A Cross-Cultural Comparison of Online Buying Intention: Effects of Internet Usage, Perceived Risks, and Innovativeness

Cheol Park, Assistant Professor of E-Marketing, Department of Management Information Systems, Korea University, Jochiwon, Chungnam, 339-700, South Korea, Email: cpark@korea.ac.kr

Jong-Kun Jun, Assistant Professor of Internet Marketing, Dept. of Internet Business, Dong-Eui University, Busan, Korea, Email: jkjun@dongeui.ac.kr

Abstract

This research attempts to examine differences in Internet usage, innovativeness on the Internet, the perceived risks of online shopping, and online shopping behavior in Korea and America and to identify a model of online buying intention, explained by Internet usage, perceived risk, innovativeness, and online buying experience on a cross-cultural basis. As a result, it was found that there were significant differences in Internet usage and the perceived risks of online shopping but no significant differences in online buying intentions and online buying frequency between Korean and American consumers. Nonetheless, comparing the Korean and U.S. models of online buying intention, some cultural differences in online shopping behavior were identified. Internet usage time and innovativeness on the Internet significantly affected the frequency of online shopping in the U.S. model, but it did not in the Korean model. The perceived risks of online shopping significantly affected online shopping frequency in the Korean model, but not in the U.S. model. The length of Internet usage period affected online shopping frequency both in the Korean model and the U.S model. The implications of the study were discussed and further research was suggested.

Introduction

The Internet is revolutionizing marketing and trade. As the Internet is essentially a global medium, it is one of the most significant and the greatest marketing tools for the global marketplace (Samiee 1998).  The global nature of the Internet, combined with the nature of the communications that it can convey, makes it a perfect vehicle for international interactive marketing. International consumer research in a cross-cultural context is needed for a better understanding of global online consumer behavior (e.g. Javenpaa and Tractinsky 1999). Cultural imperatives are likely to have a profound impact on the adoption and the use of the Internet in international marketing.  For example, as Internet shopping tends to be impersonal, methodical, and policy-driven, it is not clear that Confucian-based cultures focus on personal interaction is well-suited to it.  Furthermore, cultures that score high on uncertainty avoidance are less likely to be early adopters of Internet marketing schemes, even if other cultural imperatives are met.  However some observers view Internet-based transactions as essentially culture free and personal due to the perception that it brings parties closer together (Perterson et al. 1997).

Some researchers found that many international users of the Internet are similar to U.S. users (Quelch and Klein 1996). Are Internet users in the world homogeneous and is there a worldwide common culture of the Internet?  The tremendous advances in global travel, communication, and media have led to suggestions that cultures are converging and that the globalization of markets will create, or at least lead to, a common culture worldwide.  However common or uniform behaviors appear, there continue to be clear differences in what these behaviors mean to the individuals and groups of different cultures (Costa and Bamossy 1995).

We could find some similarities and differences in online shopping behavior between different culture groups. There are few cross-cultural studies on the adoption of online shopping. This research attempts to examine the differences in Internet usage, attitude (innovativeness and perceived risks), and online shopping behaviors between Korea and America and to identify a model of online buying intention, explained by Internet usage, perceived risk, innovativeness, and online buying experience on a cross-cultural base.

Theoretical Background

Internet Usage

Studies on the determinants of IT adoption and usage argue that perceived usefulness and perceived ease of use are primary explanations of computer acceptance behavior (Davis 1986, 1989). Similarly, Igbaria et al. (1994) reports perceived usefulness and perceived fun play respective roles in the acceptance of microcomputer technology. These factors can be applied to explain Internet usage. Teo et al. (1998) found that perceived usefulness has consistently strong effects on Internet usage, while the effects of perceived ease of use and perceived enjoyment are partly supported. Loshe et al. (2000), using panel data, found that the percentage of panelists making a purchase on the Internet increases as a function of time spent online. They showed that the longer the amount of time spent online, the greater the chance of making a purchase online. Months online as well as time spent online are an important predictor of online buying behavior (Bellman et al. 1999). They show that a typical online buyer has a "wired" lifestyle. The wired lifestyle variables: number of months on the Internet; hours online per week; hours per week working online; searching for product information online; and the attitude that email is indispensable, predict buying behavior for 77% of the sample. Similar findings have also been reported by the research of Citrin et al. (2000) on the role of Internet usage in the acceptance of Internet shopping.

