Information Technology Integration in Supermarkets Operations-Libre

First Edition 2008
NOR HAZARINA HASHIM, AHMAD SHARIFUDDIN SHAMSUDDIN &

ABU BAKAR ABDUL HAMID 2008

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recording, or any information storage and retrieval system, without permission
in writing from Universiti Teknologi Malaysia, Skudai, 81310 Johor Darul
Tak'zim, Malaysia.

Perpustakaan Negara Malaysia Cataloguing-in-Publication Data

Application and issues in e-business / penyelenggara Noor Hazarina Hashim,
Ahmad Sharifuddin Shamsuddin, Abu Bakar Abdul Hamid.
Includes index
ISBN 978-983-52-0698-6
1. Electronic commerce. I. Noor Hazarina Hashim. II. Ahmad Sharifuddin
Shamsuddin. III. Abu Bakar Abdul Hamid.
658.800285

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iv
iv
TABLE OF CONTENTS
Preface vi
Chapter 1 A Meta Analysis on Website Design for the
Hospitality Industry
Noor Hazarina Hashim, Jamie Murphy, Rob Law
Information Technology Integration in
Supermarkets Operation
Nor Zafr Md. Salleh, Abu Bakar Abdul Hamid, Rohaizat
Baharun, Siti Zaleha Omain, Mazilah Abdullah
Diffusion of Innovations: Adoption and Use
of Websites and Email Among Malaysians
Hotels
Noor Hazarina Hashim
Website Design and E-Loyalty: A Case Study
of Air Asia
Ling Jong Ping, Ahmad ShariIuddin Shamsuddin
1
21
39
57
Chapter 2
Chapter 3
Chapter 4
v
71
81
109
119
139
159
Branded Domain Name as an Online
Marketing Tool: A Case Study in Hospitality
Industry
Jamie Murphy, Noor Hazarina Hashim
The Implication of IT in Supply Chain
Communication Systems in Manufacturing
Companies
Abu Bakar Abdul Hamid, Leong Chin Hsiung, Melati
Ahmad Anuar
Adoption of E-Banking in Small Medium
Industry
Ahmad ShariIuddin Shamsuddin
Online Destination Marketing: A Case Study
of Malaysia
Noor Hazarina Hashim, Jamie Murphy
Internet Evolution: A Case of Malaysian
Hotel Industry
Noor Hazarina Hashim
Research on Trust in Online Environment
Khalil Md. Nor
Chapter 5
Chapter 6
Chapter 7
Chapter 8
Chapter 9
Chapter 10
vi
vi
PREFACE
Live in fragments no longer. Only connect.
Edward Morgan Forster, Chapter 22, Howards End (1910)
Welcome to the exciting world oI the Internet, the World
Wide Web, e-business and e-commerce. E-business and
e-commerce are evolving rapidly, iI not explosively. This
creates tremendous challenges Ior managers, academicians
and proIessional to understand and cope with these challenges
This book chapter aims to provide readers with the application
oI e-business in Malaysia. Chapters discussed in this book cover
various industries such as manuIacturing, retailing, banking and hotel.
This book provides real case on how businesses in Malaysia deal and
apply e-business in Malaysia. While there are plenty oI discussion
about e-business, mostly Iocused in the developed countries and
less is said about application oI e-business in developing countries.
We hope you will fnd it inIormative, challenging
and entertaining. Last but not least, thank you to the authors
Ior contributing chapters in making this book chapter a reality.
Comments are integral part oI write-up, thus we welcome
any comments and suggestion to improve on Iuture work.
1 A Meta Analysis on Website Design for the Hospitality Industry
1
A META ANALYSIS ON
WEBSITE DESIGN FOR THE
HOSPITALITY INDUSTRY
NOOR HAZARINA HASHIM
JAMIE MURPHY
ROB LAW
INTRODUCTION
Research suggests that website content can augment advertising and
marketing activities (Barwise, Elberse, & Hammond, 2002; Wan,
2002). For example, customers satisfed with a website return to that
same website (Kim & Stoel, 2004). Given the Internets growing
importance as a hospitality distribution and marketing channel
(OConnor & Frew, 2002), hoteliers must routinely evaluate their
websites to ensure that the site is eIfcient, appropriate and useIul
to customers (Baloglu & Pekcan, 2006). Yet despite the Internets
increasing role in tourism and hospitality, research related to website
evaluation seems lagging and requires further effort (Morrison, Taylor,
& Douglas, 2004).
In the frst instance, there is lack oI consensus on the important
features and dimensions of hotel websites (Morrison et al., 2004).
Website evaluation studies differ on dimensions of website quality
(Aladwani & Palvia, 2002; Barnes & Vidgen, 2001). For example,
Chen, Clifford and Wells (2002) identify three dimensions, while Liu
and Arnett (2000) mention fve dimensions. As the number oI studies
grows, dimensions of website quality begin to converge (Heinze &
Hu, 2006) and suggest that website quality has multidimensional
constructs such as information, interactivity, ease of use and trust
2 Application and Issues in E-Business
(Kim & Stoel, 2004).
Despite this seeming convergence, most studies fail to explain
how website dimensions form or the domain of the measured construct,
and even fewer studies establish the validity and reliability of their
measures (Susser & Ariga, 2006; Wolfnbarger & Gilly, 2003). For
example, Liu and Arnetts (2000) factors related to website success
included features about information to support business objectives,
empathy to customer problems, and follow-up services to customers.
These three features loaded on the same factor, information quality,
yet there was no discussion of forming or classifying that factor (Kim
& Stoel, 2004).
Finally, there seem to be two major research streams that
analyse website features. One stream measures user perceptions of
website quality (Law & Cheung, 2006; Law & Hsu, 2006) such as
the E-S-Qual scale (Parasuraman, Zeithaml, & Malhotra, 2005). This
stream examines perceived characteristics of effective and successful
website and a complementary stream verify these variables in actual
practice. These studies content analyse features on a website, using
either humans (Murphy, Olaru, Schegg, & Frey, 2003) or computers
(Scharl, Wber, & Bauer, 2004; Schegg, Steiner, Frey, & Murphy,
2002) to count the presence of each feature.
In essence, websites are important to the hotel industry but
there is little consensus on a valid and reliable website evaluation
framework. Thus, this paper reviews key website evaluation
studies across multiple disciplines from information management,
e-commerce, electronic marketing, hospitality and tourism in order to
propose and help validate an evaluation framework that will assist (a)
hoteliers improve their website presence and (b) academics evaluate
hospitality websites. The next section explains the methodology, an
analysis oI almost 50 website studies. AIter discussing the fndings,
the paper closes with academic and managerial implications of the
study.
DEFINING WEBSITES DIMENSIONS AND FEATURES
This study employed a two-step process to build content validity, a
literature review of website evaluation studies and expert judgement
to confrm and validate the dimensions. The literature review helps
achieve content validity and ensuring the theoretical meaningfulness
of a construct (Hinkin, 1995, p.969). A sound conceptual and
theoretical basis of the construct must precede the development of
website dimensions (Tsai & Chai, 2005).
The study started with a broad review of management
information system, internet marketing and electronic commerce
literature, as website evaluation studies often progressed from
these disciplines. A July 2006 search of online databases Google
Scholar (Jacs, 2005), JSTOR, ProQuest International, PsycINFO,
Business Source Premier, Wiley Interscience and ScienceDirect
with keywords website evaluation, website study or web site study
yielded 17 articles from nine journals from 1997-2005 that explained
developing or constructing website dimensions (see Table 1).
Authors Dimensions and features
Liu, Arnett, Capella &
Beatty (1997)
Products/services, overview, feedback, whats new,
fnancial, customer service, search, employment,
guest book, index/directory, online business, other
sites, CEO messages and FAQs
Ho (1997)
Matrix of purpose (promotion, provision and
processing) by value (timely, custom, logistic and
sensational)
Chen & Wells (2002);
Chen et al.,(1999)
Entertainment, informativeness, and easy to use
and understand
Johnson & Misic (1999)
Functional/navigational issues, content and style
and contact information
Lin & Lu (2000)
Information quality, response time, and system
accessibility
Table 1: Website quality dimensions and features across studies
Liu & Arnett (2000)
Quality of information and service, system use,
playfulness, and system design quality
Zhang & von Drand
(2001)
Information content, cognitive outcomes,
enjoyment, privacy, user empowerment, visual
appearance, technical support, navigation,
organisation of information, credibility, and
impartiality
Barnes & Vidgen (2001) Usability, design, information, trust and empathy.
Cox & Dale (2002)
Ease oI use, customer confdence, on-line
resources, and relationship services.
Palmer (2002)
Download delay, navigability, site content,
interactivity and responsiveness
Ranganathan &
Ganapathy (2002)
Information content, design, security and privacy.
Aladwani & Palvia
(2002)
Technical adequacy, content quality, specifc
content, and appearance
Wolfnbarger & Gilly
(2003)
Fulflment and reliability, website design, privacy
and security and customer relationship
Kim & Stoel (2004)
Information, transaction, ease of use,
entertainment, trust, consistent image
Hong & Kim (2004)
Structural robustness (Internal reliability and
external security), functional utility (useful content
and usable navigation) and aesthetic appeal (system
interface and communication interface)
Tsai & Chai (2005)
Impression, download and switch speed,
accessibility and convenience, web page content,
service function and compatibility with common
browsers
The frst study introduced 12 Ieatures to evaluate Fortune
500 company homepages (Liu et al., 1997). Exploratory and
descriptive, it failed to discuss reliability and validity. Later studies
however, addressed this shortcoming. For instance, Tsai and
Chai (2005) developed and validated a questionnaire for nursing
websites. Their 32-item questionnaire covered six website quality
criteria of impression, download and switch speed, accessibility and
convenience, web page content, service function and compatibility
with common browsers.
An analysis oI the 17 articles also identifed the 79 website
dimensions and features in Table 1. While these studies contribute
to website evaluation and design, a main limitation is research
inconsistencies in addressing different aspects of website design
factors, purposes, and user categories (Zhang & von Drand, 2001,
p.11). Wolfnbarger and Gilly (2003) noted that lists oI quality website
dimensions were long, varied and oftentimes, different terms denoted
the same construct. For instance to refect ease oI use, two studies use
organisation of the site (Chen et al., 2002; Chen & Wells, 1999) and
another uses system design quality (Liu & Arnett, 2000).
This study uses structured conceptualisation, a technique
to organise thoughts, ideas, theories, and problem statements into
conceptual representations (Trochim & Linton, 1986). The researcher
starts with a brainstorming session, in this case based on the 17 articles,
to generate a large set of topical information. Then, the researcher
sorts the information into similar groups and a pictorial representation
called a concept map (Trochim & Linton, 1986, p.293).
Lastly, the researcher interprets and defnes the meaning oI
each group in the concept map. For example, Wolfnbarger and Gilly
(2003) used structured conceptualisation to identiIy fve dimensions
of retail website quality: information, interactivity, relationships,
trust, and design and usability. Structured conceptualisation of the
results in Table 1 yielded the fve dimensions oI website quality in
Figure 1: information and process, value added, relationships, trust,
and design and usability.
Figure 1: Dimensions of Hotel Website Quality
To help validate and generalise these dimensions to the
hospitality industry, the researchers conducted 17 in-depth interviews
in Kuala Lumpur and Johor Bahru, Malaysia in January 2006.
The interviewees were 13 managers Irom one-fve star hotel, two
website designers specialising in hotel and destination marketing,
and two university academics in e-commerce. The face-to-face, tape-
recorded interviews relied upon semi-structured questions, whereby
respondents described criteria for high quality websites. Transcribing
and reviewing the interviews supported the framework in Figure 1
as well as identiIying hotel-specifc Ieatures. The Iollowing section
complements these qualitative results by reviewing website evaluation
studies in tourism and hospitality.
CLASSIFYING WEBSITE FEATURES INTO DIMENSIONS
Wolfnbarger and Gilly (2003) argue that a website conceptual
framework should capture online activities from the beginning to the
end of transactions, including information search, website navigation,
ordering, customer service interactions, delivery and satisfaction
with the ordered product (p.183). Morrison et al. (2004) add that
holistic website evaluations should assess technical details as poor
technical performance could undermine good website content and
sound marketing.
A literature review using the sources described in section 2.1
identifed 25 tourism and hospitality website studies Irom 1996-2006
(see Appendix A). Research in website evaluation in tourism and
hospitality took off only in mid 1990s (Morrison et al., 2004), as these
25 studies illustrate. There was one study from 1996-2001, three in
2002, fve in 2003, three in 2004, two in 2005 and seven in 2006. OI
the 25 studies, 12 are descriptive and explained the frequency of each
feature, ten studies measure the association of website features with
dependent variables such as website marketing performance (Wang
& Fesenmaier, 2005) and website effectiveness (Scharl et al., 2004)
and three articles are case studies.
Reviewing the 25 articles generated 235 website Ieatures. Data
consolidation of these features focused on similar names for the same
website feature. For instance, three studies used the term electronic
postcard (Doolin, Burgess, & Cooper, 2002; So & Morrison, 2004;
Yuan, Gretzel, & Fesenmaier, 2006), while a fourth noted send
friend a postcard (Schegg et al., 2002). Combining similar terms
strengthens discriminant validity, that features differ, and construct
validity or that a feature measures what it claims measure (Malhotra,
Hall, Shaw, & Oppenheim, 2002).
Consolidation and structured conceptualisation oI the 235
Ieatures yielded 74 Ieatures in 15 sub dimensions and fve dimensions.
Table 2 shows the fnal results and the Irequency count oI how oIten
each feature appeared in the 25 studies. The top three dimensions and
features based on frequency counts resemble literature discussing
the evolution of websites, from providing information to providing
personalisation and adding value (Piccoli, Brohman, Watson, &
Parasuraman, 2004). Yet combined, the personalisation and added
value dimensions did not garner as much research interest as the top
dimension, information and processes.
The most researched features, over one-third of the total
Irequency count oI 311, Iell into the InIormation and Process
dimension. Within this dimension and in decreasing order, the fve
sub dimensions related to sales, contact information, promotions,
product descriptions and about the hotel. The top two sub dimensions
were the most popular of all 15 sub dimensions. With a frequency
count of 14, the ability to search a website and the presence of an
email address, tied as the most popular feature in this dimension and
all other dimensions.
The value added and relationship dimensions had the same
frequencies. Value added features fell into two sub dimensions,
travel information and entertainment. The top two value added
features, 11 times each in the 25 studies, seemed at opposite ends
of the implementation costs. External links are free and easy to add
while animated features are much more complicated and expensive.
The two sub dimensions of relationships related to either loyalty or
personal care. The most popularly studied relationship feature was
inviting customers to comment.
The design and usability dimension contained three sub
dimensions: navigation, technical and success metrics. A multilingual
site with 11 mentions, led this dimension, closely followed by
Sitemap, FAQs and webpage size with nine mentions each. Despite
growing calls for measuring website success (Morrison et al., 2004;
Murphy, Ho, & Chan, 2005), success metrics was the least popular
feature.
Studies highlight trust as an essential element to create positive
costumer relationships and pleasant online experiences (Corbitt,
Taylor, & Han, 2003). Yet this was the least studied dimension; less
than one in ten frequency counts related to trust. Features such as
timeliness information, branded URLs and email addresses, and
privacy statements help increase customers with the hotel website
and thus support and encourage customer relationships and loyalty.
Table 2: Dimension, Sub Dimension and Feature Frequency Counts
A few studies showed a relationship between some features and
website performances. For instance, the search capability, download
and printables, external link, video and animation, comments/
Ieedback and multilingual site Ieatures had a signifcant relationship
with dependent variables such as email reply quality (Murphy et al.,
2003) and hotel`s internet marketing activities (Wang & Fesenmaier,
2005). For instance, hotel websites with animation had low quality
email replies, while websites that provided external links or brochure
requests had high quality email replies (Murphy et al., 2003).
CONCLUSION
Although the list of reviewed articles is by no means exhaustive, the
peer-reviewed articles provide useful and dependable information.
Furthermore, the qualitative interviews took place in Malaysia, which
could bias the framework. Future research should involve a more
heterogeneous set of experts and a larger set of articles.
This study reviewed the presence of website features. Future
research could extend and complement this study by including more
quantitative studies and investigating the presence of other variables
in those studies. For example a few studies examined relationships
between these features and either organisational characteristics such as
size and star category (Murphy et al., 2003), or consumer preIerences
(Law & Hsu, 2006).
This developed Iramework helps hoteliers refect on their
current and future website design. The five dimensions help
management understand important areas for their site. Offering the
right information is critical, as customers with purchase intention
seek specifc product inIormation and spend minimal browsing time
on the web (Moe, 2003). It also gives hotels a list oI Ieatures to
gauge their website versus their competitors sites. For example, the
website ranking features demonstrates the visibility of the website
on the Internet.
Academically, this framework helps consolidate existing
studies on website evaluation and lays a foundation for future
research. Research requires valid and reliable instruments, yet
website evaluation studies often fail to verify or discuss dimension
identifcation and measurement (Aladwani & Palvia, 2002). This
study takes a small step forward, beyond the descriptive and
narrative evidence to propose a website evaluation framework and
corresponding features. A review of dozens of website evaluation
studies helps ensure comprehensiveness and avoid missing important
aspects of effective websites.
This paper comprises the frst two oI Iour proposed steps oI
a systematic and comprehensive study of website dimensions and
features (see Figure 2). These phases cover six key validity types:
content, construct (convergent and discriminant), criterion (predictive
and concurrent), internal, statistical and nomological (Bagozzi, 1981;
Hinkin, 1995; Straub, 1989).
Figure 2: Proposed Website Evaluation Framework Development and
Validation Process
This study defned dimensions Ior, and Ieatures oI, a website
evaluation framework. Both theory and understanding build a
foundation for deciding website dimensions and features. The third
phase deals with reliability, pre-tests coding the features on a few
websites beIore the fnal step oI coding the Ieatures present on the
fnal sample.
Lastly, future research should pre-test the framework and
most features on a sample of hotel websites. A pre-test allows the
researcher to refne and puriIy the Iramework beIore administering
to the fnal sample. For example, a Ieature can be ambiguous and
misunderstood by coders, which leads to unreliable coding of the
feature (Krippendorff, 1980; McMillan, 2000).
APPENDIX A: TOURISM AND HOSPITALITY STUDIES
INCLUDED IN THIS STUDY
Baloglu, S., & Pekcan, Y. A. (2006). The Website Design and Internet Site
Marketing Practices of Upscale and Luxury Hotels in Turkey.
Tourism Management, 27(1), 171-176.
Benckendorff, P. J., & Black, N. L. (2000). Destination Marketing on the
Internet: A Case Study of Australian Regional Tourism Authorities.
Journal of Tourism Studies, 11(1), 11-21.
Blum, V., & Fallon, J. (2001). Welsh Visitor Attraction Websites:
Multipurpose Tools or Technological Tokenism. Information
Technology & Tourism, 4(3-4), 191-201.
Cano, V., & Prentice, R. (1998). Opportunities for Endearment to Place
through Electronic Visiting: WWW Homepages and Tourism
Promotion of Scotland. Tourism Management, 19(1), 67-71.
Chung, T., & Law, R. (2003). Developing a perIormance indicator Ior hotel
websites. International Journal of Hospitality Management, 22(1),
119-125.
Doolin, B., Burgess, L., & Cooper, J. (2002). Evaluating the Use of the Web
for Tourism Marketing: A Case Study from New Zealand. Tourism
Management, 23(5), 557-561.
Essawy, M. (2006). Testing the Usability of Hotel Websites: The Springboard
for Customer Relationship Building. Information Technology and
Tourism, 8, 47-70.
Feng, R., Morrison, A. M., & Ismail, J. A. (2003). East vs. West: A
Comparison of Online Destination Marketing in China and the
USA. Journal of Vacation Marketing, 10(1), 43-56.
Jeong, M., Oh, H., & Gregoire, M. (2003). Conceptualizing Web Site Quality
and its Consequences in the Lodging Industry. International Journal
of Hospitality Management, 22(2), 161-175.
Kster, I. (2006). Relational Content of Travel and Tourism Websites. Asia
Pacihc Journal of Tourism Research, 11(2), 119-133.
Law, R., & Cheung, C. (2006). A Study of the Perceived Importance of the
Overall Website Quality of Different Classes of Hotels. International
Journal of Hospitality Management, 25(3), 525-531.
Law, R., & Hsu, C. (2006). Importance of Hotel Website Dimensions and
Attributes: Perceptions of Online Browsers and Online Purchasers.
Journal of Hospitality & Tourism Research, 30(3), 295-312.
Law, R., & Wong, J. (2003). SuccessIul Factors Ior a Travel Web Site:
Perceptions of Online Purchasers in Hong Kong. Journal of
Hospitality & Tourism Research, 27(1), 118-124.
Morrison, A. M., Taylor, J. S., & Douglas, A. (2004). Website Evaluation
in Tourism and Hospitality: The Art Is Not Yet Stated. Journal of
Travel and Tourism Marketing, 17(2/3), 233-251.
Morrison, A. M., Taylor, J. S., Morrison, A. J., & Morrison, A. D. (1999).
Marketing Small Hotels on the World Wide Web. Information
Technology & Tourism, 2(2), 97-113.
Murphy, J., Forrest, E. J., Wotring, C. E., & Brymer, R. A. (1996). Hotel
Management and Marketing on the Internet. Cornell Hotel and
Restaurant Aaministration Quarterly, 37(3), 70-82.
Murphy, J., Ho, P., & Chan, C. (2005). Competitive Analyses for Marketing
Electronic Wine Tourism. International Journal of Wine Marketing,
17(3), 39-54.
Murphy, J., Olaru, D., & Schegg, R. (2006). Investigating the Evolution
of Hotel Internet Adoption. Information Technology & Tourism.,
forthcoming.
Murphy, J., Olaru, D., Schegg, R., & Frey, S. (2003). The Bandwagon EIIect:
Swiss Hotels Website and E-mail Management. Cornell Hotel and
Scharl, A., Wber, K. W., & Bauer, C. (2004). An Integrated Approach to
Measure Web Site Effectiveness in the European Hotel Industry.
Information Technology & Tourism, 6(4), 257-271.
Schegg, R., Steiner, T., Frey, S., & Murphy, J. (2002). Benchmarks of
Web Site Design and Marketing by Swiss Hotels. Information
So, S. I., & Morrison, A. M. (2004). Internet Marketing in Tourism in
Asia: An Evaluation of the Performance of East Asian National
Tourism Organization Websites. Journal of Hospitality and Leisure
Marketing, 11(4), 93-117.
Wan, C. S. (2002). The Websites of International Tourist Hotels and Tour
Wholesalers in Taiwan. Tourism Management, 23(2), 155-160.
Wang, Y., & Fesenmaier, D. R. (2005). Identifying the Success Factors of
Web-based Marketing Strategy: An Investigation of Convention and
Visitors Bureaus in the United States. Journal of Travel Research,
43(3), 1-11.
Yuan, Y. L., Gretzel, U., & Fesenmaier, D. R. (2006). The Role of
Information Technology Use in American Convention and Visitors
Bureaus. Tourism Management, 27(2), 326-341.
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21
Information Technology Integration in Supermarkets Operations
NOR ZAFIR MD. SALLEH
ABU BAKAR ABD. HAMID
ROHAIZAT BAHARUN
SITI ZALEHA OMAIN
MAZILAH ABDULLAH
INFORMATION TECHNOLOGY
INTEGRATION IN SUPERMARKETS
OPERATIONS
2
INTRODUCTION
Retail sector in Malaysia is growing rapidly following the impact
of economic growth in Malaysia (Rohaizat, 1997). Increasing
income and purchasing power among the Malaysian population has
contributed to the development of supermarkets in this region. In
the current situation, supermarkets today face much competition in
the light of the increasing presence of hypermarkets in Malaysia.
Increasing size of supermarkets and competition among the retailers
has also created the need for sophisticated stock control to increase
their productivity and implementations of new IT (Al-Sudairy and
Tang, 2000).
According to Shyla (2003), ICT adoption among Malaysian
retailers is comparatively low. On average, retailers spend 1 percent
of sales on IT investment compared to 5.5 percent spending of
economy as a whole. This under-investment is putting the retail
industry at risk (Steidtmann, 1999). According to Frugal Retailers
