product risk and financial risk. Purchasing a product over the internet involves a greater degree of risk than the adoption of other IT innovations. Bhatnagar et al. (2000) also claimed that the likelihood of purchasing a product or services over the internet decreases where the product risk is higher. If consumers seem high level of perceived risk then they may avoid or postpone a purchase entirely. In a virtual environment, the customer cannot check the physical attributes of the product such as the quality and texture nor can he monitor the security and safety of sending sensitive personal and financial information through the Internet to a party whose behaviour and motives may be hard to predict (Schurr, et al. 1985).

2.10.1 Product Risk

The decision of consumer whether or not to shop online is influenced by the kind of product they consider to buy this is because, some product are more suitable for online shopping than others. Lack of physical contact and assistance in online shopping is one of the important factors that have an influence while shopping online and other factors are lack of touch and feel factor which is absent in online shopping. So some time it becomes risky to buy a product online. A Product category risk is related with the product itself. Product risk is associated with the consumers' belief regarding whether the product would perform as per their expectations or not (P.D.Lynch, et al., 2001; Jarvenpaa, et al., 1999; Jarvenpaa, et al., 2000; Fram and Grady, 1997). Performance risk is defined as

'the loss incurred when a brand or product does not perform as expected'

(Horton, 1976). Given a high price of the product, the risk associated with buying the product over the internet would be high and it increases with the complexity of the product. For the clarifications of the above point consider the following products such as a software or a book, where tangibility is not at all an important factor. Whereas the product risk will be higher for products where feel and touch are important such as fabrics, fashions etc. So while shopping online for those products, consumers have to rely heavily on information stated or the product image on the screen. Risk would be high for the products such as Computers, Stereo equipments; Televisions etc because of the product being technologically complex and highly priced (Bhatnagar et al. 2000). Consumer's behaviour changes with the change in level of risk. Consumers try to minimise the risk by shopping from online channels which are run by established and well known brands such as Marks & Spencer, Tesco, Dell and Amazon etc (BBC, 2000). Another major concern for consumers purchasing products on the internet is the lack of commitment by sellers towards meeting their delivery objectives. This can be supported by a UK-wide survey where more than a third of customers receive their products late and 17% see nothing at all for their virtual trouble (BBC, 2000).

2.10.2 Financial Risk

Financial risk is defined as a net loss of money to a customer (Derbaix, et al. 1983; Horton, 1976), and includes the possibility that one's credit card information may be misused. Financial risk related to shopping via internet is primarily concerned with losing money via credit card fraud (E.H.Fram, et al., 1997; Jarvenpaa, et al., 1999; Jarvenpaa, et al., 2000; Lynch, Kent, and Srinivasan, 2001). The main element of financial risk while online transactions are, perceived security of online transaction and Privacy concern. Kini, et al., (1998) suggested that the trust is necessary while conducting business through internet, but it is not sufficient for an internet buying behaviour to take place. Consumers must also trust the transaction medium to fully embrace online shopping. According to M.Koller, (1998) consumers are risk averse when it comes to an uncertain environment like internet. While shopping through internet the sensitive information which is send by the customers to the e-tailers and the information received by the customer passes through different networks, routers, switches and computers system before its reaches the final destination. In this transmission of information there is high risk involved because each of the devices is capable of capturing the confidential information of the customers that passes through it. Hardly a day goes without a major news items on security and privacy concerns of IT users (J.U.Godwin, 2001), resulting in low confidence and moral of consumers towards online shopping. The internet is not owned by anyone and the ambiguity of the internet may enables criminals to make cross-border purchases with stolen credit card details at relatively little risk of being caught. Thus, consumers' apparent sense of insecurity regarding online credit card usage stems primarily from a concern about financial risk. Many authors also found that the most important concern of the consumers while shopping online is the security of transaction, including personal information and credit card information being misused (Keeney, 1999; Liang and Huang, 1998; Baker, 1999) these all factors have a negative impact on consumers trust and intention to transact.