Perceived Risks

Many marketing practitioners and researchers continue to be interested in perceived risk because it is more powerful in explaining consumers' behavior as well as the theory has intuitive appeal and broad application (Mitchell 1999). Perceived risk is negatively correlated to self-esteem, rigidity and risk taking and positively correlated to anxiety (Schaninger 1976). Attitude toward perceived risk also affects consumer behavior. For some decision situations like gambling or stock market investment, attitude towards perceived risk between subjects makes significant differences in risk preference (Weber and Milliman 1997). Bhatnagar et al. (2000) argued that the likelihood of purchasing on the Internet decreases with increases in product risk. Risk perception is argued to have cross-cultural variation. The perception of the riskiness of activities threatening health and safety showed cultural variation (Slovic et al. 1991, Kleinhesselink and Rosa 1991). Bontempo, Bottom, and Weber (1997) observed cross-cultural differences also in the perception of the riskiness of financial gambles, comparing students and security analysts from the U.S.A., the Netherlands, Hong Kong, and Taiwan. Previous research has also demonstrated the existence of cross-cultural differences in risky choice. Weber and Hsee (1998) argue that people in socially-collectivist cultures tend to choose riskier options than those in individualist cultures.

Innovativeness

Innovativeness has received considerable attention among consumer researchers (e.g. Hirschman 1980; Midgley and Dowling 1978; Rogers 1983). There are two approaches to innovativeness. Joseph and Vyas (1984) focus on a cognitive style, global innovativeness, which incorporates an individual's intellectual, perceptual, and attitudinal characteristics, arguing that this kind of innovativeness is an important predictor of the adoption of innovations. Goldsmith and Hofacker (1991) developed the domain specific innovation scale as a Likert scale arguing that it is a more useful predictor of the adoption of innovations by consumers. Innovativeness should also be thought of as a domain specific phenomenon, linked to broader innovative traits, but more predictive of actual behavior in a specific product than is global innovativeness (Goldsmith and Flynn 1995). Citrin et al. (2000) adopted the two measures of innovativeness to explain consumer's adoption of Internet shopping. Their findings indicate that Internet usage and domain-specific innovativeness have a direct influence on the adoption of Internet shopping. They also report that domain-specific innovativeness is a moderator of the relationship between Internet usage and the adoption of the Internet for shopping, but general innovativeness does not influence the use of the Internet for commerce. Like perceived risk, consumer innovativeness can be different according to cultural differences. Hofstede (1980, 1991) identifies three dimensions of national culture that can be related to consumer innovativeness: individualism, uncertainty avoidance, and masculinity. Individualism and masculinity are positively related to consumer innovativeness whereas uncertainty avoidance is the opposite (Steenkamp et al. 1999).

Cultural Differences

People are deeply influenced by the cultural values and norms they hold. Many researchers have classified cultures around the world in various categories. The most typical category is Western vs. Oriental culture. The Western cultural value ascribes individualism and low-context while oriental ascribes collectivism and high-context (Kim et al. 1998). Individualism-collectivism is a cultural-level variable referring to the extent to which members of a culture tend to have an independent versus interdependent construal of the self (Hofstede 1980). These cultural values influence consumption related behaviors (Wang 1999). Western cultural values describe how an individual from an individualistic society fulfills his/her needs through a market system that emphasizes individualistic goals (Tse 1996). The independent construction of the self, which is dominant in Western cultures, is rooted in the belief that distinct individuals are inherently separate (Wong and Ahuvia 1998). As hedonic value primarily gratifies the internal, private self, Cheng and Schweitzer (1996) noted that American television ads stressed enjoyment much more than did Chinese commercials. Collectivists tend to be concerned with affiliating closely with others, maintaining connectedness, and blending the self/other boundary (Aaker and Williams 1998). In collective and high-context cultures, group bonds and harmony are viewed as important, overly precise, and analytical procedures and structures tend to be avoided. On the contrary, in individual and low-context cultures, explicit communication and clear procedures are preferred. Such traits were represented in pursuing the values or benefits from certain activity or behavior. Harmonic and holistic benefits would be preferred in collective cultures while accurate and analytical benefits are opted for in individual cultures.