Splurge on IS, study reveals, each year, retailers only spends about
0.5% of sales on new technology, upgrading existing systems
and buying into new ones. In addition, retailers did Iace fnancial
problems and IT base manpower in implementing IT system in
operations. IBM Malaysia retail store solution manager, Ooi Kok
Hooi said local retailers should look at employing multi-channel
ICT solution to better connect with customers, colleagues, suppliers
and distributors through a choice of access channels and devices that
are fully integrated.
The objectives of this study are to identify and measure the
levels of IT integration in the supermarket operations, examine the
determinant Iactors and benefts Ior choosing IT and to understand
and identiIy diIfculties and problems encountered in the supermarket
operations in the integration of IT.
RETAIL TECHNOLOGY
IT refers to any computer-based tool that people use to work with
information and support the information processing needs (Haag et
al., 2004). IT should be a tool to enhance organizations and to promote
competitive advantage. It is a help since todays retail environment
is complex where disposable incomes have been squeezed, whilst
buying patterns change rapidly and is diIfcult to predict (Walters
and Rands, 1999). According to Al-Sudairy and Tang (2000),
supermarket retailers have expanded their market and operate store
in multiple location resulting in controlling merchandising to
become more diIfcult. As a result, IT secures as an important source
oI competitive advantage (Weber and Kantamneni, 2002).
Kotler and Armstrong (2002) stated that retail technology
is a competitive tool. IT provides tools to automate business,
analyze performance and manage relationships with customers
(Granofsky, 2001). IT also connects retailers with customers and
suppliers. In addition, according to Gupta (2000), IT speeds up
stock replenishment, reduces costs and minimizes duplication.
Meanwhile, elimination of disruption in processes digitized and
synchronized intra enterprise data transfer made product design
23
and delivery cycle to be increased (Kilcourse, 2004). Beside that, IT
also improves inventory management, provide better services and
enable effective decision-making (Al-Sudairy and Tang, 2000). On
the other hand, Lewison (1997) claimed that IT helps in making
better, faster and informed decisions.
Retailers use technology to gain competitive advantages
by applying all the organisations functioning division as in the
fgures below to achieve eIIectiveness and eIfciency. Types oI IT
normally used in retailing are listed below.
Types of IT Used in Retailing
Electronic Point of Sale Systems (EPOS) - In-store
accessing of product and customer information to facilitate
sales (Weber and Kantamneni, 2002).
Bar Codes and Scanner - Bar codes reader captures
information that exists in the form of vertical bars (Haag et
all, 2004). Scanners add bar codes by producing electronic
signals that represents the light it detects.
Electronic Data Interchange (EDI) - EDI is used
for ordering processing, payment and delivery
arrangements (Loughlin, 1999).
E-Commerce - Selling products to consumer online
as well as adding additional-added services (Parks, 1999).
In addition, other advanced IT used in the retailing industry
are self-scanning, kiosks, electronic shelf label, Radio Frequency
Identifcation, Plasma Screens and On-Demand Shopping and
Inventory. However there are some barriers of using IT in the
supermarket operations. The barriers are listed below:
Low Budgeting and High Cost - On average, retailers
spend only 1% of sales on IT compared to the 5.5% on the
economy (Steidtmann, 1999).
i.
ii.
iii.
iv.
i.
Lack of IT Staff and Training - Lack of technical support
and integrated solution of hardware and software became
an important barrier. Employees also need a training
program to enhance their IT knowledge. This will then
increase operation cost and be time consuming (Al-Sudairy
and Tang, 2000).
Transference and Acceptance of Technology - Transference
is highly dependent on the socio-cultural environments
which effected to a different outcome and acceptance in
different countries (Ho and Lau, 2001).
Obsolete Solution - By the time investment is made, the
solution may be obsolete in light of newer technologies.
This would be a waste as the cost for retooling and
retraining would be very high (Conforto, 1995).
Integration With Existence InIrastructure - BeIore
retailers can focus on emerging technologies, they need to
ensure technology infrastructure is well set up and
the basics of integration are in place (Granofsky, 2001).
Ethical Issue - Some of the issues include ethical scrutiny
via the Internet, security transactions, data integrity,
confdentiality and euthenics, lack oI legal Iramework,
copyright, Iraud, privacy and cookies (Whysall, 2000).
METHODOLOGY
We have reIerred to Malaysian Retail Association (MRA), Registrar
of Companies (ROC) and Kementerian Dalam Negeri dan Hal Ehwal
Pengguna to identify the number of supermarkets operating in Johor
Bahru. UnIortunately, these resources have no record to confrm
exactly the number of supermarkets. Since there is lack of references
and resources, we employed the observation method to recognize
those supermarkets. We have chosen the supermarket size ranging
from 3,000 to 10,000 sq.ft. to be in our sample. From our survey, we
ii.
iii.
iv.
v.
vi.
25
found out 12 supermarkets in Johor Bahru fell under this range. Thus
we took the population to be the sample. The methodology used in
this exploratory study involved questionnaire and in depth face-to-
face interviews with the IT or MIS and Information System Manager
of each supermarkets as they were the appropriate staff who really
understood the information technology used in their supermarkets
and be involved actively in the business operations. The interview
focused on the factors for choosing IT and problems encountered in
utilising IT in their supermarket operation. Following the interviews
the MIS managers were requested to fll in the questionnaires. The
design of the questionnaire was based on the knowledge gained from
relevant literature and drawing information from previous studies.
It is important to state that this is an exploratory study and the data
collected from the data collected from the questionnaire designed
Ior this study did not provide a suIfcient sample size to warrant
sophisticated statistical analysis.
LEVELS OF IT INTEGRATION
The fndings showed levels and types oI IT used in the
supermarkets surveyed.
i) Hwa Thai Supermarket
As referring to Figure 1 in the appendix, it
shows that the IT workfow oI Hwa Thai
Supermarket started with the scanned barcode
which automatically is sent to the POS system
for itemization before the information is being
transformed to the 3Ps for inventory and stock
control. Information from the POS is also used for
other types of application using Microsoft Based
Tools such as accounting, promotion, workforce
management and others.
ii) The Store Supermarket
The implementation oI IT in The Store fows Irom
the scanner then is automatically connected to the
EPOS. Information from EPOS will be transferred
to The Store Retail Management System, which acts
as a database before being directed to the main
server. (Appendix: Figure 2)
iii) Cold Storage Supermarket
The inIormation workfow oI Cold Storage started
with the used of scanners which then transforms
information to the EPOS. Using the Internet,
information was then communicated directly to the
JDA system at the head oIfce server, which consists
of corporate planning, merchandise management
and collaborative solutions. Each branch however
is able to view sales and items sold from internal
databases. (Appendix: Figure 3)
iv) Gedung Harian Supermarket
The utilization of IT in the Gedung Harian
Supermarket workfow starts Irom the scanners,
which transfer information directly to the EPOS.
Then using the Intranet, information gathered from
EPOS were transformed to the Retailmap System
which also consist of the EDP system for entering
purchase order invoices. (Appendix: Figure 4)
v) Uda Ocean Supermarket
Uda Ocean IT workfow starts with barcode
scanner to the EPOS and directly to the in-house
system called Flexy to manage all of the internal
management. (Appendix: Figure 5)
vi) Econsave Supermarket
The inIormation workfow oI Econsave supermarket
started with the use of scanners which then
transforms information to the EPOS. Using the
27
Intranet information was then communicated
directly to the Retailmap system that consists
of inventory management and accounting
management. (Appendix: Figure 6)
vii) Maslee Supermarket
Maslee Supermarket inIormation workfow starts
with the application of scanner to the EPOS and
directly to outsource generated system of ORIS for
the inventory management. In addition, UBS is in
use for the accounting management. (Appendix:
Figure 7)
viii) Kapitan Supermarket and Jalal Supermarket
Kapitan Supermarket and Jalal Supermarket have
the same IT systems employed in their supermarket
operation. Their inIormation workfow starts with
scanner to the EPOS and directly to outsourced
generated system called 3Ps system for the
inventory control and management. Other internal
management are still using Microsoft Base.
(Appendix: Figure 8)
xi) Bersatu Jaya Supermarket
We Iound out that the supermarket still used
the cash register and internal price tag. It also
implements the use of a Bersatu Member card but
not complimented with the magnetic strips. All
other activities and internal management operation
Bersatu Jaya supermarket still used the manual
system applications and basic software of Microsoft
Base.
xii) COOP Supermarket
COOP supermarket only used cash registers
complimented with the price tag on products and
at the shelf. The reasons for delaying in investing
are due to a problem whereby the building was
supposed to be upgraded and the company did not
want to adjust the system again after the upgrading.
The company also Iound it diIfcult to change as
the supermarket only has one branch, rising cost
of IT application and employees reluctance to
change. Stock checking is being done manually
once a year while supplier pays a visit for purchase
order. All other activities and operations are being
done manually with the help of Microsoft base
applications.
xiii) Duty Free Zone Supermarket
This supermarket adoption of IT can be considered
in its advance level (Figure 9). Since the company
has its own MIS department, we found out that
the company is able to generate a system call
Integrated Merchandising System. This is a
complete system comprising Merchandising
System, Logistic Management System, Data
Warehouse and Warehouse Management System,
WorkIorce System, Computer Assisted Ordering,
Inventory Planning, Pricing Management System
and Accounting System.
JUSTIFICATION OF IT SELECTION
Our research found that it is important for IT to be cost and scale
sensitive. Complimented with these, it is vital for the technology to
be mature and stable in the marketplace, proven and oIIer fexibility
to operate in different environment and situations effectively.
Furthermore, it is crucial for the technology to be user friendly.
Supermarkets also consider local availability and conservation
in cost, time, energy, and resources. In addition, the social issues
revolves around the community, the public and employees in terms
29
of their involvement, perception and impacts.
BENEFITS OF IT INTEGRATION AND
IMPLEMENTATION
The use oI IT resulted in an improvement oI the eIfciency and
accuracy in operation, decision-making and customers checkout
time. On the other hand, IT also offers a space reduction by being
able to identify saleable and non saleable items and a way to better
control inventory. Furthermore, predictions could be made to enable
a closer relationship among retailers, customers and suppliers. We
also found out that a lot of IT applications especially the RIS has
given a lot of changes to the management. Retailers are being able
to respond quickly while offering quality services and product
diIIerentiation. Employees become more satisfed and retailers are
able to reduce human error, labour, inventory and operation costs.
CHALLENGES IN IT INTEGRATION
The main problems encountered in the integration of IT in the
supermarket are regarding the cost of maintenance, IT equipments,
IT personnel, IT training and IT management. We also Iound
that some applications might just be an obsolete solution by the
time of implementation. There are also issues of resistance to
change, diIfculty in learning and time taken in understanding the
technology. In addition, capacity and readiness of the Malaysian
within the integration of IT is very low with the lack of expertise,
skilled manpower and even vendors or manufacturers who are
able to best serve in ensuring technology that is worth it and
can be implemented successfully and effectively. Furthermore,
incompatibility of IT hardware and software also was found to be
among major problems. Data accountability and accuracy also has
become an issue apart from miscommunication and ethical and
security issues.
CONCLUSION
We Iound out 83 percent oI the supermarkets in the area oI Johor
Bahru adopt the Point of Sales system (POS) in their daily operation
as their basic IT application and have a complete transaction in
this interface. Out of this, only two supermarkets are still using the
traditional type of POS. However, 17 percent of the respondent in
our analysis did not implement the POS in this interface and are at
early stages oI IT implementation with the use oI cash register. We
conclude that the level of IT integration in these interfaces to be at
a medium level.
Based on our research, 33 percent of the supermarkets
are categorized in the advance level of IT implementation as it
completed this interface with the use of incorporated system such
as the TSRMS, Flexy and Integrated Merchandising System.
50 percent of the supermarkets are in the intermediate level of
application with half of applications using outsourced systems such
as 3Ps, EDP, Retailmap and UBS, an individual system linked to
other applications using LAN and WAN. The remaining 17 percent
are categorized as early entry level, which is using basics computer
systems oI MicrosoIt oIfce to manage the internal operations.
Overall, the level of IT integration in these interfaces is at a medium
level.
83 percent of the supermarkets in Southern Malaysia did not
have any integration of IT in retailer to vendor interface and only
two supermarkets, which are Cold Storage and Duty Free Zone, have
this application. This indicates that the retailer to vendor interface is
at an early stage of low adaptation among supermarket retailers in
Southern Malaysia.
31
Supermarket Retailer-Consumer Retailers Internal-
Operation
Retailer-
Vendor
Hwa Thai UPC, Scanner, POS 3Ps None
The Store UPC, Scanner, EPOS TRSMS (Custom
Build)
None
Cold Storage UPC, Scanner, EPOS JDA
Gedung Harian UPC, Scanner, EPOS Retailmap System None
Uda Ocean UPC, Scanner Flexy (Custom
Build)
None
Econsave UPC, Scanner Retailmap System None
Maslee UPC, Scanner, EPOS ORIS None
Kapitan UPC, Scanner 3Ps None
Jalal UPC, Scanner, EPOS 3Ps None
Bersatu Jaya Manual Cash Register None None
COOP Manual Cash Register None None
Duty Free Zone UPC, Scanner, EPOS Custom Build
Level of IT Intermediate Level Intermediate Level Low Level
Table 1: Level Of IT Integrate In Supermarket Operations
In conclusion, supermarkets in the area of Southern
Malaysia are still in the process of upgrading IT systems to
a higher level in their daily operations. They were trying to
allocate larger amounts of budget in order to invest in the IT. It
is important that the supermarkets should make full use of IT
capabilities in the future to gain competitive advantages. As
referring to Table 1, we conclude that the integration of IT in
the supermarkets operation in Southern Malaysia is very low
compared to many IT applications available in the market for each
of the 3 interfaces.
RECOMMENDATION
In order to solve problems encountered in the implementation
of IT in the supermarket operations, some recommendation
include performing training programs , employing staff with
IT background, select the optimum IT solution, reduce costs by
choosing fexible system, maintain and monitor the IT systems,
standardize the EDI format and adapt to future IT. Some of the
technology include RFID or EPC, self-scanning and self checkout,
point of impulse marketing and other smaller IT solutions such
as public cellular access, wireless video marketing and integrated
network oI pos kiosk web vision (Technologies Still Working Out
Kinks, 1997)
REFERENCES
Al-Sudairy, Mohammed A. and Tang, N.K.H. (2000). IT in Saudi
Arabias Supermarket Chains. International Journal of
Retail & Distribution Management. 28 (8): 341-356.
Anonymous (1995). Ernst & Young 14 th Annual Survey of Retail
Information. Chain Store Age. 71 (9): 1-30.
Anonymous (1997). Frugal Retailers Splurge on IS, Study Reveals.
Chain Store Age. 73 (1): 146-148.
33
ConIorto, D. A (1995). Competing With Retail Technologies. Chain
Store Age, 71 (11): 120.
Gupta, U. G. (2000). Information Systems: Success in the 21st
Century. 2nd Ed. New Jersey: Prentice Hall. 31-61.
Granofsky, R. (2001). The Canada Retail Technology Survey.
Retail Council of Canada. Available: http://retailcouncil.org/
technology/techreport_2001.pdf.
Ho, Suk-Ching. Lau, Ho-Fuk (1998). Development of Supermarket
Technology: The Incomplete Transfer Phenomenon
International Marketing Review. 20-29.
Haag, S., Cumming, M. and McCubbrey, D. J. (2004). Management
Information Systems for the Information Age, 4th ed.
McGraw-Hill: 2-27.
Kilcourse, B. (2004).A Bend in the Road for Retail IT, Chain Store
Age, 80 (6): 51.
Kotler and Armstrong (2002), Principle of Marketing. 9th edition,
New Jersey, Prentice Hall. 473-492.
Lewison, D. (1997). Technological/Informational Patterns and
Trends. The Dynamic Character of Retail Environment.
United States oI America: John Wiley & Sons, Inc.
120-127.
Loughlin, P. (1999). Viewpoint: E-commerce Strengthens Suppliers
Position. International Journal of Retail & Distribution
Management. 27 (2): 69-72.
Parks, L. (1999). Retail Technology Delivers Tremendous Payback.
Drug Store News. 21 (1): 22-23.
Reid, K. (2002). Retailing in the New Year, Technology Update,
National Petroleum News. Available: http://www.npn-net.
com
Rohaizat Baharun (1997). The Present and Future of Malaysian
Retailing Industry. Malaysian Management Review.
Shyla Sangara (2003). Using ICT in Retail. New Straits
Times,Malaysia. March 3rd.
Steidtmann, C. (1999). The New Retail Technology. Discount
Merchandiser. 39(11): 23-25.
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Walters, D. and Rands, C.A. (1999). Computers in Retailing.
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Retailing: An Examination oI Underlying Benefts and
Barriers. Supply Chain Management: An International
Journal 7 (5): 311-317.
Whysall, P. (2000). Retailing and the Internet: A Review oI Ethical
Issues. International Journal of Retail & Distribution
Management. 28 (11): 481-489.
APPENDIX
Figure 1: Hwa Thai Supermarket
35
Figure 2: The Store Supermarket
Figure 3: Cold Storage Supermarket
Figure 4: Gedung Harian Supermarket
Figure 5: Uda Ocean Supermarket
37
Figure 6: Econsave Supermarket
Figure 7: Maslee Supermarket
Figure 8: Kapitan Supermarket and Jalal Supermarket
Figure 9: Duty Free Zone Supermarket
39 Diffusion of Innovations: Adoption and Use of Websites
and Email Among Malaysian Hotels
3
DIFFUSION OF INNOVATIONS:
ADOPTION AND USE OF
WEBSITES AND EMAIL
AMONG MALAYSIAN HOTELS
INTRODUCTION
OIfine, and even more so online, brands are important to consumers
(Rowley, 2004). For example, Ward and Lee (2000) Iound that
consumers use brand names as substitutes Ior product inIormation
when purchasing products online. The Internet, particularly the
World Wide Web and email, add other channels Ior increased brand
visibility (Rowley, 2004). Refecting this importance, research and
trade literature oI online branding is gradually expanding (Reichheld
& ScheIter, 2000; Rowley, 2004).
One research stream is the study oI branded domain names,
such as hilton in the Hilton hotel`s respective website and email
addresses, www.hilton.com and reservationshilton.com. Studies
highlight the importance oI using branded domain names (Murphy,
RaIIa, & Mizerski, 2003) and suggest that their use refects an
advanced level oI Internet adoption (Murphy, Olaru, Schegg, &
Frey, 2003; Murphy & Tan, 2003). In the hospitality sectors, where
branding is important oIfine (Cai & Hobson, 2004), branded websites
and email addresses become important tools Ior increasing online
Iamiliarity and confdence.
While research has examined tourism and inIormation
technology in developed nations such as the UK, Germany, Austria
and US (Frew, 2000), this research is at an embryonic stage in
Malaysia. To the authors` knowledge, there is little research on
Malaysian hospitality and tourism |see Ior example: Pei, Khatibi
and David (2005);Wai and Kevin (2005); Sellah and Micheal (1994);
Goldsmith and Mohd Zahari (1994)| and even less on Internet use
(Suraya, 2005). This chapter helps fll this gap by using Rogers` (2003)
DiIIusion oI Innovations as a theoretical base to investigate email,
websites, and branded domain adopted by Malaysian hotels.
The Iollowing section reviews branding and diIIusion oI
innovations, Iollowed by conceptual development and hypotheses.
Next, a discussion oI the research methodology leads into the general
results and hypotheses testing. The chapter closes with a discussion oI
the managerial implications, academic implications and suggestions
Ior Iuture research.
LITERATURE REVIEW
e-brands
A brand name, the spoken part oI the brand, is oIten the company
name (Siegel, 2004). When buyers need goods or services, they
oIten seek a known and trusted brand. Branding is vital to marketing,
with industry spending over US 2 trillion on brand creation and
management in the year 2000 (IlIeld & Winter, 2002). Customers
loyal to a brand usually have a positive perception oI its quality
and will repurchase the brand (Reichheld & ScheIter, 2000). In
the Internet marketplace, the role oI the brand has asserted itselI as
an important Iactor related to purchasing (Rowley, 2004) and to a
company`s integrated communication strategy (Murphy, RaIIa et al.,
2003; Siegel, 2004).
'Click-and-mortar businesses, with both physical and virtual
processes (ChaIIney, Mayer, Johnston, & Ellis-Chadwick, 2000),
are more successIul leveraging the Internet`s benefts than purely
virtual businesses (Dutta & Biren, 2001; Mahajan, Srinivasan, &
Wind, 2002). These click-and-mortar businesses oIten use the same
brand name oIfine and online in an integrated brand name strategy
(Siegel, 2004). Most well-established and reputable click-and-mortar
businesses rely on their oIfine brand name to generate awareness oI
their online presence, e.g. mcdonalds.com, dell.com, and walmart.
com (IlIeld & Winter, 2002; Reichheld & ScheIter, 2000).
The brand name may also guide consumers to the website.
For example, loyal oIfine Sheraton or Hyatt customers should seek
sheraton.com and hyatt.com. An eIIective online strategy lets existing
or potential visitors remember or guess the correct website address
(Hanson, 2000; IlIeld & Winter, 2002; Murphy, RaIIa et al., 2003).
Many web users rely less on search engines and tend to visit easy-to-
remember domain names rather than searching Ior websites (Coyle
& Gould, 2002; Roberts & Ko, 2001). As a participant in Coyle and
Gould`s (2002) study noted, 'Most well-known companies have
their own websites , so I didn`t have to search Ior the address with a
search engine because I assumed that Panasonic had its own website.
I assumed right, because it did.
In summary, branded website and email addresses help
businesses build their brand and increase visits to their website
(Carpenter, 2000; Ries & Ries, 2000). A branded site can reassure
consumers that the business is reliable, saIe and trustworthy (Hanson,
2000). Finally, branded sites save buyers time because they know
what to expect at the site and need not shop Ior alternatives (Rowley,
2004).
Domain Names
Similar to matching telephone phone numbers and names, the Internet
maps a domain name to a company`s Internet Protocol address.
Domain names such as hyatt.com are easier to remember than a string
oI Iour numbers such as 208.134.241.178 (Cross, 1998). Technically,
hyatt represents the domain name and .com represents the domain.
As noted earlier, companies should seek a domain name that
matches their brand. For example, a study oI domain name branding
Iound that most oI the world`s top brands owned their brand in the
global .com domain (96), Australian .au domain (80) and French
.Ir domain (Murphy, RaIIa et al., 2003). The Iormer, available to
anyone and costing about RM 38 annually, include .com, .biz, .net,
and .org.
The latter two, .au and .Ir, exempliIy country domains. There
are over two hundred country domains, with varying prices and
registration requirements such as country residence. The Internet
Corporation Ior Assigned Names and Numbers (www.icann.org)
manages domains and delegates country domains to the respective
countries` representatives. Mynic, the registrar Ior Malaysia`s .my
domain, assigns domain name on a frst come frst serve basis Ior as
little as RM 40 per year to Malaysian citizens (Mynic, 2005).
Having the right domain name, however, is just one step
towards Internet success. Management, maintenance and eIIective
use oI the company`s website and email also relate to success. The
next section introduces DiIIusion oI Innovations (Rogers, 2003) as
a theoretical base to investigate the adoption oI email, websites and
branded domain names by Malaysian hotels.
Internet Adoption Stages
DiIIusion oI Innovations (DOI) oIIers a rich perspective on innovation,
and involves Iorces that drive and restrain the adoption oI innovations
by individuals and organisations (Rogers, 2003). According to the
theory, organisations adopt technologies over a continuum, Irom