In an economic transaction, trust plays a vital role in reducing the risk of a falling victim to opportunistic behaviour (Fukuyama, 1995, Teo and Jing 2002). Jaevenpaa et al stated that trust in an e-tailer can be used to reduce the risk of the consumer to transact with the e-tailer. The foundation of trust is based on a simple equation wherein if people trust others, then they would anticipate the others to behave in a similar manner thereby reducing the complexity of the interaction. Ranganathan et al. (2002) claimed that there are four key dimensions of business to consumer web sites i.e. information content, design of the website, security and privacy policy. Based on the above statement we can assume that to build a level of trust in the consumer, the presence of the four dimensions in e-tailers website will further reduce the financial and product risks involved while shopping online. Many other researchers have stated that trust reduces the perceived risk (Mayer et al., 1995, Luhmann, 1979, Lewis and Weigert, 1985) and can influence the customers to transact online. So on this basis we can draw the hypothesis that Trust is negatively related to perceived risk and Perceived risk is negatively related to intention to transact with e-tailer

H6: Trust is negatively related to perceived risk H7: Perceived risk is negatively related to intention to transact with e-tailer

2.11 Proposed online shopping model

Virtual environments do not provide the luxury of physical interaction with the seller. Thus the users have to base their purchase on the various features of the website such as appearance, layout, images, information content, security and video footings to base their potential purchase. This implies that a good website experience plays an important role in influencing the customer to explore the website and potentially transact online. Past research as documented in the literature has identified lack of trust as an important reason why customers do not participate in online shopping. Considering the above factors in mind online shopping model is proposed that may extend TAM to account the adoption of online shopping with no prior experience with the website.

  • Website Experience
  • Trust
  • Perceived Risk
  • Perceived Enjoyment
  • Perceived Ease of Use
  • Intension to transact


3.1 Research Method

The term methodology refers to the 'theory of how research should be undertaken' (Saunders et al., 2003, p.2). Research is an organized investigation to find the answer to problems, and research methodology depends on the research topic and field of study. From many different definitions offered, Amaratunga et al., (2001) defines research as "Research is a process of enquiry and investigation; it is systematic and methodical; and research increases knowledge". According to Hussey and Hussey (1997), there are different types of research such as qualitative, quantitative, descriptive, predictive, exploratory, analytical, inductive, deductive and basic research. It doesn't matters what kind of research the researchers intend to use, the only thing that matters is the need to focus their efforts on answering two significant questions i.e. What methodology and method the researchers will adopt for their research and secondly how they will justify their choice and use of these methodologies and methods.

The research methodology and data collection for this research were chosen in order to successfully achieve the aims and objectives of the research. The justification of choices and use of methodology will be presented in this chapter. This chapter will deal with the primary and secondary research that is undertaken to attain the aim and objectives of the study. This chapter explains how the research was planned and carried out.


To examine the impact of website experience, on consumers intention to transact while shopping online.


  1. To understand the factors that influence the consumer to shop online
  2. To study consumers innovation decision making process while shopping online.
  3. To explore the relation between web design and consumer trust while online shopping
  4. To propose an online shopping model which will show the relationship between consumers website experience and intention to transact while shopping online
  5. To support the proposed online shopping model and hypothesis by using primary research
  6. To project the comparison between secondary and primary research

To examine the impact of website experience, on consumer's intention to transact while shopping online, hypothesis was supported based upon the data collected from the experiment, wherein participants were asked to go through an online shopping process. The specific methods used for this study are explained further in this chapter.

3.2 Research Design

A research design is a plan of the research project to investigate and obtain answers to research questions (Cooper & Schindler 2001; Davis & Cosenza 1988). According to Samouel et al, (2003) a research design provides the basic directions for carrying out the project. The process of research as described below provides a direction for conducting the research project. The process of research begins with stage one i.e. collecting secondary data in literature review, and that data was collected from RGU database, Internet, Books etc. After completing the literature review the author moves on to stage two i.e. collecting primary data. To conduct and experiment questionnaires was prepared. Questionnaire was developed in such a format so that hypothesis can be calculated and the online shopping model developed can be tested. After preparing the questionnaire a pilot study was done on a group of four people, to check out the errors in the questionnaire. Thus with the help of the pilot study the questionnaire was refined and some corrections were made. The data was collected via appropriate source by conducting an experiment, the respondents were asked to go through an online shopping process on website and based on their experience with the website they were asked to fill a questionnaires. Below are the advantages and disadvantages of primary and secondary research.

3.3 Secondary Research Source

According to Schiffman and Kanuk (2004), 'secondary data includes findings based on research done by outside organisation, data generated in house for earlier studies and customer information collected by the firm's or credit departments is called secondary research'.

According to Saunders (2006) secondary research is basically done to collect secondary data that exist revolving around the research subject area and secondary data is the data that has previously been gathered by someone other than the researcher. Secondary data can be defined as 'data used for a research project that were originally collected for some other purpose' (Saunders et al., 2006, p. 489).

The focus of secondary research for this dissertation was to gather information about the factors that influence the consumer to shop online, to study the consumers innovation decision making process while shopping online, to explore the relation between web design and consumer trust while online shopping, to propose an online shopping model using Technology Acceptance Model, which will show the relationship between consumers website experience and intention to transact while shopping online. This information

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