Method

Samples and Procedures

An online survey was performed for obtaining data. The Korean subjects consisted of a panel from an online survey company in Korea (www.survey.co.kr).  An HTML-formed questionnaire was on the website and the panel members visited and responded to it. They were given air mileage points as rewards. One hundred and fifty Korean samples were completed through the online survey.  The American respondents were contacted through email, newsgroup, Web-board posting and inviting them to visit the online survey site (www.survey.co.kr). Korean traditional folding fans (bu-chae) were offered as an incentive for them.  One hundred and thirty-three US samples were completed.

In the Korean sample, 6.0% were in their teens, 45.3% were in their twenties, 40.0% were in their thirties, and 8.7% were over forty years old. The Korean sample consisted of 55.2% males, and 44.7% females. The mean period of Internet usage was 3.88 years and the mean time of Internet usage per week was 18.15 hours.  In the U.S sample, 6.9% were in their teens, 36.2% were in their twenties, 32.3% were in their thirties, and 24.6% were over forty years old. The American sample consisted of 56.7% males, and 43.3% females. The mean period of Internet usage was 4.84 years and the mean time of Internet usage per week was 11.3 hours.

Measurements

Internet usage

Internet usage is said to have three dimensions: frequency of Internet usage, daily Internet usage and diversity of Internet usage (Igbaria et al. 1995). We focused on the first two dimensions by measuring hours of Internet use. Hours of Internet use per week and number of months on the Internet were measured by open-ended questions. Number of months on the Internet was recoded to number of years on the Internet.

Perceived risks

Risk is a multidimensional construct. However, Bhatnagar et al. (2000) argue that in the case of Internet shopping two types of risk--product category risk and financial risk--are predominant.  Product category risk matters if one has a specific product in mind before getting on the Internet. As we focus on the risks involved in online buying regardless of product category, product risks are measured by concerns about product price and information. The reliability coefficient for the scale is 0.671 for the Korean sample and 0.738 for the American sample. Financial risk associated with online buying is primarily in regard to losing money via credit card fraud. Perceived security of transactions and concern for privacy are major elements of financial risk in online transactions. We measured privacy and security risks by a two item five point Likert-type scale, the former are privacy concerns and the latter are the payment concerns. The reliability coefficient for the scale is 0.581 for the Korean sample and 0.782 for the American sample. The two scales were reversed.

Innovativeness

Domain specific innovativeness was measured using Goldsmith and Hofacker¡¯s (1991) 6 item scale. Citrin et al. (2000) modified the scale for the WWW, so we adopted it. Originally, the scale was a seven-point Likert-type scale, and items were anchored with "disagree strongly" and "agree strongly", but we used a five-point scale. Three items which had factor loadings greater than 0.5 were retained. The scale yielded a standardized ¥á=0.681 for the Korean sample and 0.690 for the American sample.

Others

  A measurement of online buying intention included a seven-point Likert-type scale ranging from never buy (1) to must buy (7). A measurement of online buying frequency included a five-point Likert-type scale from never buy (1), 1-2 times per year (2), 3-4 times per year (3), 1 time per one or two months (4), 2-3 times or more per month (5).

Results

In case of multi-item scales, items were averaged to form a single variable for further analyses. The attitudes and opinion variables were factor analyzed. Before mean differences between countries and relations among constructs can be examined in cross-national research, we must first establish that the measurement instruments are cross-nationally invariant (Skeenkamp and Baumgartner 1998). Item analysis and assessment of unidimensionality were accomplished by exploratory factor analysis.

A Comparison of Online Behaviors and Buyng between Korea and US

An Independent sample t-test was performed to see if there are any differences between respondents from Korea and those from America. The results are presented in Table 1.