having a technology to using that technology eIIectively throughout
the organisation (Abrahamson, 1991; Raho, Belohlav, & Fiedler,
1987; Rogers, 2003; Zmud & Apple, 1992). For instance King and
Teo (1997) proposes that inIormation system adoption in organisations
evolves across Iour stages, Irom supporting administrative work in
stage one to integration within organisational business strategy at
the last stage.
Extending DOI to Internet adoption, organisations also evolve
in their Internet use (Beatty, Shim, & Jones, 2001; Daniel, Wilson,
& Myers, 2002; Hanson, 2000; Lennon & Harris, 2002), such as
starting with a Iree Hotmail or Yahoo! email address. Organisations
may then advance Irom having a website at a non-branded domain
such as www.emalaysiahotels.com/vistanahotel.html to the branded
domains oI vistana.com or vistana.com.my. However, the challenge
Ior organisations is to understand and manage the implementation
oI technologies (Cooper & Zmud, 1990) rather than succumb to
bandwagon eIIects and Iall into assimilation gaps.
The bandwagon eIIect is the phenomenon oI joining an
increasingly popular trend such as adopting Internet technology
(McBride, 1997), without considering its eIIect or how to integrate
the technology with existing business practice. The bandwagon eIIect
usually results in a larger assimilation gap since adopters Iail to utilise
the innovation appropriately. The assimilation gap is the diIIerence
between the rate at which the market adopts and assimilates new
technologies (Fichman & Kemerer, 1999). This Iailure can yield
losses on the investment oI Internet and subsequently reduce potential
Internet benefts (Murphy, Olaru et al., 2003).
For instance, the Hotel Bintang Warisan has the branded
website address www.bintangwarisan.com, but the hotel`s email
address is maxcarrytm.net.my. This Iailure to leverage the branded
domain name in the email address suggests bandwagon eIIects and
assimilation gaps in using the Internet. As Hotel Bintang Warisan
already owns the domain name, bintangwarisan.com, a Iurther stage
oI organisational implementation would match the email address to
the website address, such as inIobintangwarisan.com.
Hotel Characteristics Related to Internet Adoption
DOI supports that size, aIfliation and hotel star rating relate positively
to the level oI technology adoption (Kimberly & Evanisko, 1981;
Murphy, Olaru et al., 2003; Premkumar, 2003; Scharl, Wber, &
Bauer, 2004; Schegg, Steiner, Frey, & Murphy, 2002; Siguaw, Enz, &
Navasivayam, 2000). In a study oI IT adoption by US hotels, Siguaw
et al. (2000) Iound that larger US hotels tended to adopt technology
more than smaller hotels. Similarly, Wei et al.`s (2001) study oI hotels
Irom 53 countries Iound wide scale website and email use by large
hotels as compared to small hotels. Finally, larger Swiss hotels lead
smaller Swiss hotels in the adoption oI Internet technologies (Murphy,
Olaru et al., 2003).
Research also shows that chain aIIiliated organisations
adopt technology Iaster than independent organisations (Julien &
Raymond, 1994; Siguaw et al., 2000). Explanations oI why chains
organisation lead the adoption include mandates by the headquarters,
strong fnancial support and having inIormation technology expertise
(Sigala, Lockwood, & Jones, 2001). Murphy, Forrest, Wotring and
Brymer (1996) Iound that chain hotels have six times more promotion,
service and inIormation, interactivity and technology and management
elements on their website than independent hotels. Further, a Tunisian
study Iound that chain hotels provided a better quality email reply
than the non-aIfliated hotels (Gherissi-Labben, Schegg, & Murphy,
2003).
With regard to hotel category, Siguaw et al., (2000) argued
that US luxury hotels are early adopters oI technology due to high
competition and meeting their customers` high demands. Jogaratnam
and Eliza-Ching (2004) in their study oI 163 hotels in China and
Hong Kong, Malaysia, and Singapore Iound that higher rated hotels
were more innovative in promoting technological development than
lower rated hotels. Similarly, research shows that Iour-to-fve star
hotels use email signifcantly more oIten than three star hotels (Wei
et al., 2001).
As organisations within the same industry adopt and
implement innovations diIIerently, researchers call Ior more
investigation oI organisational characteristics related to adoption
(Fichman & Kemerer, 1999) to support DOI theory. Furthermore,
cultural diIIerences among countries (Gatignon & Robertson, 1989)
may aIIect hotels` ability to use the Internet. The Iollowing section
proposes extending DOI to email and website
METHODOLOGY
As metropolitan areas lead in the adoption oI technologies (Walcott,
Press, McHenry, Goodman, & Fostor, 2001), this research used Iour
technologically advanced Malaysian areas: Kuala Lumpur, Selangor
and Pulau Pinang and Johor. Given no comprehensive database oI
email and website addresses Ior Malaysian hotels, this study started
with inIormation Irom the Malaysian Accommodation Directory
(MAD) 2003/2004, which provides a hotel`s star rating (1-5 stars),
number oI rooms and email addresses . MAD, however, does not list
a hotel`s website address.
To supplement and update the MAD inIormation, keying the
hotel name into the Google and Yahoo search engines helped fnd
the hotel websites. Visits to the websites in August 2005 yielded
additional data related to hotel`s website domain name, email address
and chain-aIfliation. In the case oI conficting inIormation, this
chapter assumed the inIormation Irom the hotel`s website was more
current and valid than the inIormation in the printed MAD directory.
A census oI the MAD directory Ior the Iour states garnered 494 hotels,
but only 185 hotels were 1-5 stars rated hotels (see Table 1 Ior sample
characteristics).
FINDINGS
Evolving Internet adoption: From email presence, to website
presence, to matching domain names
The results in Table 1 show that similar to previous hospitality research
(Wei et al., 2001), email is the most popular Internet application
among Malaysian hotels. Two in fve hotels had an email address
and the percentage oI hotels with an email address was much higher,
over six out oI seven, Ior those hotels with a star rating. Over one in
Iour oI all hotels and almost two oI three rated hotels had a website.
Finally, just over one in fve oI all hotels and one in two rated hotels
matched their email and website domain names.
N Email
Presence
Website Presence Matched
Domain Names
Size
30 rooms 186 12 (7) 3 (2) 2 (17)
31-99 rooms 162 58 (36) 23 (14) 16 (28)
100-199 rooms 53 43 (83) 26 (49) 17 (39)
200-299 rooms 33 31 (94) 26 (79) 19 (61)
~300 rooms 60 54 (98) 54 (90) 50 (85)
T-value
17.23
21.35 7.42
Signifcance 0.001 0.001 0.001
Total 494 203 (40) 132 (27) 104 (21)
Star rating
One star 22 12 (55) 2 (9) 1 (8)
Two star 38 26 (68) 9 (24) 6 (23)
Three star 43 40 (93) 28 (65) 18 (45)
Four star 42 41 (98) 40 (95) 35 (85)
Five star 40 40 (100) 39 (98) 34 (85)
Kruskall Wallis 33.17 84.92 46.86
Signifcance 0.001 0.001 0.001
Total 185 159 (86) 118 (64) 94 (51)
Chain aIfliation
Chain 128 119 (93) 106 (83) 88 (73)
Non-chain 366 84 (23) 26 (7) 16 (19)
Chi Square 192 277.61 58.27
Signifcance 0.001 0.001 0.001
Total 494 203 (40) 132 (27) 104 (21)
Hotel characteristics and Internet adoption
Larger, higher-rated and aIfliated hotels led the adoption oI Internet
technologies. While just 7 oI the hotels with less than 30 rooms
had an email address, 98 oI those hotels with over 300 rooms had
an email address. Table 1 shows that as the number oI rooms rises, so
does the percentage oI hotels with email addresses, website presence
and matched domains. Similarly, as the star category rises, so does
the percentage oI hotels with email addresses, website presence and
matched domains. Finally, compared to non-aIfliated hotels, chain
aIfliation Iavours having an email address, website and matched
domains.
Table 1 also shows the results oI three tests used to examine
the hypotheses: Chi Square tests Ior the nominal chain-aIfliation,
Kruskal-Wallis tests Ior the ordinal star rating and t-tests Ior the
metric number oI rooms. The results support all three hypotheses.
Hotel size showed a signifcant positive relationship with the three
dependent variables oI email presence, web presence and matched
domain names. The signifcance (p .001) oI these results held across
the entire sample (n494), as well as with just those hotels with a star
category (n185). Similarly, both hotel category and hotel aIfliation
showed signifcant relationships (p .001) across both samples with
email presence, web presence and matched domain names.
CONCLUSIONS
This chapter helps hoteliers and related authorities such as Tourism
Table 1: Email, website and email matches domain name
Malaysia and Malaysia`s Ministry oI Tourism benchmark existing
patterns oI Internet use. About two oI fve Malaysian hotels in these
Iour states have email, but only about one in Iour have websites and
even less, about one in fve, leverage their online branding by having
the same domain name in their website and email addresses.
As this and previous studies show that larger, aIfliated and
high rated hotels lead in the adoption oI technologies, these results
help predict Malaysian hotels` Internet adoption, i.e. starting with an
email address, Iollowed by a website and matching domain names.
Hotels without an email address should consider using email as
soon as possible to catch up with those using email in delivering
customer service. Hotels can get a Iree email address with two popular
Malaysian websites: Yahoo at www.yahoo.com.my and Google at
www.google.com.my. Furthermore, the hotels can seek an email
address that incorporates their hotel brand such as hotelbrandyahoo.
com.my or hotelbrandgoogle.com.my.
Similarly, hotels with or without a website should at least
register their hotel name as a branded domain name. Given the frst
come frst serve basis and minimal expense oI RM 40 annually, hotels
should stake their branded .my domain name sooner rather than later.
Research and the popular press illustrate how domain name conIusion
results Irom honest mistakes and unscrupulous entrepreneurs grabbing
another`s brand name as a domain name (Murphy, RaIIa et al., 2003).
Branded electronic addresses help businesses build their brand and
increase website visits (Carpenter, 2000; Hanson, 2000; Ries & Ries,
2000). Finally, hotels unsure about hosting a website in the short term
could still use their branded domain name in their email address.
Mynic lists approved companies that sell .my domains and host .my
email addresses at www.mynic.net/newhp/reseller-list.htm.
Yet hotels should not adopt an email address, buy a domain
name or launch a website due to bandwagon eIIects (Murphy, Olaru et
al., 2003). In other words, management should not adopt the Internet
in order to keep up with latest trends and Iashions, or to imitate their
competitors. There is little sense in having an email address iI the
hotel will not answer emails. Hotels might provide customers with
an email address but problems such as bounced emails, low reply
quality or worse, no reply to enquiries, harm the hotel`s service
quality. Alternatively, hotels can gain an immediate competitive
advantage via proper email responses (Gherissi-Labben et al., 2003;
Matzler, Pechlaner, AbIalter, & WolI, 2005; Murphy & Gomes, 2003;
Murphy, Olaru et al., 2003; Murphy & Tan, 2003; Schegg, Murphy,
& Leuenberger, 2003).
Hotels that jump on the Internet bandwagon lower their chance
oI successIul implementation oI website and email as business tools.
In addition to poor email responses, hotels may update their website
irregularly, add unnecessary animation, or provide insuIIicient
inIormation about the hotel. Without a convincing argument Ior having
a website, hotel should stay with email, preIerably branded email.
This chapter adds to the lack oI research on Malaysian hotels
and technology. The results resemble research in developed countries
in that larger, higher rated and chain aIfliated hotels adopt Internet
technology Iaster than independent, smaller and lower rated hotels
(Murphy, Olaru et al., 2003; Scaglione et al., 2005; Schegg et al.,
2003; Siguaw et al., 2000). This chapter helps extend and generalise
diIIusion research (Abrahamson, 1991; Zmud & Apple, 1992), by
illustrating evolving Internet adoption in a developing country,
Malaysia.
This chapter also adds a new measure oI Internet adoption,
i.e., an email domain name matching the website domain name. The
results support the proposition that Internet adoption stages begins
with having email to launching a website and then having email that
matches the domain name. Malaysian hotels, hotels with an email
address only may be at an initiation stage oI Internet adoption but
hotels oIIering email addresses that match their domain names,
suggests moving toward the implementation stage. Finally, this
research also supports discussion oI online branding by supporting a
new variable in the discussion oI evolving Internet adoption, domain
name branding.
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57 Website Design and E-Loyalty: A Case Study of Air Asia
4
WEBSITE DESIGN AND E-LOYALTY:
A CASE STUDY OF AIR ASIA
LING JONG PING
AHMAD SHARIFUDDIN SHAMSUDDIN
INTRODUCTION
Customers loyalty is becoming an area of great interest for
companies. The rapid development of technology and internet has
diverted companies direction to retain e-loyalty. Customer loyalty
has a direct impact on the revenue and proftability oI a company. The
website interface plays an imperative role in customer e-loyalty. An
interactive and content full website creates added value and highly
motivate customer repeated visits.
Internet is a creative business tool of the new era. It has
changed the shape of traditional way of doing business and has
gained a great deal of attention in the media. With the advent of the
WWW and user-friendly web browsers, companies are making the
leap online. Many companies have set up their own internet presence.
Companies are quickly moving to use the Internet as a way of
segmenting markets, targeting customers ,having frequent customer
feedback, enhancing global customer access ,maintaining round the
clock shopping facility and many other things which were beyond
the reach of ordinary promotional tools. All these business functions
are being carried out with eIfciency and at a reasonable cost.
The potential application of the Internet are being expanded
every day, and companies which are the first to exploit these
opportunities will have a tremendous advantage over their traditional-
oriented competitors(Ainscough and Luckett, 1996). The following
are the actionable factors that impact website loyalty and investigate
the nature of their impact. These eight factors appeared to impact
website loyalty: (1) customization, (2) contact interactivity, (3)
cultivation, (4) care, (5) community, (6) choice, (7) convenience, and
(8) character. We refer to these factors as the 8Cs.
This study investigates Iactor infuencing loyalty towards
Air Asias website and later identify factors found most effective in
infuencing loyalty towards Air Asia`s website.
LITERATURE REVIEW
Customer loyalty is defned as 'a deeply held commitment to re-
buy or re-patronise a preferred product/service consistently in the
future, thereby causing repetitive same-brand or same brand-set
purchasing, despite situational infuences and marketing eIIorts
having the potential to cause switching behavior (Oliver 1999, p.
34). This general defnition can also be applied to e-loyalty as well
but there is a brieIer and specifc defnition oI e-loyalty that is 'the
customers favorable attitude toward an electronic business, resulting
in repeat purchasing behavior (Srinivasan et.al 2003). Customer
loyalty is considered important because of its positive effect on
long-term proftability. ThereIore it is crucial Ior online companies
to create loyal customers because it has a positive effect on long
term proftability and on the other hand acquiring new customers can
be more expensive and company has to spend much more on new
customers (Reichheld et al. 2000).
According to Kuttner (1998, p. 20), 'The Internet is a
nearly perfect market because information is instant and buyers
can compare the oIIerings oI sellers worldwide. The result is ferce
price competition and vanishing brand loyalty. Given the reduction
in information irregularity between sellers and buyers, there is a
growing interest in understanding the bases of customer loyalty
in online environments. In order to acquire the benefts oI loyal
customer base, e-retailers need to develop a thorough understanding
of the background of e-loyalty, that is, customer loyalty to a business
that sells online. Such an understanding can help e-retailers gain a
competitive advantage by devising strategies to increase e-loyalty.
The following are the actionable factors that impact e-loyalty and
investigate the nature of their impact. These eight e-business factors
that appeared to impact e-loyalty: (1) customization, (2) contact
interactivity, (3) cultivation, (4) care, (5) community, (6) choice, (7)
convenience, and (8) character.
METHODOLOGY
This research is a case study and correlation study as it identifes the
Iactors infuencing e-loyalty through Air Asia`s website. Furthermore,
it examined the most eIIective Iactor that infuence student`s e-loyalty
toward Air Asias website. There are eight factors introduced by
Figure 1: Concept Model for E-Loyalty Source (Srinivasan et.al. 2002)
Srinivasan et.al. (2002)These instruments were utilised to examine
this analysis.
The population of this study includes the students from
Faculty of Management, UTM who have used Air Asias website
for searching for information and purchased the air tickets. In the
research, the questionnaires were distributed to 278 respondents
who are aged between 20 and 30 years old. Researcher will use the
simple sampling technique choosing the respondents to answer
the questionnaire. Every respondent chosen was given one set of
questionnaire form.
Data collection started with collecting common information
such as the companys website performance. After the main
company`s website was identifed, the data concerning their website
design was collected. The main objective of this part of data collection
process was to improve the implementation quality of website for
operational activities.
Frequency analysis helps describe the demographic of the
respondents. Factors analysis analysed the dimensions that are
associated with the Iactors in infuencing the intention to use Air Asia
website. To test the reliability of the factor, a reliability factor is the
appropriate method of investigation. Further, to test the relationship
between eight e-loyalty factors with loyalty, researchers applied
the Pearson Correlation CoeIfcient Analysis to investigate both
relationships. Regression Analysis identifed the signifcant role in
achieving e-loyalty on Air Asias website.
DATA ANALYSIS AND FINDINGS
The survey garnered 100 respondents who have used Air Asias
website Ior booking tickets or surfng Ior inIormation . Every question
answered by respondents will contributed the implication towards
research results. The demographic characteristics discussed here
included gender, race, age, year of study, experience of using Air
Asia website Ior booking the air tickets or surfng Ior inIormation
for study use. The frequency distributions of these characteristics are
shown in Table 1 below.
Table 1: Frequency and Percentage Distribution oI Respondents` Profles
Confrmatory Factor Analysis
Factor Analysis was used to identify factors that are associated
with loyalty toward Air Asias website. Principal Component Factor
Analysis with Vairmax Rotation was used to analyse 28 items to
identify the factors that are associated with loyalty towards Air Asias
website.
Factor analysis is appropriate in this research because the
test of Kaiser-Meyer-Olkin Measure of Sampling Adequacy is more
than 0.6 (KMO 0.728) and Barlett`s Test oI Sphericity is signifcant
(Bartletts Test of Sphericity =3282.850, Sig = 0.000). These results
show that factor analysis is useful in analyzing the data which was
collected.
RELIABILITY
Reliability analysis had been done for the eight constructs in this study,
which were customisation, contact interactivity, cultivation, care,
community, choice, convenience, and character. As recommended
by Hair et al. (1998), the benchmark of the reliability analysis was
Chronbachs alpha of 0.7. In this study, all the eight factors had
shown high Chronbachs alpha which exceed the recommended
benchmark, thus implying that all the items from the eight factors
were statistically reliable.
Among these eight factors, Contact Interactivity had the
highest reliability level whereby the reliability alpha was 0.986
followed by Character alpha which was 0.974. For Convenience, the
alpha was 0.968 and Care had an alpha of 0.945 and Choice which
had an alpha of 0.942. Besides that, cultivation, customization and
community also had the Chronbachs alpha of 0.901, 0.889 and
0.704 respectively. Through this reliability analysis, no items were
deleted and the high Chronbachs alphas supported the reliability of
this study.
THE RELATIONSHIP BETWEEN EIGHT E-LOYALTY
FACTORS THAT APPEARED TO IMPACT LOYALTY
Correlation matrices that derived Irom the Iactors that infuence
students loyalties were then computed in order to verify the
relationships between both variables. The result shows that only 5
factors yielded a positive degree of convergent validity among the
variables.
Table 2 shows that the value of each variable correlates with
loyalty. According to the correlation analysis above, most of the
independent variables yielded a moderate and positive degree against
loyalty. This meant that the number of students loyal towards Air Asia
website would bincrease with the increase of these variables.
In brief, eight variables out of the six measures have appeared
to be signifcantly correlated with Air Asia`s website. Customisation
of the Air Asia website has been expected to be a high variable
that correlated with the students loyalties, which has the highest
correlation coeIfcient at 0.987 (p0.01) compared to other Iactors.
The table below shows the correlation between eight loyalty factors
across loyalties of Air Asia website.
Table 2: Correlation between eight loyalty factors across loyalties of Air
Asia website
THE MOST EFFECTIVE FACTORS THAT INFLUENCES
LOYALTIES TOWARDS AIR ASIAS WEBSITE
Five factors were found to have a dominant impact on loyalty toward
Air Asias website which is customization, contact interactivity, care,
community and choice. Besides that, dimension of customisation has
(t=2.571, Sig=0.012), contact interactivity (t=1.984, Sig=0.050), care
(t=2.111, Sig=0.038), community (t=3.108, Sig=0.003) and choice
(t=2.001, Sig=0.048)and these have a positive relationship with the
loyalties toward Air Asia website except for factor of choice. It shows
that students loyalties can increase if dimension of customisation,
contact interactivity, care and community is increased and the factors
of choice is decreased. The equation of regression is:
Y=0.364X1+0.311 X2+ 0.301X3+0.321X4+0.291X5+0.047
Of Which:
Y=Loyalty
X1=Customization
X2=Contact Interactivity
X3= Care
X4= Community
X5= Choice
Dimension of customisation (beta=0.362) is a main dominant
Iactor infuencing students` loyalties. Customisation Iactor infuence
on the students intention to use Air Asia website was higher if
compared to the factor of customization, care, choice and contact
interactivity as it indicated larger standardized beta coeIfcient.
The results of the research are supported by researchers
(Srinivasan et al, 2002)and that the extent to which an e-retailers
website can recognize a customer and then tailor the product, services
for that customer. Air Asia customizes its services to its customers
regarding to the customers` needs. Air Asia had oIIered benefts,
cost savings and low cost schemes to its customers through email.
The more customers pay the more benefts he/she will get. Air Asia
supports the practical as it customized its services according to the
needs of customers.
According to Alba et al. (1997), interactivity enables a search
process that can quickly locate a desired product or service, thereby
replacing dependence on detailed customer memory. By replacing a
consumer`s need Ior confdence on memory with an interactive search
process, Air Asia may be able to increase the perceived value that the
consumer places on an information transaction. Air Asia had provided
email and search options Iacility to its customers to fnd any relevant
inIormation such as the air Iare, travel services, fight inIo and etc.
Besides that, Air Asia website also provides an effective
search tool to make the browsing process more easily and locate the
products or service from the perspective of the viewer. Customer care
refers to the attention that an e-retailer pays to all its customers to
make a long term relationship.. In this case researchers found that Air
Asia keeps its customers up to date about the different products and
services that are offered and also the status of their order. To increase
loyalty Air Asia uses customer personal data that is submitted on Air
Asia web site. Customer data is treated with great care and respect
while making a reservation, payments and providing ticket delivery
information.
Air Asia uses customers e-mail address to send news and
other marketing information and communication on a regular basis.
Air Asia also uses email, phone and customer survey to get feedback
from their customers. Hagel & Armstrong (1997) found that there
are several reasons why a community could potentially affect
customer loyalty. They found that communities are highly effective in
facilitating word-of-mouth information. Frank (1997) discerned that
the customers ability to exchange information and compare product
experiences can add to customer loyalty. Air Asia fame with the lost
cost air fare motivates students exchanging news with each other. It
will infuence and encourage them to search the low cost air Iare on
Air Asias formal website. Air Asia statements partially support the
theory as they do not provide any facility on their web site that can
interconnect customers with each other to share opinions.
Regarding Srinivasan et al (2002), the e-retailer extended
their partnership and cooperated with each other, so it can offer
wider range of products and services within given category than the
traditional retailer. An alliance with virtual suppliers can provide
customers with greater choice. Air Asia has made alliances with
some hotels, cruise operators , hospitals or medical checkup centers,
resorts and companies to give a customer a one-stop shopping so that
a customer does not change his or her attention to another web site
to do inIormation surfng. Air Asia provides this Iacility with some
discounted rates such as Red Card to give their customers more
choice while selecting services. Air Asia fully supports the theory as
they have given their customers choice of services on their website
to make them more satisfed.
CONCLUSION
Based on the fndings, researchers Iound that the customization
was more statistically significant in influencing customers
loyalties than other attributes such as care, choice, community and
contact interactivity. Besides that were insignifcant Iactors like
cultivation, convenience and character. The followings describe the
recommendations for Air Asias website designer and marketers.
From a managerial perspective, researchers pointed out that
there are some issues that could be useful for Air Asia to create loyalty
of customers to its website continuously. Air Asia should focus on
8Cs factors to sustain students loyalty through its website. From the
researchers opinion a strong and good response service system will
help Air Asia to build a good interactive communication relationship
between students, customers and Air Asia.
Communication and feedback can play an effective role in
making e-commerce successful Feedback is important for interaction
with customers on the Internet. (Cox & Dale, 2002). This is because
an efficient website system can make customers feel at home,
building their trust and loyalty. Air Asia can establish early warning
systems based on continuously measuring customer perceptions for
the 8Cs.
Besides that, here are some recommendations that can be
considered by Air Asia to enhance its website services. This is done
by improving convenience and character of its website. In order for
Air Asia to maintain students loyalty towards its website, it needs to
use the students database effectively to cultivate students consumer
habits. Air Asia can deliver information desired by students such as
university holiday packages, special air fare for university students
and etc. AirAsia may offer low cost air fare for students especially
during holiday periods. This will encourage students to visit Air Asia
websites more frequently. Air Asia websites will show students needs
and desires Iulflled by an eIfcient promotion strategy.
Furthermore, Air Asia needs to improve on its websites
conveneience as students tend to leave the website without purchasing
anything because they are unable to fnd their way through the website.
Sinioukov (1999) suggested that enabling consumers to search for
information readily accessible and visible is the key to creating a
successful e-retailing business.
Additionally, website attractiveness will attract more students
to visit Air Asias website. Information must be presented in a
meaningful format. If Air Asia wants to make its website become
more convenient it must enable a shorter response time, facilitate
faster completion of a transaction and minimize customer effort.
Most oI the time students expect Iast and eIfcient processing oI
their transactions. If Air Asias website is convenient to use it will
minimize mistakes made by students or other customers and it will
make their shopping and search experiences more satisfying. This
enhances loyalty towards Air Asias website.
Moreover, Air Asias website can use unique characters
or personalities to enhance site recognition and recall.The unique
characteristics will attract consumers to stay at the website longer to
search for more relevant information.
According to Budman ( 1998 ) creative website design can
help an e-retailer build a positive reputation and characterization
for itself in the minds of consumers. Air Asias website designer
may create more striking and attractive animation to catch viewers
attention and ensure they will spend more time in comprehending
promotional information.
As a conclusion , the results of this study provide information
on students loyalties towards Air Asias website and solutions to
solve the problems they have to face. Recommendations provided
present an extra input to Air Asia to enhance their website to meet
customers needs.
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71 Branded Domain Name as an Online Marketing Tool:
A Case Study in Hospitality Industry
5
BRANDED DOMAIN NAME AS AN
ONLINE MARKETING TOOL:
A CASE STUDY IN
HOSPITALITY INDUSTRY
JAMIE MURPHY
INTRODUCTION
While they could plead ignorance last century, hospitality enterprises
cannot ignore the Internet this century; effective Internet use is a
competitive advantage. Choosing the right domain name or names
is a critical key to effective Internet use. In addition to the branding
opportunities and protection from fraudulent websites, customers
often guess the website address. Current and potential guests seeking
Hyatt hotels Swiss and global operations would type hyatt.ch or
hyatt.com, respectively. For as little as 10USD annually, hotels can
protect their brand, strengthen their brand and increase website visitors
via a branded domain name. Choosing the right name necessitates
answering two key questions what name and how many names.
The frst question is easy to address but answering the second takes
on a life of its own. Before addressing these key questions, a brief
overview of domain names, and their importance, follows.
THE EVOLUTION OF DOMAINS AND DOMAIN NAMES
In the pioneering Internet days, the small community of users knew
the Internet Protocol or IP address of each others computers. But as
the number of users grew, remembering four to 12 digit IP addresses
proved cumbersome and led to the 1985 development of the domain
name system or DNS, whereby domain names replaced IP addresses.
Thus to reach Hyatts global website, it is simpler and easier for
users to remember and type hyatt.com rather than a number such as
207.155.183.72.
Technically, hyatt is the domain name and .com is the
domain. The global body for domains and domain names, the
Internet Corporation for Assigned Names and Numbers (ICANN),
oversees three processes relevant to this article: adding new domains,
authorising companies to rent domain names, and settling domain
name disputes.
Until this century, domains were either three-letter generic
domains or two-letter country domains. Anyone in any country can
register any name frst come frst served in the generic .com, .net
and .org domains for as little as $10 annually. Rules for registering
names in country domains vary depending on the country. Switzerland
at (.ch), as well as South Pacifc countries Tuvalu (.tv), Tonga (.to)
and Niue (.nu) let anyone register any name. Other countries, such
as Australia (.au), Italy (.it) and Malaysia (.my) restrict registrations
based on country of residence or a corresponding business name.
Country domains cost from about 10 to hundreds of Swiss Francs
annually.
This century has seen the blossoming of domains and non-
English languages. New generic domains are either unrestricted
(.biz, .info, .name and .pro) or restricted (.aero, .museum and .coop).
Generally, the former are available to anyone but the latter have
restrictions such as being in the aerospace or museum industry. A
generic domain solely for the travel industry, .travel went live in
late 2005. Two new country domains for businesses and individuals
in Europe and Catalonia, respectively .eu and .cat, go live in mid
2006. ICANN is considering .asia for Asian businesses, .tel for
telecommunications and .xxx for sex-related websites. Finally, early
this century ICANN began implementing domain names Arabic,
Chinese, Thai and Croatian characters.
DOMAIN NAMES AND ONLINE BRANDING
A brand name, the spoken part of the brand, is often the company
name (Siegel, 2004). When buyers need a good or service, they often
seek a known and trusted brand. Branding is vital to marketing,
with industry spending over US 2 trillion on brand creation and
management in the year 2000 (Ilfeld & Winter, 2002). Customers
loyal to a brand usually have a positive perception of its quality
and will repurchase the brand (Reichheld & Schefter, 2000). In
the Internet marketplace, the role of the brand has asserted itself as
an important factor related to purchasing (Rowley, 2004) and to a
companys integrated communication strategy (Murphy, Raffa et al.,
2003; Siegel, 2004).
Click-and-mortar businesses, with both physical and virtual
processes (Chaffney, Mayer, Johnston, & Ellis-Chadwick, 2000),
are more successIul leveraging the Internet`s benefts than purely
virtual businesses (Dutta & Biren, 2001; Mahajan, Srinivasan, &
Wind, 2002). These click-and-mortar businesses often use the same
brand name oIfine and online in an integrated brand name strategy
(Siegel, 2004). Most well-established and reputable click-and-mortar
businesses rely on their oIfine brand name to generate awareness oI
their online presence, e.g. mcdonalds.com, dell.com, and walmart.
com (Ilfeld & Winter, 2002; Reichheld & Schefter, 2000).
The brand name may also guide consumers to the website.
For example, loyal oIfine Sheraton or Hyatt customers should seek
sheraton.com and hyatt.com. An effective online strategy lets existing
or potential visitors remember or guess the correct website address
(Hanson, 2000; Ilfeld & Winter, 2002; Murphy, Raffa et al., 2003).
Many web users rely less on search engines and tend to visit easy-to-
remember domain names rather than searching for websites (Coyle
& Gould, 2002; Roberts & Ko, 2001). As a participant in Coyle and
Goulds (2002) study noted, Most every well-known company has
its own website, so I didnt have to search for the address with a
search engine because I assumed that Panasonic had its own website.
I assumed right, because it did.
Branded website and email addresses help businesses build
their brand and increase visits to their website (Carpenter, 2000;
Ries & Ries, 2000). A branded site can reassure consumers that the
business is reliable, safe and trustworthy (Hanson, 2000). Finally,
branded sites save buyers time because they know what to expect at
the site and need not shop for alternatives (Rowley, 2004).
Common sense suggests that organisations choose domain
names that match their brand name. All things equal, the Hyatt Hotel
chain would use hyatt.ch and hyatt.com for its Swiss and global
online presence. Similarly, Hyatt would direct customers to email
info@hyatt.ch or info@hyatt.com for queries to its Swiss or global
operations. Most of the worlds top brands own their brand name in
the global .com domain (96%) as well as the Australian .au (77%)
and French .fr (80%) country domains (Murphy, Raffa, & Mizerski,
2003). In addition to mimicking the top brands, this intuitive online
branding suggests effective Internet use.
A popular theory of effective technology use is the diffusion
of innovations (Rogers, 1995). Since the end of World War II, studies
have shown that organisations adopt technologies over a continuum,
from having the technology to using the technology well. A 2005
hospitality study found that hotels advance from having email, to
having a website to having the same domain name in the website
and email address, such as hyatt.ch and info@hyatt.ch (Hashim &
Murphy, 2005).
The above argument relates branded domain names and
advanced Internet use, but fails to relate branded domain names
to effective Internet use. Two other studies show that compared to
those without branded email addresses, Swiss hotels and Singaporean
travel agencies with branded email addresses provided better email
responses to guest inquires and had more advanced websites (Murphy,
Olaru, Schegg, & Frey, 2003; Murphy & Tan, 2003). Thus for both
online branding and better Internet use, hotels should buy and use
domain names that match the hotels brand name.
OWNING AND KEEPING THE RIGHT DOMAIN NAME(S)
For hotels seeking branded domain names, two general rules guide
choosing the correct domain(s) and domain name(s). The target
customers dictate the choice and the more valuable the brand, the
more domains and domain names rented. But there is also the sleazy
side of renting domain names.
Businesses and the trade literature usually speak of buying
a domain name, yet the correct analogy is renting a domain name.
ICANN lists over two hundred businesses authorized to register
generic and country domain names, but the registration is for a
limited number of years. If a hotel registers a domain name for one
year and lets the registration lapse, another person or hotel can grab
that domain name.
Unsavoury entrepreneurs known as cybersquatters proft
from staking legitimate businesses domain names. For example,
cybersquatters buy lapsed domain names and host a pornographic
website at that name, ransoming a hotels online reputation. Similarly,
cybersquatters could buy a hotels name as a domain name in one of
the half-dozen generic domains or over two hundred country domains.
As the rules governing domain name registration are oIten frst come
frst served, the hotel must pay the cybersquatter an exorbitant Iee
or take the cybersquatter to arbitration. While the hotel should win
the arbitration, the lengthy process costs usually offers little recourse
for damages.
To protect its online brand, Hyatt Hotels should refect upon
intuitive names and typographical variations their customers might
use, such as hyatt, hyat, hyatthotels and hyattcorporation. Hyatt
should register domain name variations across generic and country
domains, starting with .com and country domains where Hyatt has a
strong presence such as .fr, ch, and .de. Hyatt could eventually register
hundreds of domain names, but the expense is minimal compared to
Hyatts brand value and the arbitration hassles. Hyatt can then point
several domain names to the same website. For example, visitors
keying in hyatthotels.com arrive at the hyatt.com website.
For smaller properties, one domain name should suIfce. The
main decision is a global versus country image. For the former, the
hotel would use hotelbrand.com and for the latter, a Swiss hotel would
register hotelbrand.ch. Yet given the minimal expense of around CHF
10, a small Swiss hotel should register their brand name in both .com
and .ch, and then redirect hotelbrand.com visitors to hotelbrand.ch.
A fnal step in online branding is promoting the branded
domain name, oIfine and online. OIfine promotion includes adding
the hotel website address, www.hotelbrand.ch, and branded email
addresses to all advertisements and collateral materials. Online
promotion includes using a branded email address for both the hotel
departments and employees, such as sales@hotelbrand.ch, info@
hotelbrand.ch and m.steiger@hotelbrand.ch. All outgoing hotel emails
would use a branded email address as well as include the hotel website
address, www.hotelbrand.ch.
MYNIC: THE .MY REGISTRAR
MYNIC Berhad is the registry and registrar for the .my domain, and
comprises the following departments: registration, billing, system
administration, and policy and operational. MYNIC Berhad was
incorporated on 24 May 2006. Prior to that, the Malaysian Network
Information Centre (MYNIC) was a division of MIMOS Berhad,
a mission-oriented research and development (R&D) government
corporation.
MYNIC administers the name space for the .my top level
domain (TLD). This involves the registration of domain names as
well as the maintenance and operation of a domain name registry (a
central database for .my domain names).
MYNIC administers eight (8) domain name categories,
namely:
.com.my - Ior commercial organisation/activities
.net.my - Ior network-related organisations/activities
.org.my - Ior organisations/activities which do not
qualify for other categories
.edu.my - Ior Malaysian educational organisations only
.gov.my - Ior Malaysian government organisations
only
.mil.my - Ior Malaysian military organisations only
.name.my - Ior Malaysian individual`s personal use only
For the newly launched shorter Internet address .my for
Malaysian individuals and organisations, the MYNIC website
provides step-by-step procedure to register any .my domain.
BRIEF TIPS
A few tips for choosing and renting domain names follow:
Choose domain names that resemble the hotels
brand name.
Keep the domain name simple, short and easy to
remember.
Use an accredited ICANN registrar.
Watch out for the expiration date and consider
renting the domain name for several years.
When renting a domain name, use contact details
that will last. Expiration messages sent to an
ex-employee can prove troublesome.
RELATED WEBSITES
Approved registrars www.icann.org/registrars/accredited-
list.html
Domain arbitration www.icann.org/udrp/udrp.htm
.cat domain names www.domini.cat/
.ch domain names www.switch.ch/
.eu domain names www.eurid.eu/
ICANN www.icann.org/
.travel domain names www.tralliance.inIo/
REFERENCES
Hashim, N. H., & Murphy, J. (2005). The Diffusion of Websites and Email
among Malaysian Hotels. Paper presented at the International
Conference on Tourism and Hospitality, Penang, Malaysia.
Murphy, J., Olaru, D., Schegg, R., & Frey, S. (2003). The Bandwagon Effect:
Restaurant Administration Quarterly, 44(1), 71-87.
Murphy, J., Raffa, L., & Mizerski, R. (2003). The Use of Domain Names
in E-Branding by the Worlds Top Brands. Electronic Markets,
13(3), 30-40.
Murphy, J., & Tan, I. (2003). Journey to Nowhere? Electronic Customer
24(5), 543-550.
Rogers, E. M. (1995). Diffusion of Innovations (Fourth ed.). New York,
New York: The Free Press.
81 The Implication of IT in Supply Chain Communication Systems
in Manufacturing Companies
6
THE IMPLICATION OF IT IN SUPPLY
CHAIN COMMUNICATION SYSTEMS
IN MANUFACTURING COMPANIES
ABU BAKAR ABDUL HAMID
LEONG CHIN HSIUNG
MELATI AHMAD ANUAR
INTRODUCTION
Information technology provides various applications that enhance
not only frms` relationships with consumers or partners but also their
competitive advantages, through the improved internal capacity that
results when IT is adopted and used eIIectively (Humphreys, Lai and
Sculli; Porter 2001). According to the resource based view (RBV),
the latent potencies oI IT can be leveraged to realize the Iull strategic
potential oI more frm-specifc resources such as organizational
leadership, culture, and business processes, thus enabling the frm
to gain a sustained competitive advantage (Clemons and Row,
1991; Henderson and Cockburn,1994). How eIIective IT as an
internal resource is deployed would determine the achievement oI a
competitive advantage in the long run.
In many industries, IT has become a Iacilitator Ior the whole
supply chain process. Supply Chain Management (SCM) deals with
the management of materials and information resources across a
network oI organizations that are involved in the design and production
process. It recognizes the inter-connections between materials and
inIormation resources within and across organizational boundaries
and seeks systematic improvements in the way these resources are
structured and controlled.
Traditional business partnership schemes have changed, as
organizations endeavour to achieve a business advantage by leveraging
networking technology and the principle oI supply chain integration.
Today, it is impossible to achieve an eIIective chain without IT. As a
medium oI communication, IT in SCM setting has created network
connectivity among supply chain parties to extend the capabilities
oI IT Ior supply chain activities. With network connectivity, supply
chain integration is now the core strategic competence Ior the frm.
According to Simchi-Levi et al. (2003), SCM is a set oI
approaches utilized to eIIectively integrate suppliers, manuIacturers,
warehouses, and stores, so that merchandise is produced and
distributed at the right quantities, to the right locations, and at the
right time, in order to minimize systems wide costs while satisIying
service level requirements. To handle these complete activities, an
integrated inIormation system (IS) is needed to manage various value-
adding activities along the supply chain. Supply chain communication
system (SCCS) can be viewed as communication inIormation system
in SCM setting that is supported by a frm`s IT resources to integrate,
manipulate and manage inIormation within the supply chain partners
internally or externally.
Contemplating the need Ior organizational interaction, SCCS
as an integrated communication system is designed to facilitate
inIormation sharing between partners in order to serve customers
better and reduce costs (Cunningham and Tynan 1993; Humphreys
Lai and Sculli 2001; Johnson, 1999; Lewis, Ira & Talalayevsky,
1997). By working closely with their partners, supplying them with
related information and transmitting information to and retrieving it
Irom partner`s system directly, frms can Iacilitate operating process
and incorporate critical market information into their production
by increasing communication eIfciency and eIIectiveness through
SCCS.
Supply chain management emphasizes the overall and long-
term beneft oI all parties on the chain through co-operation and
inIormation sharing. This signifes the importance oI communication
and the application of IT in SCM. Gustin, Daugherty and Stank
(1995) examined the role oI inIormation systems and other computer
technologies on a Iirm`s ability to successIully implement the
integrated logistics distribution concept. According to Gustim et al.
(1995), better inIormation usage can improve the perIormance oI
many logistics tasks including distribution network design, demand
forecasting, transportation management and inventory management.
EIIective and eIfcient inIormation sharing improves the visibility oI
logistics activities in supply chain.
Supply chain is a kind oI new organization structuring
model based on enterprise cooperation. It is a Iunctional net chain
surrounding key enterprises to connect suppliers, manufacturers,
wholesaler, retailers and fnal customers. It is not only a chain
connecting material, information, capital from suppliers to customers,
but also an increment chain Irom which material increases its
value in the process of production, packaging and transportation
to get beneft Ior the relevant enterprises. In the whole Iunctional
net chain, a communication system is needed to integrate with the
frm`s IT resources to Iacilitate the basic Iunctions Ior supply chain
management.
Firms engaged in supply-chain relationships, as customers,
suppliers, or providers of services, need to share a great deal of
inIormation in the course oI their interactions (White, 1999). Over
the years, companies have managed these inIormation fows in a
number oI ways, including telephone calls, letters, telex, Iaxes, and
electronic data interchange (EDI). More recently, frms have begun
using the power oI the Internet to create more eIIective and open
transmission protocols Ior machine-to-machine communication oI
the same high-Irequency data.
Supply chain communication system (SCCS) requires a
great deal oI data input, both Irom automated sources (soItware
applications, control systems, bar code readers, sensors, analytical
instruments) and manual interactions. In an ideal system, each piece
oI data would be entered only once and be available to any system in
the inIormation network that needs it. High-Irequency, routine data
input tasks should be Iully automated, with oversight on a periodic
basis by skilled systems optimisers, such as planning or logistics
personnel. In a similar manner, high-Irequency inIormation fows
should be Iully automated and transmitted Ireely between supply
chain partners.
Today, the supply chain is becoming increasing important
to Iirms, deployment oI IT is essential Ior better supply chain
management. The use oI IT is considered a prerequisite Ior eIIective
control oI today`s complex supply chain Ior organizational interaction,
an integrated inIormation system (IS) is needed to manage various
value-adding activities along the supply chain. This study tries to
determine the relative importance oI IT resources when integrate with
supply chain communication system (SCCS) Ior channel capabilities
in supply chain management whether IT resources and SCCS
integration are important to channel capabilities in supply chain.
This research will try to identiIy the IT resources that infuence the
indicated channel capabilities. This study has three objectives mainly
to identify the importance of IT resources in relation to supply chain
communication system (SCCS) integration, to identiIy the importance
oI supply chain communication system (SCCS) integration to
information sharing and coordination and transaction execution and
later to identiIy the importance oI IT resources in infuencing channel
capabilities
LITERATURE REVIEW
The operational defnition oI SCCS reIerred to the inIormation system
that is involved in a frm`s interaction with channel partners in order
to carry out electronic transaction, quality and cost calibration and
collaborative planning and Iorecasting (Bowersox, Closs and Stank
1999; Robert and Mackay 1998; Stank et al. 1999; Tang 2001). With
recent advances in IT, many frms are interested in achieving eIfcient
and eIIective communication with their partners (Bowersox et al.
1995; Cunningham and Tynan 1993). ManuIacturers always work
closely with their suppliers and distributors to reduce unnecessary
inventory (Bowersox, Closs and Stank 1999).
The ability Ior a company to transIer and share inIormation
across departments, supplier, and distributor has become a competitive
advantage Ior many organizations in the 21st century marketplace
(Fink and Holden 2005; Phan 2003). In particular, advances in