Hours of Internet use (Hours): Time usage of the Internet per week was significantly greater in the Korean sample than in the American sample.

Length of Internet use (Length): American users showed a longer period of time since they first used the Internet than did Korean users.

Perceived risks: American users showed lower perceived risk on privacy and security (RISK1) as well as perceived risk on product (RISK2) than Korean users.

Innovativeness (DSI) of Internet users (DSI): Korean users are more innovative than American users.

Frequency of Online shopping (FREQ): We couldn't find any significant difference in the frequency of online shopping between the two samples.

Online Buying Intention (OBI): We couldn't find any significant difference in the online buying intention between the two samples.

Table 2 reports the pairwise zero-order correlations between the constructs of interest.

Regression Models of Online Buying

We built two models explaining factors influencing online buying on the basis of past studies (eg. Swaminathan et al. 1999, Lohse et al. 2000, Bellman et al. 1999, Citrin et al. 2000). Multiple regression analysis was used to estimate the model with the total sample. The results, with frequency of online buying (Model 1) and online buying intention (Model 2) as the dependent variables, are presented in Table 3. The explanatory power of the models, as indicated by R square for Models 1 and 2 is 0.113 and 0.232 respectively.

Model 1 shows that perceived product risk negatively (scale inversed) affects frequency of online buying (¥â= 0.16, p < 0.05) whereas hours of Internet use and length of Internet use are positively related to the frequency of use (¥â= 0.01, p < 0.05; ¥â= 0.06, p < 0.01). The analysis of Model 2 shows that domain specific innovativeness and frequency of online shopping affect online buying intention (¥â=0.32, p < 0.01; ¥â= 0.39, p < 0.01). The two models show that nationality (NAT) does not influence any of the dependent variables.   

Comparison of A Path Model of Online Buying Intention between Korea and US

Although there was no difference in the frequency of online shopping or in online buying intention between the Korean sample and the US sample, there were significant differences in the explanatory variables such as perceived risks, innovativeness, hours of Internet use and length of Internet use.  To investigate the reason for this phenomenon, we did additional analyses using path analysis. Any significant variables in the previous results were selected to develop a new path model. Results from path analysis are presented in Figure 1 and Figure 2.

 

A path model was identified using multi-group analysis with Amos 3.6, so we can compare the results from the two groups to see how similar they are. According to the results, the influence of innovativeness (DSI) was significant in the US sample (¥â=0.30, p<0.05), but not in the Korean sample. Hours online per week positively affects the frequency of online shopping in the US sample (¥â=0.02, p<0.05), but not in the Korean sample. Product risk has positive influence on frequency of online shopping in the Korean sample (¥â=0.25, p<0.05), but not in the US sample. Length of Internet use is significant in both samples.

All these results explain why there is no difference in the level of dependent variable while there are significant differences in the levels of independent variables.  For example, Koreans are more innovative on average than Americans in the domain of Internet usage, and it influences online buying intention.

Discussion and Conclusion

This study examines whether there are differences of Internet usage, Internet innovativeness, perceived risks of online shopping and online buying behavior between Koreans and Americans. It was found that there were significant differences in Internet usage and perceived risks of online but no significant differences in online buying intention and online buying frequency between Korean and American consumers.

The period of Internet usage in the U.S. was longer than in Korea but the duration of Internet usage per week in Korea is longer than in the U.S. Internet innovativeness and perceived risks of online shopping in Korea were higher than in the U.S.  Recently, high-speed Internet is becoming prevalent. The Korean government has made the information highway a national priority.  Also there are Internet cafes, 'PC bangs' which can be found everywhere in Korea. It is easy to use high-speed Internet in Korea.  Korean people have high conformity in using the Internet because Korean society is characterized by collectivism. Collectivists are concerned with affiliating closely with others, maintaining connectedness, and blending the self/other boundary.  

The perceived risks of online shopping in Korea are higher than in the U.S.  This means that despite good Internet infrastructure, many Koreans cannot trust e-commerce in Korea and perceive high risks of Internet shopping.  The security of online transaction system and the protection of privacy are important to increase online purchasing.

Internet usage time, Internet usage period, perceived risks of online shopping and Internet innovation can be considered as independent variables that affect dependent variables such as frequency of online shopping and online buying intention.  According to previous research, the longer the Internet usage time and period, the less the perceived risks of online shopping, and the higher Internet innovativeness, the higher the frequency of online shopping and online buying intention are. Considering these research results, there should be significant differences in the frequency of online shopping and online buying intention between Korea and the U.S., but there are no significant differences. As a result of the regression analysis, nationality did not affect the frequency of online shopping and online buying intention.  It implies that four independent variables differently affect the dependent variables. To identify it, a path analysis was performed.  So, some points were found using a path model for both countries as follows.

First, the Internet usage time significantly affected the frequency of online shopping in the U.S. model, but it did not in the Korean model.  The U.S. model was consistent with the result of prior research but the Korea model was not. It can be explained that the Internet is used primarily for the purpose of education, information searching, online games, participation of community, and communication in Korea. As Korea is a collective society, involvement in the online community is higher than any other countries. The popular websites of Korea are community sites such as ¡®Daum,¡¯ ¡®iloveschool,¡¯ ¡®freechal,¡¯ and etc. Internet users in Korea tend to spend more time in online community or communication, not shopping. So, there was no significant relationship between Internet usage time and the frequency of online shopping.

Second, the perceived risks of online shopping significantly affect Internet shopping frequency in the Korean model, but not in the U.S. model. This shows that E-commerce is related to the stability and reliability of the whole system of the country. Although people perceive risks in online shopping which is very innovative and new in the U.S., they click the mouse for online shopping because of the reliable and stable social system. So, the perceived risks of Internet shopping do not affect Internet shopping frequency.  Since the social system is very dynamic and variable in Korea, the perceived risks of online shopping are high and a negative relationship between the perceived risks of online shopping and online shopping frequency is found.

Third, in the case of the U.S model, the innovativeness of the Internet affected online buying intention but it did not in the Korean model.  Innovativeness of Internet is considered as an important variable for explaining individual consumer¡¯s online buying.  Everyone could think his Internet innovativeness is high because Koreans generally use the Internet very much. Therefore, Internet innovativeness could not affect online buying frequency too much in the Korean model. In addition, even though Internet innovativeness, a consumer individual variable, is high, if the e-commerce system is not stable and trustworthy, online buying would not occur. In other words, the effect of individual variables might be neutralized by the characteristics of the social system.

Fourth, the length of Internet usage period affected online shopping frequency both in the Korean model and the U.S model. The longer one¡¯s Internet experience, the more knowledge of the Internet one has.  The experienced Internet user can utilize and enjoy many Internet services and benefits.

Differences in the path model between two countries result from differences in the social commerce system and style/views of Internet usage of both countries. Even though the same information technology is introduced, its adoption and application depend on unique traits of the society.  It shows that high technology and international standardization are not particular to a locale. Therefore, though Internet marketing has a merit in targeting global customers, it should consider the cultural differences in adopting and applying e-commerce. Eventually, proper cultural transformation in the international marketing will be necessary even in the Internet age.

This study has some limitations due to its exploratory stage. There are some omitted variables in the model, for example, shopping orientations and vendor characteristics. We focused on the main effects so we may have missed the interaction effects of the key factors. There are measurement problems for perceived risks and innovativeness. We could not help choosing several items form the original because some items were not appropriate for Koreans. Hence more cautious of interpretation of the results were needed.

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Copyright

Cheol Park and Jong-Kun Jun, © 2002. The authors assign to Southern Cross University and other educational and non-profit institutions a non-exclusive licence to use this document for personal use and in courses of instruction provided that the article is used in full and this copyright statement is reproduced. The authors also grant a non-exclusive licence to Southern Cross University to publish this document in full on the World Wide Web and on CD-ROM and in printed form with the conference papers and for the document to be published on mirrors on the World Wide Web.