inIormation integration have enabled supply chains to reap signifcant
returns to investmentsome oI which include decreased order cycle
times, increased agility to respond to customer demand, and yet to
increase frm proftability (Gavirneni 2002; Kulp et al. 2004; Lee
2004; Liu et al. 2005; Soliman and Janz 2004).
Supply chain communication system (SCCS) integration
in this study reIers to the extent to which a company`s SCCS is
integrated with that oI the channel partners and ready Ior collaborative
channel activities with other channel members in order to increase
the eIfciency and eIIectiveness in intra and inter frm communication
(Malone, Yates, and Benjamin 1987). High integration allows two
proprietary systems to reduce technical barriers and incompatibility
so as to communicate more eIIectively (Byrd and Turner 2000). The
lowest level oI SCCS integration would allow partners to conduct
electronic order-Iulfllment only, a Iundamental Iunction oI SCCS
(Johnson 1999; White 1999). Intermediate systems integration,
however should permit partners to share more proprietary inIormation
including sales and demand Iorecasts (Bowersox, Closs, and Stank
1999); Roberts and Mackay 1998; white 1999). For a manuIacturing
company, the channel partners can be reIerred to their supplier,
distributors and across other departments in the organization.
As technology and appropriability improve, these lead to more
active sharing of planning, strategies, resources and competencies
among partners (Armistead and Mapes 1993; Roberts and Mackay
1998). This sharing at the same time implies system integration among
partners (Malone, Yates, and Benjamin 1987). Furthermore, Clemons
and Row (1992) assert that 'IT can Iacilitate the development oI
stable, tightly coupled relationships among flms. Robert and Mackay
(1998) also stress 'the role oI IT systems such as EDI, as a key enabler
Ior competitive advantage through cementing relationships with
customers, enabling integration Iorwards or backward in the industry
value chain or in establishing a technical lead. Evan et al. (1993)
share the view that IT is imperative Ior supply chain integration.
Moreover, in an empirical study, Rashed and Geiger (2001) Iound
that a frm`s IT resources have a positive impact on the degree oI
integration Ior technical support Iunctions within the value chain.
InIormation plays a leading and optimizing role in the whole
operationoI supply chain. The development oI IT has changed the way
that a company gains competitive advantages through supply chain
management, successIul companies always utilize IT to support and
develop their business strategy, which will signifcantly impact on
the whole supply chain (Shen Guoi Qiang at al. 2001).
It is well acknowledged that the use oI IT is an integral part
oI modern SCM. For example, Simchi-Levi et al. (2003) list the
objectives oI IT in SCM includes providing inIormation availability
and visibility; enabling single point oI contact oI data; allowing
decisions based on total supply chain inIormation; and enabling
collaboration with supply chain partners.
Over the years, companies have managed inIormation fows
in a number oI traditional or in manual manner including telephone
calls, letters, telex and faxes. With the development of information
technology and economic globalization, modern competition has
become the competition among enterprises and their supply chains.
The great eIIects oI inIormation technology serves as basis Ior
eIIectively managing the supply chain and watching it over, which
is the fundamental difference from that of traditional enterprise
adopts (Zhou Wei, Luo Chen-yu. 2003). According to Wang Ng,
Guo Qing-nan (2001), the common models oI IT catered Ior SCCS
are such as:
Electronic data interchange (EDI)
Electronic Data Interchange (EDI) is an electrical inIormation
applicable technology based on computer and data communication
network technology. EDI is the most typical SCCS which plays a
key role in the success supply chain management and information
sharing within the channel (Humphreys, Lai and Sculli 2001; Roberts
and Mackay 1998). EDI is utilized to eliminate the blocks between
functional departments so as to make the information run smoothly
and reliably moves between diIIerent departments or organizations.
Bar code technology
Bar code technology is an important and quick inIormation collecting
technology. It includes code-editing technology; code-shaped
designing technology, quick recognition technology and computer
management technology and are all the necessary technology for
realizing computer management and electrical data exchanging. In
supply chain fowing system where material fow is characterized by
plenty and high-speed, the application oI bar code technology resolves
the data entering and data collecting problems, which can greatly
improve the eIfciency oI fow and provide support Ior management
of supply chain.
Expert system
Expert System is an intelligent computer programming system,
simulating human experts to solve the problem specifed Ior designed
area and job scopes. In the deciding questions concerning supply chain
management, decision-making is an unavoidable technical problem.
The application of expert system and intelligence can effectively
eliminate the block between material fow and inIormation fow,
thus promoting data sharing and improving cooperation between
enterprises. In this way, automatic optimizing can be realized to
elevate the whole eIfciency oI the whole supply chain.
Communication technology
The basic advantage oI communication technology lies in that it
can improve the service to customers. By providing more timely
inIormation, it confrms tasks more quickly to deliver sales and
stocking inIormation to improve service. However, the application oI
inIormation technology needs a rather big investment. For example,
the application of radio, satellite communication and picture dealing
technology can eIIectively overcome the problem brought by products
moving and material dispersing, but the investment cost is rather
high.
Database technology
Database technology is the technical basis Ior enterprise
inIormationalisation. In the supply chain management, database
technology can better manage stocking inIormation, customer
material, thus eIIectively planning and analysing cost and decision-
making. Warehouse management system resolves the new problem in
business activities, which is hard Iort database technology, heighten
the quality oI data. It pays attention to database integration as well
as data seeking and provides SCM Ior intelligent decision-making
information.
Network technology
Internet provides a basic instrument Ior sharing inIormation. Both
intranet and Internet are the support for normal running for supply
chain. They provide convenient, timely and low cost sharing
inIormation Ior members in the supply chain to reduce cost and
improve the eIfciency oI service. Electronic business, in Internet
environment, by using computer and network technology, realize the
commercial activities between products and services (Yu Li-ping,
2002). It may reduce transition costs, shorten term and improve
inIormation management and improve decision-making. In terms oI
quality, cost and response time in improving enterprise management
and enhance competitive ability are done so as to rapidly satisIy
the customers. Electronic business can improve the eIfciency oI
the supply chain from system management, stocking management,
transportation management and inIormation fows. Systems that
are commonly used within the network environment are enterprise
resource planning system (ERP), customer relationship management
(CRM) system, advance planning system (APS) etc.
According to Barney (1991), frm resources include 'all assets,
capabilities, organizational processes, frm attributes, inIormation and
knowledge controlled by a frm that enable the frm to conceive oI and
implement strategies that improves its eIfciency and eIIectiveness.
Over the years, companies have managed inIormation fows in a
number oI traditional or in manual manner including telephone
calls, letters, telex and faxes. With the development of information
technology and economic globalization, modern competition has
become the competition among enterprises and their supply chains.
The great eIIects oI inIormation technology serves as a basis Ior
eIIectively managing the supply chain and watching it over, which is
the fundamental difference from that of traditional enterprise adopts
(Zhou Wei, Luo Chen-yu. 2003).
Adapting Barney (1991)`s defnition oI resources into the
current study context, this study defned IT resources as various
specifc and IT know how, tangible and intangible IT assets and IT
capitals including IT department that provide the owning frm a unique
competitive position (Barney 1991). This study Iurther discussed how
the improvement in IT advancement and appropriability has driven
channel partners closer to SCCS integration (Clemons and Row 1992;
Evans, Naim, and Towill 1993; Malone, Yates, and Benjamin 1987;
Rasheed and Geiger 2001; Roberts and Mackay 1998).
IT ADVANCEMENT
IT Advancement Ior SCCS is defned as the extent to which a frm
adopts the most sophisticated available technology. It concerns the
degree oI proactive adoption or use oI the most advanced IT to build
new technical solution to answer a partner`s needs. IT advancement
is likely to be an important frm resource as the literature argues that
frms with advanced technology outperIorm their competitors.
Recognizing the critical role oI IT, many frms have started to
invest in IT for their SCCS and setting up expensive IT departments
to accrue the internal skills to utilize the advanced technology Iully.
Barney (1991), argues, however that inIormation processing system
alone could not be a resource Ior competitive advantage because oI
their availability in the market to any frm and thus their homogeneity
(Powell and Dent-MichalleI 1997). He Iurther stresses that only
inIormation processing system that is closely embedded into a frm`s
managerial process can provide a competitive advantage.
IT APPROPRIABILITY
Grant (1996) defned resource appropriability as 'the ability oI the
owner oI a resource to receive the beneft equals to value created by
the resource. In this study, IT appropriability oI a company reIerred
to the ability oI the company that deploys IT to exploit the potential
of IT resource fully.
Barney (1991) emphasized the integration oI inIormation
processing systems with other resources or capabilities oI the frm in
order to gain competitive advantage. This synergy from the integration
oI IT with other core frm and channel capabilities is critical Ior
achieving the Iull benefts oI IT (Bharadwaj 2000). It is particularly
important, in the SCCS context, whether IT linked supply chain
members to collaborative planning, demand Iorecasting and order
replenishment Ior the success oI SCCS (Bowersox, Closs, and Stank
1999; White 1999).
According to Daekwan Kim (2003), IT appropriability
stemmed from certain internal and external factors such as the existence
and skills Irom IT department to provide technical knowledge and
supports is likely to be a source oI competitive advantage Ior supply
chain management. High resource appropriability leads to competition
only when it is uniquely embedded to the frm`s relevant activities
(Barney 1991; Grant 1996).
Grant (1996) view organizational capability as an outcome
oI knowledge integration within and across frms. Firm capability is
pre-determined by its capability to integrate knowledge and resources
within the frm or across channel partners (Amit and Schoemaker
1993; Collis 1994; Grant 1991). In this study, channel capability oI the
frm reIers to the ability to exploit resources and other capabilities to
derive eIfciency in channel activities and thus ultimately sustainable
competitive advantage (Amit and Schoemaker 1993; Bharadwaj
2000; Grant 1996). The researcher investigated inIormation exchange
and transaction execution and coordination as two main channel
capabilities in SCCS integration.
The inIormation sharing is the most obvious and direct
beneft Irom frms gained Irom an SCCS (Clemons and Row 1992;
Lancioni, Smith, and Schau 2000; Malone, Yales, and Benjamin 1987;
Moberg et al. 2002; Roberts and Mackay 1998). An accurate and Iast
information exchange electronically helps channel partners to share
more inIormation both qualitatively and quantitatively (Clemon and
Row 1992). ThereIore, the more advanced oI IT Ior SCCS and the
higher level oI SCCS integration, the quality oI inIormation exchange
should be higher and better (Clemon and Row, 1992; Moberg et al.
2002).
Coordination and transaction execution in this study refers to
activities involved in transactions between partners. These range Irom
products-related inIormation collection to order Iollow-up. As frms
deploy more advanced IT for SCCS, they can perform the coordination
activities more eIfciently at less cost or provide a high quality oI
coordination activities for the same cost. Thus, sophisticated SCCS
enhances coordination activities oI the frm (Roberts and Mackay
1998). Malone et al. (1987) assert that frms with advanced technology
and high appropriability will beneft Iorm 'the possibilities Ior closer
coordination by electronic hierarchy. Shin (1999) reports Irom his
empirical analysis that IT improves frm coordination. Lewis and
Talalayevsky (1997) claimed that 'improvement oI IT have reduced
logistics transactions cost and promoted better communications
between organizations.
The proposed Iramework model is presented in Figure 1. This
Iramework consist three determined Iactors: elements oI IT resources
in the frm (IT advancement and IT appropriability), supply chain
communication system (SCCS) integration and channel capabilities
(inIormation sharing and coordination and transaction execution).
This research Iramework is adapted Irom Daekwan`s (2003)
research. In accordance to the resource-based view (RBV) oI the frm,
he postulatedthat the frm`s internal IT resources enhance internal
channel capabilities and the internal capabilities in turn infuence
frm perIormance.
Daekwan (2003) mentioned in his study where SCCS is
justifed Ior several reasons. First, SCCS is the most typical inter-
organizational system Ior supply chain that involved two or more
independent channel partners (Humphreys, Lai and Sculli 2001).
The impact oI IT on channel relationships can be investigated more
effectively in the contexts of SCCS. Different types or models of SCCS
play different functional roles to facilitate different applications in the
frm. ThereIore, SCCS plays the role oI key integrators within and
across frms by linking various IT resources internally or externally
(Bowersox et al. 2002).
Accordingly, the proposed hypotheses are:
H1: There is signifcant relationship between IT resources and
SCCS Integration.
H2: There is signifcant relationship between SCCS Integration
and information sharing.
H3: There is signifcant relationship between SCCS Integration
and coordination and transaction execution.
information sharing.
coordination and transaction execution.
METHODOLOGY
A quantitative methodology is used to provide precise measurement
or quantifcation inIormation pertaining to the research problems
(Aaker et al., 2001). Most oI the past studies that are quantitative
in nature have employed descriptive research method, for instant,
Seyal and Rahim (2006); Ngai and Gunasekaran (2004); Chau and
Jim (2002); and Bergeron and Raymond (1997). The data collected
will be analyzed based on statistical methods i.e., descriptive and
inferential.
The research was designed to study the application and the
infuence oI IT where it was adopted in supply chain management.
This research Iocused to what extent the relationship oI IT in SCCS
integration is for information exchange and transaction execution in
multi-national (MNC) manuIacturing company. The population oI the
research is the entire Multinational Companies (MNCs) in Senai and
Figure 1: Research Iramework (adapted and
reproduced Irom Daekwan, 2003)
Tampoi. There are about 15 MNCs in Senai and Tampoi industrial
area. Respondents represented executives oI these companies (supply
chain executive, purchasing executives, logistics executives, store
executive and administration executive etc). In other words, only
heads oI departments were the respondents in order to ensure validity
oI the inIormation given. All potential respondents were contacted
earlier over telephone to get their consent. A set oI questionnaire was
designed based on the variables indicated in the research Iramework.
A mail survey was conducted by distributing the questionnaires to
the respondents. Some oI the questions were adapted Irom Daekwan
(2003). The designed questionnaires consisted 4 sections: demographic
inIormation; IT Resources oI the frm; SCCS Integration; and Channel
capabilities. Reliability analysis was conducted to test on consistency
and stability, whereby Cronbach`s alpha is computed in terms oI the
average inter-correlations among the items measuring the concept
and shows how well the items in a set are positively correlated to
one another. While the validity analysisis used to measure validity,
this indicates whether the items are an accurate refection oI the
intended construct. A total oI 30 usable questionnaires were collected
eventually which represent an overall response rate oI 22.96.
RESULTS AND DISCUSSION
The targeted respondents representing executives of MNC
manufacturing companies came from different departments. There
are mainly from supply chain departments, purchasing departments,
logistics departments, administration departments and etc. Further
profles oI the respondents are tabulated in Table 1.
Position Total Respondent Percentage
Planner 8 26.66
Table 1: Respondent Profle
Purchasing Executive 8 26.66
Buyers 6 20.00
Procurement Engineer 3 10.00
Logistics Executive 5 16.66
Total 30 100
Number oI employees Percentage
Below 50 1 3.33
50-150 5 16.66
151-500 10 33.33
501-1000 12 40.00
Above 1000 2 6.66
Total 30 100
Company Tenure
1-5 8 26.66
6-10 22 73.34
Total 30 100
Type of manufactured
products
Raw material oriented 3 10.00
Semi fnished products 16 53.33
Finished products 11 36.66
Total: 30 100
According to Bowersox, Closs, & Stank (1999), the basic notion
oI Supply-Chain Management is based on the premise that
eIfciency along distribution channels can be improved when
the various agents involved share inIormation and carry out joint
planning. Based on Figure 2, network technology is the most
popular type oI SCCS being adopted and deployed to Iacilitate
data communication and management for supply chain. By using
network technology, the fow oI inIormation can be achieved
internally or externally.
Type of SCCS
A Expert system (ERP / SAP)
B Bar code technology
C Electronic data interchange (EDI)
D Network Technology (Intranet / Internet)
E Communication Technology
F Database technology / Warehouse management
system (WMS)
Figure 2: Frequency chart oI IT Ior SCCS
The fnding discusses the analysis oI the empirical data
collected Irom the survey by using the statistical technique set Iorth
to test the formulated hypothesis. The result from Pearson moment
analysis showed that there is correlation between IT resources and
supply chain communication system (SCCS) integration. Second,
analysis using Pearson moment analysis, shows result there is
signifcant relationship between supply chain communication system
(SCCS) integration and inIormation sharing; there is also signifcant
relationship between supply chain communication system (SCCS)
integration and coordination and transaction execution. Third, using
Pearson moment analysis showed that there is signifcant relationship
between IT resources and inIormation sharing; and there is also
signifcant relationship between IT resources and coordination and
transaction execution.
Table 2: Pearson moment correlation analysis of IT Resources and
Supply chain communication System (SCCS) Integration
ITR SCCSI
ITR Pearson Correlation 1 0.9680
Sig. (2-tailed) . 0.0000
N 30 30
SCCSI Pearson Correlation 0.9680 1
Sig. (2-tailed) 0.0000 .
N 30 30
From Table 2, the signifcant value oI H1 is 0.0000, which is
less than the signifcant value threshold oI 0.05. ThereIore, H1o is
rejected. This result indicated that frm`s IT Resources (ITR) can be an
important determining factor for supply chain communication system
integration (SCCSI) in the company. The correlation coeIfcient oI the
frm`s IT resources and supply chain communication system (SCCS)
integration is 0.9680 and is considered high correlation between these
two constructs.
The result suggested that 2 main Iirm`s IT resources
components, IT Advancement and IT Appropriability infuence the
integration oI supply chain communication system (SCCS) in the
company. This result is consistent with Daekwan`s (2003) fnding oI
support oI IT Advancement and IT Appropriability on supply chain
communication system (SCCS) integration.
Table 3: Pearson moment correlation analysis of Supply Chain
Communication System (SCCS) Integration and InIormation Sharing
SCCSI
SCCSI IS
Pearson Correlation
1 0.6240
Sig. (2-tailed)
. 0.0000
N
30 30
IS
Pearson Correlation
0.6240 1
Sig. (2-tailed) 0.0000 .
N 30 30
From Table 3, the signifcant value oI H2 is 0.0000, which
is less than the signifcant value threshold oI 0.05. ThereIore, H2o
is rejected. This result indicated that Supply Chain Communication
System Integration (SCCS) is important Ior InIormation Sharing
(IS).
The correlation coeIfcient oI Supply Chain Communication
System (SCCS) Integration and InIormation Sharing is 0.6240 and
there is a substantial correlation between these two constructs. The
researchers concluded that IT for SCM has the door for companies to
refne their inIormation exchange fows, not only in commercial terms,
but also more thorough knowledge oI their partners` operations, thus
improving the perIormance oI both towards fnal consumers.
Also a fnding that is aligned with Liu, Zhang & Hu (2005)
fnds that a study on application oI IT in SCM where he Iound that
modern IT Ior SCM provides a new way Ior the development oI
enterprise management. To get ahead in competition, the enterprises
must change the traditional information system, adopt advanced
technology and optimize the supply chain in order to share the
inIormation oI all joints on the chain.
Decelle et al. (2006)`s fnding also supports the importance
of supply chain communication system for information sharing and
presented new semantic-based approaches that have been and are
being developed to improve the quality oI the inIormation exchanges
within the supply chain.
Table 4: Pearson moment correlation analysis of Supply Chain
Communication System (SCCS) Integration and Transaction and
Coordination Execution
is rejected. This result indicated that Supply Chain Communication
System Integration (SCCSI) is an important determining Iactor Ior
Coordination and Transaction Execution (CTE) as a channel capability
within supply chain partners.
The correlation coeIfcient oI 'Supply Chain Communication
SCCS
SCCS CTE
Pearson Correlation
1 0.7170
Sig. (2-tailed)
. 0.0000
N
30 30
CTE
Pearson Correlation
0.7170 1
Sig. (2-tailed) 0.0000 .
N 30 30
System (SCCS) Integration and 'Transaction and Coordination
Execution is 0.7170 and there is very strong correlation between
these two constructs.
According to Grean (2000), the integration oI the supply
chain communication systems will become increasingly important
both Ior enhancing business to business electronic commerce and Ior
supporting the increasing volume and customization in business to
consumer electronic commerce. The resulting channel has become
more eIfcient because channel activities are better coordinated and
they have resulted in the need Ior inventories to be reduced with the
increased sales by Iocusing on selling what the customers want.
This fnding is also consistent with Jaana et al. (1999) study
that the use oI inIormation technology (IT) is considered a prerequisite
Ior the eIIective control oI today`s complex supply chains that lead
to substantial benefts supply chain in coordination and transaction
execution.
ITR
ITR IS
Pearson Correlation
1 0.6510
Sig. (2-tailed)
. 0.0000
N
30 30
IS
Pearson Correlation
0.6510 1
Sig. (2-tailed) 0.0000 .
N 30 30
Information Sharing
is rejected. This result indicated that IT Resources (ITR) is an
important determining Iactor Ior InIormation Sharing (IS) as a channel
capability within supply chain partners. The correlation coeIfcient oI
IT Resources and InIormation Sharing is 0.6510 and considered as
high correlation between the construct. This fnding is also consistent
with Jouni`s (2004) study that need Ior sharing inIormation with
IT, especially demand related, grows with the used manuIacturing
mode (eg. make-to-order compared to make-to-stock) and business
volatility and Iound that these two variables are interrelated.
Coordination and Transaction and Coordination Execution
ITR
ITR CTE
Pearson Correlation
1 0.7220
Sig. (2-tailed)
. 0.0000
N
30 30
CTE
Pearson Correlation
0.7220 1
Sig. (2-tailed) 0.0000 .
N 30 30
is less than signifcant value threshold oI 0.05. ThereIore, H5o is
rejected. This result indicated that IT Resources (ITR) is an important
determining Iactor Ior Coordination and Transaction Execution (CTE)
as a channel capability within supply chain partners.
The correlation coeIfcient oI IT Resources and InIormation
Sharing is 0.7220, that there is very high correlation between these
two constructs. This fnding also consistent with Jouni (2004) study
that Iound that the use oI IT has become commonplace in industrial
companies under the last fve years and relates currently in many
instances to the handling of supply chain transactions.
CONCLUSION
Another theoretical implication of this study is that IT resources
may possibly oIIer sustainable competitive advantage oI frms. A
frm with high level oI IT resources is likely to hold competitive
advantage in IT (Barney, 1991). ThereIore, depending on how frm`s
allocate their investment in IT resources between IT Advancement
and IT Appropriability, the IT may be a source Ior their sustainable
competitive advantage. Investment in IT Advancement for SCCS
should not be contented with just technology upgrades. Instead, the
investment should seek functional improvements or additions for
supply chain activities. The deployment oI advanced IT Ior new
technical solutions without seeking strategic benefts or advantages
will not yield Iavourable returns.
The results regarding SCCS integration and IT resources
reveal how crucial the adoption oI IT investment strategy is Ior supply
chain management. When IT resources with an IT strategy Iocus
on Iunctional improvement Ior SCCS, this will enhance channel
capabilities. II there is no IT strategy as to what it is deployed Ior or
what inter flm Iunctions are added to SCCS, it is unlikely to result
in channel capability enhancement Ior supply chain. ThereIore, an
IT strategy for IT resources is a critical necessary option for the
enhancement oI channel capabilities Ior supply chain management.
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109 Adoption of E-Banking in Small Medium Industry
7
ADOPTION OF E-BANKING IN SMALL
MEDIUM INDUSTRY
AHMAD SHARIFUDDIN SHAMSUDDIN
INTRODUCTION
The introduction of the auto teller machine in the 80s marked the
frst electronic banking transaction in Malaysia. However the recent
development oI the Internet has changed the landscape oI electronic
banking. More products have been oIIered by banking institutions,
in order to lure more customers. Not only constricted to consumer
banking products banks are now oIIering online products to its
business customer.
E-banking makes it easier Ior customers to compare bank`s
services and products, and more importantly, e-banking can increased
bank`s ability to reach a Iar wider target market. This will enable
banks to expand beyond their geographical reach. In the era oI
globalisation, this is most important in order to stay competitive.
Plus, more eIfcient services can be provided by banks and at cost
eIIective rate. A transaction costing about $1 in a traditional bank,
would cost $0.60 through phone banking, however only costs $0.02
online (Nsouli and Schaetler, 2002).
The downside oI the Internet technology is not only is it
vulnerable but may intensiIy some operational, legal, regulatory, and
also reputational risks (Nsouli and Schaetler, 2002). The reliance
on new technology to provide services makes security and system
availability the central operational risks oI electronic banking (Nsouli
and Schaetler, 2002). Being able to operate beyond their geographical
boundaries meant banks might not be Iully versed in a jurisdiction`s
local laws and regulations beIore they begin operations. The
implication can be damaging to the banks` reputation. As the Internet
allows services to be provided Irom anywhere in the world, regulation
and supervision are diIfcult to implement iI not impossible.
ThereIore, the central question is with all the benefts and
drawbacks oI Internet banking, what is the local SME`s entrepreneurs`
attitude towards e-banking, particularly Ior loan acquisition services.
In the case oI Malaysian SME entrepreneurs, apart Irom the risks
discussed above the level oI knowledge and awareness oI the e-banking
products greatly infuenced the consumption oI such services. This
paper attempts to examine the above issues by interviewing SME
entrepreneurs in South Johor region.
OBJECTIVES
The objectives oI this paper, among others are to:
1. Examine the attitude and tendencies oI SME
entrepreneurs towards e-banking applications in the
running oI their business.
2. Examine the awareness and knowledge level oI
SME entrepreneurs towards e-banking.
3. IdentiIying entrepreneurs` perception towards
e-banking.
REVIEW OF LITERATURE
There are three main issues concerning the e-banking, frst whether
e-banking would be able to decrease operating costs while increasing
proft margin. Second, whether e-banking would make banking
operations more eIfcient, and fnally the risks involved (Simpson
2002). Simpson (2002) Iurther Iound out that overhead costs are lower
and that revenues are higher in the USA when compared to banks in
emerging markets. Simpson (2002) also Iound out that banking risk
in USA is less than that in emerging markets. E-banking enables
banks to penetrate new markets and reach new target customers
beyond their geographical limitations. E-banking makes it easier Ior
customers to compare products and services, and eventually increase
banks competitiveness.
Internet is available 24 hours a day, seven days a week.
ThereIore this enables consumers to transact at any time convenient
to them. Because oI the high availability oI the Internet, e-banking
accessibility is also high. Banking hours are non-existent. The speed
oI transaction oI e-banking is much Iaster than traditional transactions,
or oI that oI auto teller machines.
However e-banking is not without its downside. Banking
sites can be diIfcult to navigate at frst try. Time is needed in order
to be really comIortable with the virtual banking foor. Furthermore,
in order to stay updated, new Ieatures are added periodically to the
website, and to make it worse, in some cases the users may have to re-
enter account inIormation. Above all, the biggest hurdle to e-banking
is the question oI how much trust one should put into it.
E-banking service in Malaysia
BeIore looking at the e-banking scenario in Malaysia, one has to
understand the process oI obtaining fnancial assistance by traditional
means. Although the Iund Ior the development oI SMEs came
Irom the government oI Malaysia through its agency SMEDEC
(Small medium Industries Development Corporation), the Iund is
actually channelled through local fnancial institutions. ThereIore
these fnancial institutions are responsible Ior giving out loans and
also the management oI IT. Among the reasons Ior not oIIering
fnancial assistance to SMEs are lack oI collateral and no previous
perIormance record. ThereIore in order to solve this problem, Credit
Guarantee Corporation Malaysia Berhad (CGC) was established in
1972 with its main purpose oI assisting small medium entrepreneurs
with no collateral or records to obtain fnancial assistance. CGC
was established under the 1965 company`s act with Central bank,
all commercial banks, and licensed Iianacial institutions as its
shareholders with a paid up capital oI RM 25 million. The principal
responsibility oI CGC is to act as a guarantor to the loan obtained by
the SMEs and to share the risk iI repayments problems arise.
Among the major local banks that oIIer e-banking services Ior
SMEs are Maybank, with its FAC3plus design specially Ior SMEs,
Bumiputra Commerce oIIering Bcbiz-SME Power Connection, AIfn
bank with SPIKS (Small Medium Industries loan scheme) and Public
Bank with SMELAX (Small Medium Industries Loan Assistance Ior
Expansion Plan). All oI these products can be accessed through the
respective banks` website. In order to make e-banking Ior SMEs more
convenient, CGC has launched a portal called iGuarantee. This portal
is a one-stop centre, which enables small medium entrepreneurs to
make online application to various fnancial institutions, and CGC
will act as the credit guarantor. Maybank and RHB are two banks
that are directly involved with this scheme.
Awareness and knowledge level of small medium entrepreneurs
towards e-banking
According to the study by Yellow Pages Small Business Index (2000)
in Australia, only 60 SMEs are connected to the Internet. From
that fgure, only 12 use e-banking transactions. In Indonesia, it
is Iound out that, because oI the low level oI understanding and
knowledge oI e-banking, its usage is not popular amongst the small
medium entrepreneurs (Castle Asia, 2002). In the Philippines, lack oI
knowledge to do e-banking is one oI the main reasons cited by SMEs
Ior not considering to use e-banking (Lallana, et.al, 2002).
Attitude and tendencies of SME entrepreneurs towards e-banking
applications in the running of their business.
69 oI e-banking users in Indonesia have only been using the service
Ior less than one year. This is not surprising given the liIe cycle oI
e-banking is still in its inIancy stage (Castle Asia, 2002). 70 oI
the respondents that have been using the e-banking services were
already customers oI the bank when it started oIIering the service.
The reason being, that it is perceived as oIIering the highest level oI
security (Castle Asia, 2002).
Most small medium entrepreneurs preIerred to use Internet
banking with banks with which they already have a relationship with
,and they are already client-depositors in the bank (Lallana et. Al,
2002). According to Lallana et.al (2002), a study in the Philippines
revealed that 19 oI the frms that are currently not using e-banking
plan to use this Iacility in the next 12 months.
Entrepreneurs perception towards e-banking
According to Sathye (1999), majority oI the respondents interviewed
in Australia stated that they have the tendencies to use the e-banking
but were very much concerned about the security.
A study in Indonesia carried by Asia Foundation in 2002,
revealed that 97 oI the small medium entrepreneurs interviewed
believe that the Internet is somewhat important Ior business today.
86 oI total respondents identifed barriers to ICT use. The barriers
are mainly lack oI knowledge, poor telecommunications inIrastructure,
inadequacy oI computer and Internet literate managers and workers,
internal lack oI resources, insuIfcient fnancial resources, and
technical diIfculties.Wright and Ralston (2002), Iound out that small
medium entrepreneurs in Australia preIer to deal directly with a bank
manager when negotiating terms and conditions oI loans.
METHODOLOGY
A number oI 152 copies oI questionnaires were distributed to SMEs
that are located in the South Johor district, specifcally Irom the Senai
industrial zone I,II,III,and IV, and Tebrau industrial I,II, and IV area.
There were 30 useable responses returned, Ior a response rate oI
approximately 20. The businesses were primarily manuIacturing
based frms.
FINDINGS AND DISCUSSIONS.
Awareness and knowledge level oI small medium entrepreneurs
towards e-banking were researched. Almost all oI the respondents
interviewed have a high level oI awareness towards e-banking.
Only two oI the respondents were not at all aware oI the existence
oI e-banking. The researcher concluded that this happened due to
the lackadaisical attitude oI the two respondents towards IT aspect
in the running oI their businesses. From the knowledge aspect oI
the respondents towards e-banking, only halI possess satisIactory
knowledge level. Attitude and tendencies oI SME entrepreneurs
towards e-banking applications in the running oI their business were
noted.
From the study none oI the interviewed respondents used
e-banking in the running oI their businesses. However 60 oI the
respondents intend to use the service in the Iuture. Furthermore, they
are willing to invest to acquire latest equipment, which enables them
to use the online services more eIIectively. Most oI the respondents
are aware oI the benefts that they could gain by using online services.
This is supported by the study done by Lallana et.al in the Philippines
where the tendencies oI small medium entrepreneurs to use e-banking
is high.
Entrepreneurs perception towards e-banking
Most oI the respondents perceived that traditional banking is more
credible than e-banking. Although they agree that e-banking could
increase eIfciency due to time saving, they still perceived traditional
banking to have more credibility.
Inline with the Iindings in Thailand, Indonesia, and the
Philippines (Asia Foundation study, 2002), respondents state that
they tend to use e-banking but were deterred by security reasons. The
respondents perceived that the security level oI online transaction is
still not 100 saIe.
CONCLUSIONS
It can be concluded that SMEa are still hesitant in adopting e-banking.
Based on the fndings it can be concluded that the major deterrent Ior
not using e-banking is lack oI suIfcient knowledge on the Internet
as a whole. As proved by Lallana et.al (2002), in the case oI the
Philippines entrepreneurs, lack oI knowledge leads to not using the
services. The SMEs also are not entirely convinced oI the Internet
credibility as a medium Ior transaction.
Internet banking is still in its inIancy stage in Malaysia, with
fnancial institutions targeting the consumer segment; and it did
nothing to help increase the consumption oI the business segment.
Given the preIerence oI small business customers Ior direct contact
dealings at branch level, fnancial institutions have assumed a low
demand Ior Internet banking Iacilities. However, according to this
study, there is some willingness among SMEs to invest in equipment
to enable them to use e-banking more eIIectively in the Iuture.
Finally in order to develop more interest in using e-banking,
more attention and eIIort should be given to the security issues.
Although this study showed none oI the respondents are currently
using e-banking, there is some evidence showing some potential usage
in the Iuture provided that security issues are dealt with eIfciently.
In order Ior the SMEs to be more competitive in the era oI
globalisation, it is imperative Ior them to be able to not just understand
but to adopt the technologies oI e-commerce. ThereIore, the relevant
parties should take into consideration the need to equip these groups
(the SME) with the necessary knowledge oI ICT.
REFERENCES
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Ior SME. Business Times. Oct. pp2-4.
Castle Asia (2002). 'SMEs and E-commerce in Indonesia in Asia
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Demers, Julie (2001) ' Small Business Get their say CMA Management.
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Lallana et.al. (2002) ' SMEs and E- Commerce in three Philippines Cities in
Asia Foundation. 'Regional survey oI SMEs use oI e-commerce
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International banks with Small and Medium Sized Enterprises.
American Society Ior InIormation Science. Vol 25, pp11-14.
Hamisah, Hamid (2001), 'Banks Pro Active and Innovative lending
Approach to SME Business Time. November. Kuala Lumpur..
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International Thompson Business Press. London.
Kuivalainen, K. Gupta. (1992). 'Small Industry: Challenges & perspectives.
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Maisara, Ismail. (2001). 'AIfnplus Seen drawing RM 300m in deposits
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Mohd Rosli Mohamad (2000). 'Industri Kecil Sederhana: landasan
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Saleh, M.N. and Schaectler, A. (2002) 'Challenges oI the E-banking
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119 Online Destination Marketing: A Case Study of Malaysia
8
ONLINE DESTINATION MARKETING: A
CASE STUDY OF MALAYSIA
JAMIE MURPHY
INTRODUCTION
The Internet started a new communication era in the early 1990s
that changed tourism marketing. Established websites can improve
marketing activities (Kim & Kim, 2004) and become a main
information source for travelling activities. The information-intensive
nature of tourism suggests an important role for Web technology in
marketing tourist destinations (Govers & Go, 2003). The fexible
information platform supports travel activities through more
information, connectivity and online transactions (Sharma, 2002).
Thanks to the Internet, tourism websites often display the
beauty of their attractions (Govers & Go, 2003). For destinations such
as Saudi Arabia, Italy, Spain, France and India, religious activities are
important for tourism. A typical destination for Muslims is Mecca,
Christians often visit Jerusalem, Rome and the route of Saint Jacques
of Compostela in France and Spain (Kadir, 1989). A Hindu destination
could be an Ashram a spiritual retreat or college established by a
Hindu sage (Sharpley & Sundaram, 2005).
The Islam holy book, the Quran, encourages travelling
activities (see Quran (1987) Chapter 29: verse 20) to increase
Muslims faith by witnessing Gods power (Subhanallah) as well
as the beauty and bounty of Gods creations. To promote travelling,
Muslim travellers enjoy benefts such as eligibility to receive the zakah
(almsgiving), fexibility in perIorming solah (prayer) and fasting, and
benevolent treatment from hosts. Yet, despite a mushrooming Muslim
population (Essoo & Dibb, 2004) and encouragement to travel in
Islam (Q29:20; Q16:36) there is little research of tourism in Muslim
countries. The scant research of tourism in Muslim countries tends
to focus on four areas:
(a) destination image (Burns & Cooper, 1997;
Henderson, 2003a, 2003b; Kadir, 1982,
1989; Schneider & Sonmez, 1999)
(b) culture and ethnicity (Henderson, 2003a, 2003b;
Kadir, 1982; Schneider & Sonmez, 1999);
(c) future of tourism in Muslim countries (Inayatullah,
1995); and ;
(d) tourism in Muslim countries such as Egypt (Aziz,
1995), Kenya (Sindiga, 1996), Malaysia
(Henderson, 2003a, 2003b; Kadir, 1982, 1989)
and Yemen (Burns & Cooper, 1997).
Several studies have examined projected Muslim destination
images oIfine but to authors` knowledge, only two studies have
examined this online. Henderson`s (2003b) study oI Muslim images
online used one website, Tourism Malaysia. She found few pictures
or comments about Islam as Malaysias main religion, rather pictures
of Malay culture, crafts, customs and tradition dominating the
Tourism Malaysia website. Govers and Go (2005) content analysed
20 Dubai-based tourism company websites projection of Dubais
image via photos and text. Their results suggest that Dubai Iails to
use pictorial and narrative images to project its cultural identity by
overemphasising experiential images such as shopping facilities and
dining experiences.
Malaysia is an interesting destination Ior exploring tourism
activities in a Muslim country. The countrys multiracial and
multi-religious population, as well as friction between Islamic
modernisation and Islamic revivalism provide an interesting context
(Henderson, 2003a). Modernity and development may nurture
hedonistic lifestyles among some Muslims in Malaysia, especially in
big cities with activities such as concerts, discos and pubs becoming
available. Islamic revivalism in Malaysia grows due to increased
Muslim awareness, understanding and commitment towards Islam.
At the federal level, the Institute of Islamic Understanding Malaysia,
established in 1993, exemplifes government eIIorts to improve
Islamic understanding. This institute provides Islamic information to
Muslims and non-Muslims through activities such as research, public
seminars, workshops, forums, consultations and publications.
Academically, this chapter adds to the small body of
research of tourism in Muslim countries in several areas. Firstly, it
extends the discussion oI oIfine Muslim destination images to an
online environment Muslim online. Secondly, this chapter extends
Henderson`s (2003b) study by expanding the discussion oI tourism
identity and images in Malaysia to DMOs at state level. Lastly, it
extends both Govers and Go (2005) and Henderson`s (2003b) by
examining how Malaysian DMOs perceive the online role oI Islam
in promoting their destination to Muslim and non-Muslim tourists.
For industry, this chapter sheds light and offers initial suggestions
Ior incorporating Islamic inIormation on websites. Specifcally, this
paper tackles the two research questions:
(1) How do DMO perceive Islams role in promoting
their destination to Muslim and non-Muslim
tourists, and
(2) How do DMO websites refects the role oI Islam in
promoting Malaysian destinations?
This paper frst discusses the concept oI tourism in Islam
and how a Muslim nation, Malaysia, promotes Islam as a tourism
product. The next section illustrates applying Muslim images to online
tourism. The paper then shares the results of qualitative interviews
with six Malaysian states on how they perceive the role oI Islam in
online promotion of their destination to Muslims and non-Muslims.
The paper closes with future research suggestions and implications
Ior DMOs to use Muslim images to infuence destination selection
by both Muslim and non-Muslim tourists.
LITERATURE REVIEW
The Concept of Tourism in Islam
Islam, the fastest growing religion in the world (Essoo & Dibb, 2004),
should constitute 30% of the world population by 2025 (Huntington,
1996). Between 1989 and 1998, Europes Islamic population more
than doubled (Abdullah, 2000). With 0.7 to 1.2 billion Muslims
worldwide, Islam dominates most Arab countries, as well non-Arab
countries such as Indonesia, Malaysia, Pakistan and Turkey. Only
12% of Muslims worldwide are Arabs and there are more Muslims
in Indonesia than in all Arab countries combined (Sechzer, 2004).
With their burgeoning presence and 57 Muslim countries globally
(The Organization of Islamic Conference, 16 September 2005),
tourism in Muslim countries is a major market. Despite the growing
population, research oI Muslim market remains understudied (Shafe
& Mohamad, 2002).
Islamic political, economic, legal and social policies affect
most aspects of believers lives (Huntington, 1996). Religious
travels are fundamental in Islam (Q29:20; Q22:46) based on the
Islamic worldview of God, man and nature, tourism is part of the
addin (way of life). Life is a journey in the way of God; travelling
in Islam stresses the sacred goal of submission to the ways of God.
Travelling in Islam also aims to achieve physical, social and spiritual
goals (Kadir, 1989).
The spiritual goals reinforce ones submission to God
through the beauty and bounty of Gods creation by grasping
the smallness of man and seeing the greatness of God (Q29:20,
Q30:42 and Q16:36). The physical goal leads to a healthy and
stress-free life, which subsequently lets Muslims serve God better.
Islam encourages Muslims to visit their Muslim brothers as this
helps strengthen Muslims silaturrahim (bond) among the ummah
(Muslim community) (Q49:10). Finally, travelling is a test of ones
perseverance in Islam.
Muslim travellers enjoy exemptions Irom some compulsory
religious duties. For instance, travellers may postpone fasting during
Ramadhan, as well as shorten or combine prayers (Q4:101). In
addition to these exemption, hosts should treat travellers in Islam
with compassion and thoughtfulness (Kadir, 1989).
Muslims travellers should abstain Irom profigate consumption
and indulgence (Kadir, 1989). For example, alcohol, prostitution, men
and women mixing, and gambling contradict Islamic purposeIul travel
(Henderson, 2003a; Kadir, 1989). In addition, as Islam preaches
aurah (dress codes such as women covering all but their face and
hand), scanty womens clothing and mens shorts above the knee are
bad. These restrictions shape tourism in most Muslim countries. For
instance, selling alcohol is illegal in Saudi Arabia.
These restrictions, perhaps unfavourable to non-Muslim
tourists where these activities are common, raise a dilemma. How do
Muslim countries include Islamic teachings and restrictions in their
tourism industry yet appeal to non-Muslim tourists? The next section
discusses how Malaysia balances Islamic teachings and restrictions
in its tourism industry.
Islam in Malaysia
After manufacturing, tourism is Malaysias most important sector for
Ioreign exchange (The Seventh Malaysia Plan, 1996-2000). In addition
to its strong economic contribution, tourism is a key in promoting the
diverse cultures and lifestyles of Malaysias multi-ethnic population
(Ghazali, 2000). Tourism Malaysias current promotion, Malaysia
Truly Asia, showcases its vibrant Asian communities Malay,
Chinese, Indian and ethnic groups of Sabah and Sarawak.
With this varying ethnic composition, many of the worlds
major religions are in Malaysia. Over 60% of Malaysians are Muslims,
followed by Buddhists (19%), Christians (9%), Hindus (6%), and
Confucians (6%) (Department of Statistics Malaysia, 2001). Myriad
religious buildings, festival, rituals and lifestyles are important
Malaysian tourist attractions for casual visitors as well as religious
followers (Ghazali, 2000).
Islam is the oIfcial religion, but Malaysians may practice
any religion. Temples, mosques and churches in the same area are
common. The Prophet Muhammad exemplifed how Muslims could
live together with other religions in the frst Islamic city, Medina
(Asghar, 2000). The Prophet Muhammad laid the framework of
governance known as Mithaq-e-Madina (Covenant of Medina) that
respected the tribal customs of Judaism, Islam and pre-Islamic idol
worshippers (Asghar, 2000). The covenant guarantees equality and
freedom of religion and emphasises the sanctity and safety of Medina.
Respecting others beliefs promotes stronger integration and unity,
thus allowing people in the nation to live peacefully.
Malaysia supports multiculturalism through a year round
program oI celebrations (Kadir, 1982) such as Hari Raya Aidiliftri
that symbolises the Muslims end of Ramadhan, Chinese New Year,
Christians Christmas and Deepavali for the Hindus. Although
Islam prohibits gambling and alcohol, these vices are available in
Malaysia in order to respect others races and religious practices, as
well as for tourism. Malaysian tourism also tends to highlight Islams
uncontroversial elements such as culture, history, and architecture
(Henderson, 2003b). Yet as Islam is Malaysia`s oIfcial religion, non-
Muslim visitors might expect diIfcult host-guest encounters.
Host-Guests Encounters: Malaysian Scenario
Host-guest relations can be pleasant when both are sensitive to one
anothers feeling and needs. Yet different outlooks and degrees of
cross-cultural tolerance lead host societies to react differently. In
Muslim destinations, local adaptation to tourism is either discouraged,
isolated from the host community or treated with a laissez faire
or moderate attitude (Kadir, 1989). Furthermore, due to political
instability, governments may discourage tourism to Muslim countries
such as Palestine, Iraq and Afghanistan (Foreign and Commonwealth
OIfce oI the UK, 2005). Similarly, countries and cultures diIIer in
their interpretation of Islamic Law (Sechzer, 2004).
Tourists travelling to the Middle East may find a strict
implementation of Islamic law, sometimes referred to as Shariah
Law. Most Middle Eastern countries have strong Islamic laws due to
the religions Arabic roots and having most of Islams holiest places,
such as Kaabah, the holiest building in Islam where Muslims pray
toward it (Sechzer, 2004). In Saudi Arabia Ior example, hedonistic
traits such as drinking alcohol, discos and pubs are isolated from
public life (Kadir, 1989; Sechzer, 2004). Yet, the different lifestyles
of Islamic countries could be a unique tourist attraction.
Countries such as Malaysia, Dubai, Oman, Indonesia and
Turkey are more moderate. To maintain the harmony among different
races and religions (Henderson, 2003a; Kadir, 1982) and to meet
modernity (Sechzer, 2004), the implementation of Islamic Law
is more relaxed in these countries. Activities contrary to Islamic
teachings, such as selling liquor or men and women dressing violating
Islamic dress codes are present in these countries. Dubai continues
to promotes its modernity with multibillion development projects
such as The Palm and Hydropolis respectively the worlds largest
man made island and frst underwater hotel as tourist attractions
(Govers & Go, 2005).
Serious Malaysian efforts to develop and promote tourism
began with the establishment of the Tourist Development Corporation
Malaysia in 1972 (Ghazali, 2000). Prior to then, concerns over western
infuences brought by tourism impeded tourism growth in Malaysia
(Kadir, 1982). The moderate approach towards tourism and business
continued with Malaysias Prime Minister, Abdullah Badawis vision
for national development, Islam Hadhari (Civilisation Islam) that
incorporates progressiveness in parallel with Islamic teachings (Islam
Hadhari, 2005).
One objective of Islam Hadhari is to promote Malaysian
socioeconomic development and counter a common misconception
of socioeconomic underdevelopment in Muslim countries. Factors
such as poverty, poor transportation and underdeveloped infrastructure
hinder tourism in Muslim countries (Kadir, 1989). Urbanisation and
development such as the Petronas Twin Tower, Multimedia Super
Corridor and Intelligent City of Putrajaya are major tourist attractions
that symbolise Malaysias economic development and liberalisation.
Apart from infrastructure development, Islam Hadhari stresses
personal traits such as acquiring knowledge, high moral and ethical
behaviour, and dynamic economic and fnancial systems guided by
Islamic teaching (Bernama, 2005).
Malaysia positions itself as a clean and value-for-money
destination (Dass, 2005). Malaysian promotional strategies include its
potpourri lifestyle with races and religions living together peacefully.
However, promotions do include Islamic motifs such as mosques,
museums and Muslims festivals (Henderson, 2003b). Two recent
efforts by the Ministry of Tourism and Kuala Lumpur City Hall
promote foods for Muslims breaking their fast, the famous bubur
lambuk rice porridge and Bazaar Ramadhan the open market selling
of various Malaysian dishes (Kuala Lumpur City Council, 2005;
Tourism Malaysia, 2005).
Tourists visiting Malaysia receive the courteous and hospitable
treatment as clearly enjoined in Islam (Kadir, 1989). In addition,
hotels usually provide an arrow on the ceiling of every room for
Muslims to pray pointing towards the qiblat (Mecca). Also in line
with Islamic teachings and Shariah Law, state religious departments
prohibit activities such as indecent exposure, showing aIIection in
public, gambling, eating or drinking in public during Ramadhan, and
selling and drinking liquor.
Yet in some countries such as Malaysia, banned activities for
example gambling, drinking liquor and unmarried couples sharing
rooms apply only to Muslims. This double standard, which seems to
work well for Muslims and non-Muslims, illustrates balancing tourist
needs with local religious values (Kadir, 1989). The next section
discusses how Malaysian DMOs could migrate Muslim images and
teachings to the online environment, while catering to both Muslims
and non-Muslims
Taking Destination Image Online
Image is a valuable concept for understanding how tourists choose
destinations. Studies show a positive relationship between destination
image and preference or visit intentions (Beerli & Martin, 2004;
Gallarza, Saura, & Garcia, 2002; Schneider & Sonmez, 1999).
Research on the influence of destination image suggests three
determinants in the absence oI actual visits or previous experience:
tourism motivations, socio-demographics, and information sources
related to the destination (Baloglu & McClearly, 1999a; Beerli &
Martin, 2004; Echtner & Ritchie, 1993).
Information sources represent a stimulus or image forming
agent to help shape destination perceptions and choices (Baloglu
& McClearly, 1999b; Beerli & Martin, 2004). Information sources
include oIfine and online media such as newspapers, brochures,
celebrities, television, referrals and the Internet (Gartner, 1989;
Standing & Vasudavan, 1999).
The Internet, particularly the World Wide Web and email,
continues to change tourism. The Web is becoming a major information
sources for tourists. This new medium differs from other information
sources as it provides general information about tourism products as
well as personalised inIormation exclusive to individuals. Through
the Internet potential visitors can access multimedia information
about tourist products and organisations instantly, inexpensively and
interactively (Baines, 1998).
Promoting tourism online requires businesses and tourism
agencies to defne their target market and products clearly (Standing
& Vasudavan, 1999). As word-of-mouth (Govers & Go, 2005, p.4)
becomes a powerful and important information source for tourist, the
narratives and photographic materials on a website should describe
the destination precisely. Discrepancies between projected image
and real encounter can create a negative perception among tourists
(Fairweather & SwaIfeld, 2002).
Saudi Arabia`s oIfcial tourism website Ior example, uses
images such as a veiled woman, a man wearing a gotra (a red and
white square scarf) and agal (a round black binding to hold the gotra),
Arabic handwriting, the Nabawi mosque (Islams earliest mosque)
and the Holy Kaaba to refect strong Islamic values and practices.
Wording such as one of the oldest Islamic states in the world and
the birthplace of Mohammad the messenger of Allah and advice
for tourists to wear modest dress that covers arms and legs further
emphasise the practice of Islam in this kingdom (Kingdom of Saudi
Arabia, 2005). The next section describes the methodology used to
answer the proposed research questions.
METHODOLOGY
Sampling for this chapter was the DMOs representing Malaysias
13 states and three federal territories. Of these 16 areas, Putrajayas
website listed no email address nor did the Tourism Malaysia and
Ministry of Tourism websites list an email address for Putrajaya. An
email in English to the 15 DMOs briefy explained the study and asked
two questions about (a) the role of Islam in promoting their destination
to Muslim and non-Muslim tourists, and (b) how their websites refect
Islam to promote the destinations. Although English is not the oIfcial
language in Malaysia, it is widely encouraged in business (Ministry
of Foreign Affairs, 6 July 2003). To encourage replies, respondents
were given the option to answer the email in Malay or English; all
respondents answered the English email in Malay.
Of the 15 emails, three DMOs responded, but four emails
bounced due to problems such as bad addresses and unknown
users. A follow up email one week later, this time in Malay, sent to
the remaining 12 DMOS using different email addresses for the
Iour miscreant cases yielded another reply. A Iollow up Iax one
week later failed to garner any responses. Finally, three days later,
the researcher phoned the remaining 11 DMO oIfces and gathered
two more responses via phone Ior a total oI six responses or a 40
response rate.
FINDINGS
This section discusses the findings from the email and phone
interviews, and per the interview protocol, protects the respondents
anonymity. Overall, Islam seems to play a minor role in promoting
these six Malaysian destinations. Indeed, one DMO noted that their
promotional brochures and website have just one statement about
Islam; it is Malaysia`s oIfcial religion. This DMO`s oIfine material
failed to contain even one picture of a mosque. While all interviewees
agreed that Islam is important in promoting Malaysia as a tourist
destination, they disagreed on the emphasis.
The strongest emphasis was a state that designs tourism
activities in line with Islamic teachings. Islam plays a great role in its
tourism industry and has become a main attraction. According to this
DMO, People come to our state to see how Islam is implemented
and most of the time tourists are impressed. Recently, the states city
council declared the state capitol as Islamic City. Activities contrary
to Islamic teachings e.g., concerts, wearing revealing outfts such as
bikinis, and Iree mixing between men and women are discouraged
with some exemption Ior non-Muslims and tourists. As Ior portraying
Islam on their website, the respondent noted that there is probably
not much. The Muslim prayer schedule on their website however
refects this state`s Islamic identity.
One state focuses on the Prime Ministers aspiration of Islam
Hadhari, portraying the Islam as a balance between worldly and
hereafter affairs. The state government encourages development in
its tourism products as healthy and clean-living holiday activities.
Their website provides information on Islam as the main religion
with the image of the states mosque, but at the same time welcomes
investors to the state. The website includes a section explaining Islam
Hadhari and promoting the states stable economy for investment,
peaceful living among different races and religion, and wondrous
natural resources.
Four states take a more moderate approach towards Islam,
albeit noting tours to their national mosque as Islamic tourism
activities. For two of these states, eco-tourism, beaches and their
varied ethnic cultures are key tourism attractions. Their land,
rainforests, different ethnic faces and costumes, and local wildlife
dominate the websites. For the third state, the website promotes
bargain-shopping experiences, heritage buildings, historical sites,
local dances and local cuisines. Lastly, the fourth state focuses on
heritage and traditional Malaysian lifestyles.
Perhaps quality rather than quantity describes Islamic images
in Malaysias tourism industry. Images help reflect Malaysias
moderate and tolerant Muslim community that shares and respect
other religions and practices. Commenting on Islam as a tourism
product in Malaysia, one DMO said that We may not have a distinct
tourism product that refects the signifcance oI Islam, but I guess the
beautiful practice of the religion itself in Malaysia is an attraction.
This religious tolerance should be good news and relief to
non-Muslim and Western tourists. One DMO commenting on the
Bazaar Ramadhan exhibition expressed hope that 'the international
media would spread the beauty of Islam in Malaysia, especially
how Malaysians celebrate Ramadhan harmoniously unlike what is
happening in the Middle East.
DISCUSSION
The interviews fndings suggest that Malaysian DMOs portray Islam
online moderately and lend minimal support to the proposition. At
least two factors limit the results of this chapter, the small sample and
the low response rate. Regardless, the responding DMOs agreed on
the importance of Islam in Malaysian tourism and the results of this
chapter offer important implications for academia and industry.
As noted earlier, Iour emails out oI 15 in the frst round oI
interviews round bounced. This 27% bounce rate suggests ample
room for improvement in the implementation of email as a customer
service tool by the state tourism councils and Tourism Malaysia.
Bounced emails harm the reputation of the DMOs, and indirectly, harm
Malaysian tourism. DMOs should decide if they will answer email, if
not, DMOs should not list an email address on their website.
DMOs should ensure that their websites and the websites of
relevant agencies list the correct email address. As email communication
is business communication, the DMOs should establish policies and
procedures for proper polite, personal, promotions, professional and
prompt email responses (Murphy & Gomes, 2003). Hospitality and
tourism organisations gain a competitive advantage via proper email
response (Frey, Schegg, & Murphy, 2003; Gherissi-Labben, Schegg,
& Murphy, 2003; Matzler, Pechlaner, Abfalter, & Wolf, 2005; Murphy
& Tan, 2003). Finally, similar to mystery shopping to test tourism
goods and services, both local and national DMOs should regularly
mystery shop their implementation of proper email responses.
Common stereotypes for Muslim countries, conservative and
anti-Western, make them unattractive to Western tourists (Kadir,
1989). Yet religious tourism extends beyond practitioners oI that
religion (Sharpley & Sundaram, 2005). Images such as beautiful
nature, festivals and religious tolerance help improve the perception
of Malaysia as a liberal harmonious, multiracial, and multi-religious
Muslim country. This moderate image could be pleasant news to
the non-Muslims. While the media may often associate the Muslim
world with terrorism, experiences in Malaysia may allow non-
Muslim tourists to explore Islam in a less threatening and Iriendly
environment. This allows the DMOs to rectify the wrong interpretation
about Islam and making the visiting experience to Malaysia a pleasant
one to the non-Muslim tourists.
In addition to images related to nature, festivals and religious
tolerance, the DMO websites should provide tips for non-Muslim
travellers. As non-Muslim travellers have a different lifestyle than
Muslims, these tips would make their visit more enlightening and
enjoyable. This consideration aligns with Islamic teachings that
enjoin Muslim to assist travellers. Information on Muslim customs
and practices could reduce cultural misunderstandings and mistakes,
such as:
Muslim women may acknowledge an introduction
to a man solely with a smile and nod of their head.
Not shaking hands shows no disrespect; Islam
prohibits physical contact between men and women
in Islam except among Iamily members.
Removing shoes when entering a house since
Muslims pray at home.
Dressing neatly in suitable attire that covers arms
and legs when visiting places of worship.
Avoiding scanty clothes and showing affection in
public
Toasting is uncommon, and
Using the right hand when handling food, and
giving and receiving objects.
Alternatively, to accommodate the increasing number of
Muslims tourists especially from the Middle East (Amran, 2004;
Gee, 2002), DMOs should include more Muslim-related information
such as halal food, mosque locations and prayer times. Similarly,
Western countries with high numbers of Muslim tourists such
as Australia, the USA and the UK could improve their Muslim
marketing efforts by adding Islamic information on their websites.
Finally, hotels in Muslim and non-Muslim countries that target
Muslim tourists should offer Islamic information on their websites
and concierge desks, as well as add arrows pointing towards Mecca
to their rooms ceilings.
Similar to oIfine studies oI Muslim tourism (Henderson,
2003b; Kadir, 1982), the results suggest minimal, albeit varying,
portrayal of Muslim values by the DMO websites. The interviewees
replies support fndings by Henderson (2003b) oI Malaysia`s moderate
approach in expressing and portraying Islam. With such a varying
ethnic composition, Malaysian tourism tends to concentrate on
uncontroversial elements such as culture, history and nature.
This chapter also support the discussion of destination image
as a valuable concept in understanding the destination selection
process of tourist (Beerli & Martin, 2004; Gallarza et al., 2002;
Schneider & Sonmez, 1999). Malaysia successfully delivers its brand
image, Truly Asia. This image differentiates Malaysia from other
competing destinations such as Singapore and Thailand.
This chapter also supports the discussion of destination
branding (Gnoth, 1998) and marketing destination online (Lee, Cai, &
OLeary, In Press). The website of a destination has become a crucial
branding channel. DMOs could have multiple branding channel,
however, consistency among the branding elements is important
as discrepancies between projected images and real encounters
may create a negative perception among tourists (Fairweather &
SwaIfeld, 2002) The results oI this chapter show that Malaysian
DMOs consistently refect the country brand image, Malaysia, Truly
Asia, in promoting their destinations.
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=3&p=1&taborder=1&fp=1
Tourism Malaysia. (2005). Retrieved 7 March, 2005, from http://www.
tourism.gov.my/faq/answers.asp?faqid=9
139 Internet Evolution: A Case of Malaysian Hotel Industry
9
INTERNET EVOLUTION: A CASE OF
MALAYSIAN HOTEL INDUSTRY
INTRODUCTION
Hotels today no longer question on going online rather how to leverage
their online presence (Porter, 2001), refected by ongoing research
of Internet usage (Morrison, Taylor, & Douglas, 2004; OConnor &
Murphy, 2004). Since introduced, email usage evolves Irom basic
communication to promotional purposes (Marinova, Murphy, &
Massey, 2002). Website usage also evolves Irom brochureware type
websites to adding online transaction, networking and collaboration
Ieatures (Beatty, Shim, & Jones, 2001; Brady, Saren, & Tzokas, 2002).
The constant evolution of the Internet leaves hotels with a multitude
oI options Ior better Internet-based business processes (Morrison et
al., 2004).
Hotels that adopted the Internet must ensure that their website
is useIul to their customers, perIorming better than their competitors
and reaching industry standards (Morrison et al., 2004). A website
costs money, thereIore it is a waste iI the website Iails to give a good
return on the investment. Hotels could evaluate the effectiveness
oI their website based on online sales (Tierney, 2000), web traIfc
analysis such as using server log fles (HoIacker & Murphy, 2005)
and return on investment (Morrison et al., 2004). Hotels may also
evaluate their website based on the evolution oI their website Ieatures
(Morrison et al., 2004).
This study investigates the evolution of Internet usage
among Malaysian hotels, extending diffusion research and adding
to the growing discussion of Internet evolution (Alonso Mendo &
Fitzgerald, 2005; Morrison et al., 2004). It also adds to the small body
of Internet research in Malaysia, particularly in hospitality industry.
Internet use in business is at an inIant and Iormative phase in Malaysia
(Thuong & Anthony, 2002). Similarly, hospitality research is also
at an embryonic stage in Malaysia. There are only a Iew studies oI
Malaysia`s hotel industry |see Ior example: Pei, Khatibi and David
(2005); Wai and Kevin (2005); Sellah and Micheal (1994); Goldsmith
and Mohd Zahari (1994)| and even Iewer on hotel`s Internet usage
(Hashim & Murphy, 2005).
This paper begins with a literature review on extant theories
of Internet evolution and then explains the qualitative methods
applied for the interviews. Next, this paper discusses the results of
the interviews Iollowed by the applied and theoretical conclusions.
The paper closes with practical suggestions for future research.
LITERATURE REVIEW
Approaches to Internet evolution
DiIIusion oI Innovations (DOI) theory describes the Iorces and
barriers oI innovation adoption by individuals and organisations
(Rogers, 2003). Innovation characteristics, adopter characteristics
and social infuences shape the speed oI technology adoption by
individuals. Fichman (1999), among others, argues that the individual
model is less applicable to organisations, as companies make decisions
authoritatively or collectively (Premkumar & Roberts, 1999). Factors
such as leader and organisational characteristics, organisational
decision-making style and regulations contribute to an organisation`s
decision to adopt a technology (Premkumar, 2003; Scheepers, 2003).
The Internet exemplifes an organisational technology that involves
major decisions, changes and restructurings.
Research of organisational technology diffusion is extensive,
yet researchers criticise DOI in explaining organisational adoption
(Fichman, 1999). A main weakness is assuming progressive technology
diffusion. DOI theory suggests that organisational diffusion ranges
from awareness to adoption to successfully infusing the technology
within the organisation`s operational and managerial work systems
(Cooper & Zmud, 1990). Fichman (1992) argues that organisational
innovation adoption, particularly with complex technologies, goes
beyond the progressive model. The web Ior instance, is in a constant
state of evolution in its usage, features and technology (Morrison et
al., 2004, p.243).
The Stage Model depicts the progress of information system
adoption in organisations (Nolan, 1973). The model argues that
organisational information systems progress through successive and
predictable patterns, conceptualised as stages. In general, these stages
are (1) sequential (2) hierarchical and (3) refect management maturity
(Kazanjian & Drazin, 1989). Similar to DOI, the Stage Model assumes
that technology diIIusion Iollows a linear and stable model.
The limited capabilities oI early diIIusion research encouraged
researcher to propose middle range theories` customised to specifc
technologies and adoption contexts (Fichman, 1999, p.108). For
instance, Levy and Powell (2003) suggest that an organisations
Internet adoption Iollows a transporter model (p.173) - transportation
Irom one use to another without an implicit idea oI growth - as more
suitable to explain organisational Internet diIIusion.
Complexity and sophistication of Internet use in an
organisation refect a higher diIIusion level (Walcott, Press, McHenry,
Goodman, & Fostor, 2001). Early Internet usage begins with adopting
email Iollowed by a simple online presence such as brochure ware
or publishing sites that provide brieI and static organisational
inIormation (Teo & Pian, 2004; Yuan, Gretzel, & Fesenmaier, 2006).
As Internet usage becomes more sophisticated, businesses use the
Internet Ior online sales and marketing activities. At a mature stage,
the company integrates the website with other systems such as
enterprise resource planning and customer relationship management
to enhanced personalised and customised services (Alonso Mendo &
Fitzgerald, 2005; Piccoli, Brohman, Watson, & Parasuraman, 2004).
The next section introduces a proposition related to hotels Internet
evolution.
PROPOSITION
Organisations adopt technologies over a continuum, from having
a technology to using that technology effectively throughout the
organisation (Rogers, 2003). Piccoli et al., (2004), suggest that Internet
usage with customers evolves from experimentation, value creation,
Iocus and diIIerentiation to building relationship. Businesses frst used
the Internet mainly to publish inIormation (Teo & Pian, 2004). At
this stage, businesses are uncertain oI their technological goals, value
oI acquiring the technology, and try to minimise risk by Iollowing
industry leaders. Later, businesses try to personalise services and
raise the barrier to imitation through building relationships with
customers and increasing switching costs (Piccoli et al., 2004). Thus,
at the mature stage, businesses shiIt their marketing strategy Irom
customer acquisition to customer retention and loyalty (Kandampully
& Suhartanto, 2003).
This chapter Iollows a six-stage Internet evolution model Ior
hotels in Malaysia (Hashim, Olaru, Scaglione, & Murphy, 2006).
They begin with no Internet adoption and then progress to adopting
email in stage two. During the third stage, hotels have static brochure
ware sites with basic hotel inIormation. Interaction and simple search
is possible along with more inIormation about products, events and
news and available in stage Iour. In the fIth stage, the website oIIers
Ieatures Ior interactive marketing, sales and transactions. The sixth
and fnal stage oIIers more personalised Ieatures Ior members such as
room preIerence, newsletters and discounts, to help build and create
customer loyalty. Thus:
Proposition 1: Internet usage evolves from (1) no adoption to
(2) email adoption to (3) brochureware to (4) publishing site
to (5) database retrieval and interactivity to (6) personalised
interaction and loyalty building.
Guided by these theoretical perspectives, this research used
feld interviews to examine the evolution oI Internet use by Malaysian
hotels.
METHODOLOGY
This exploratory study uses a case study approach, which suits
exploratory research as it allows the researcher to obtain rich, real and
deep inIormation on an issue (Deshpande, 1983, p.103). In the early
stage of theory development, where phenomena are new Malaysian
hotels Internet usage premature quantitative research can lead
to inconclusive fndings (Denzin & Lincoln, 1994). The primary
unit oI analysis is the Malaysian hotel. This research used snowball
sampling, which is appropriate when the research population is small
and specialised (Aaker, Kumar, & Day, 2001; Malhotra, Hall, Shaw,
& Oppenheim, 2002). Based on their experience and future planning
of hotel operations and Internet usage, the researcher conducted 13
interviews with each hotel`s CEO or top-level managers, Irom 4
December 2005 until 4 January 2006.
The Iace-to-Iace and tape-recorded interviews relied upon a
series oI semi-structured questions. To ensure that the researcher noted
the interviewee`s key point properly, the researcher summarised the
interviewee`s points beIore closing the interview. All 13 interviews
took between 50 to 90 minutes and were transcribed within a day
oI the interview. During the interview, the respondents described
their hotel`s past, present and Iuture Internet usage. Table 1 profles
the interviewees, but per interview protocol, their identity is
anonymous.
1
4
4
A
p
p
l
i
c
a
t
i
o
n

a
n
d

I
s
s
u
e
s

i
n

E
-
B
u
s
i
n
e
s
s
Hotels
Name
Position Hotels Profle Year
started
using
Internet
Current Internet Usage
Rating AIfliation
status
Target market Email Website
Internal External
Hotel A Sales and
Marketing
Executive
Two Chain
membership
Families and
government
agencies
1999 Very
minimum
Very
minimum
Brochureware
Hotel B Room
Division
Manager
Three Chain
membership
Families and
government
agencies
2000 Moderate Very
minimum
Online
reservation,
marketing and
promotion
Hotel C Sales and
Operation
Manager
Four Chain
membership
Top level
business
travellers
1998 Moderate Moderate Online
reservation,
marketing and
promotion
Hotel D General
Manager
Five Chain
membership
Business
travellers
1998 Extensive Extensive Online
reservation,
promotion,
email
marketing
Hotel E Executive
Director
Five Chain
membership
Conferences,
meetings and
teambuilding
activities
reservation,
promotion,
loyalty
program
1
4
5
I
n
t
e
r
n
e
t

E
v
o
l
u
t
i
o
n
:

A

C
a
s
e

o
f

M
a
l
a
y
s
i
a
n

H
o
t
e
l

I
n
d
u
s
t
r
y
Hotel F General
Manager
One Non- Chain Leisure
travellers and
travel groups
- Do not
adopt
Do not
adopt
No website
Hotel G General
Manager
Two Non-Chain Travel groups - Very
minimum
Do not
adopt
No website
Hotel H General
Manager
Three Chain
membership
Leisure
travellers
1998 Moderate Moderate Online
reservation,
marketing and
promotion
Hotel I General
Manager
Three Non-Chain Weekend
travellers and
privilege card
holders
1999 Extensive Moderate Online
reservation,
marketing and
promotion
Hotel J General
Manager
Five Chain
membership
Business
travellers
reservation,
personalised
promotion,
loyalty
program
Hotel K General
Manager
Four Chain
membership
Membership
and leisure
travellers
reservation,
promotion,
membership
program,
loyalty
program
1
4
6
A
p
p
l
i
c
a
t
i
o
n

a
n
d

I
s
s
u
e
s

i
n

E
-
B
u
s
i
n
e
s
s
Hotel L Owner/
Manager
Non-
rated
Non Chain Students - Do not
adopt
Do not
adopt
No website
Hotel M General
Manager
Five Chain
membership
Conferences,
meetings and
families
reservation,
personalised
marketing and
promotion,
Table 1: Hotels Interviewees
RESULTS
Hotels Internet evolution
The past (1996-2000)
There was a strong consensus among the hoteliers that their Internet
use started with email. Email usage began with hotels communicating
with the headquarters and exchanging information among executives,
beIore becoming available Ior other staII. Later, hotels provided their
email address on the website as an alternative to communicate with
their customers.
External inducement Irom the government and competitors
were strong Iorces that drove the hotels` move to the next stage - online
presence. The main reason Ior having a website, online presence, was
a simple brochure-like website with brieI hotel inIormation. Hoteliers
believed that websites are a valuable tool to deliver inIormation,
promote and advertise their hotel to potential customers worldwide.
As the general manager oI Hotel E explained, The Internet allows
us to open our rates and promote our hotel to the whole worldif we
can capture even less than 0.0001 percent of the world population,
can you imagine our guest patronage?
The general manager of Hotel M called the early days the
computerisation` era, with a loud call Irom the industry and the
government to use the Internet but very few of us could visualise
the benehts. We thought that this Internet was another auplication
of phone, fax and mail. Hoteliers were slow in using the Internet.
Fear oI investment losses, lack oI awareness and lack oI IT expertise
hindered adoption. Managers were uncertain with their decision to
adopt the Internet and tended to mimic the leading frms to guide
their Internet usage.
The general managers also reported that there was no defnite
plan or strategy to promote the use of the Internet. There was only a
vague understanding of the Internet. For instance, the general manager
of Hotel K explained, 'We aaoptea the Internet because of the trena.
the Internet is something that we knew was going to be here to stay.
But the usage was not a focus until a few years later when we realised
it could help our business.
The present (2001-2005)
Later, the hoteliers became more sophisticated in using websites
and email. Emails are available Ior customers to make enquiries,
but, when asked about email reply procedures, most oI the hoteliers
replied that they do not have such procedures. Traditional and online
communication literatures suggest fve P`s Prompt, Polite, Personal,
ProIessional and Promotional to profle proper email responses
(Murphy & Tan, 2003; Strauss & Hill, 2001).
Hoteliers added more functions and information on their
website to meet customers` needs. The emerging Iunctionalities
departed Irom a brochure ware to a publishing site with extensive
inIormation about the hotel and new value-Iocused tools such as
Internet only offers images and videos of their rooms. Internet usage,
particularly website design, became market driven and imitation
remained common. For instance, the general manager oI Hotel E noted
that their newly updated website with an e-magazine, e-news and ash
Ieatures became common with competitors within a Iew days.
Major changes during this phase included providing
transactional support and online reservations. To encourage customers
to use the online reservations, Hotels B and H provided discounts for
online bookings. The hotels also started to purchase domain names to
match their brand name such as Hotel ABC buying hotelabc.com or
hotelabc.com.my Ior their website address. The hotels hope that the
use oI these branded domain name would increase trust and encourage
more customers to book rooms online. The general manager oI hotel
H said, 'We have a strong brana name in other proaucts, so we
believea by extenaing the brana name to our hotels website will give
us a higher chance to attract guests ana make them feel conhaent.`
At this phase, the hotels` website design and Iunctionality included
online reservations, Ieedback Iorms, 360
o
panoramic room views,
ash animation and newsletters.
As websites become standard, hotels Iace pressure to
diIIerentiate their services. The hotels started to seek niche areas
to extract value Irom their website. Customers today want more
personalised and convenient tools such as email newsletter, language
option, currency converter, redeem points and weather information
according to the general manager oI Hotel M. Forward-looking
managers have begun to provide complementary Iunctionalities such
as inIormation about nearby attraction and simpler transactions such
as one-click reservations and cancellations.
However, some general managers are sceptical of change,
as Malaysian customers still hesitate to engage in advanced Internet
activities. The managers predict that online reservation would be the
main online activities until Malaysians are open to other advanced
Ieatures. Trust and lack oI confdence among customers are main
barriers to online activities. For instance, the Sales and Operation
Manager at Hotel C said, Of course being in Malaysia, we still
lag behind those hotels in America and Europe in terms of Internet
marketing. Very few hotels talk beyond online reservation. It is not
that we do not want to change but my customers still prefer to call
and fax their reservation.
The Future (2006 and after)
The interviewers agreed that personalisation and relationships would
dominate future trends. The higher rated and international chain hotels
(Hotels D, E and J) have loyalty programs and email marketing on
their websites. Lower rated and independent hotels are still watching
and taking a small step Iorward. Hoteliers were considering email
permission as a Iuture marketing tool and help to build relationship
with existing and future customers. As the general manager at Hotel
H expressed, I do not want to confuse my staff. Therefore, I will use
email marketing hrst ana see whether it works or aoes not work. If it
works, then we coula think about creating a full eagea website.`
However, there are also concerns among the managers about
customer privacy, which could lead to rejection of the services. Some
also question the value oI the Internet to build relationships. Hoteliers
claim that the Internet cannot provide the essential ingredient of their
business, human touch and warmth. The general manager at Hotel
B summarised, I might be old fashioned; however, I still think that
the monitor and keyboard are no match to our greetings and heart
warming smiles.
CONCLUSION
Figure 1 summarises Malaysian hotels fndings and lend support to
the proposition. Internet use evolves from no adoption of email and
eventually to websites providing personalisation and loyalty Ieatures.
Overall, these Malaysian hotels still use the Internet in a limited
fashion. They concentrate on exploiting the Internet for disseminating
information and online reservations.
Figure 1: Evolution oI Internet Usage among Malaysian Hotels
This study extends diffusion research and adds to the growing
discussion of Internet evolution. Most diffusion studies assume
technology adoption in organisation as a binary and predictable
process (Nolan, 1973; Rogers, 2003), yet fndings show that hotel`s
website and email use evolves. Today, hotels` online activities extend
to mobile commerce, personalisation and loyalty programmes.
For example, Scandic Hotels is perhaps the frst chain to provide
customers with WAP-based technologies (Louveris, Driver, &
Powell-Perry, 2003). To help Ioster loyalty, the hotel provides regular
guests with a WAP-enabled device to access reservations and other
inIormation. Mobile commerce adds a new chapter to hotels` Internet
and technology use.
This study also supports Internet research in the hotel industry.
Similar to past studies (Jogaratnam & Eliza-Ching, 2004; Siguaw,
Enz, & Navasivayam, 2000; Wei, Ruys, Van HooI, & Coombrink,
2001), Malaysian higher rated and chain hotels lead in their Internet
usage. Considering the growing Internet use, hotels not adopting the
Internet may suffer serious competitive disadvantages if they fail to
react adequately. However, the results demonstrate that these hotels
have several Internet areas to exploit. As competition intensifes and
customers demand more customised and personalised services, hotels
should consider transIorming their simple virtual presence to a better
quality and customer relations management online. For instance,
hotels could use guest recognition programs that keep new and repeat
guests` record. Based on this inIormation, hotels could pre-block the
best rooms, welcome customers with Iruit, fowers, and personalised
welcome note.
Yet hotels should not adopt advanced website Ieatures simply
to keep up with trends and Iashions, or to imitate their competitors.
Following the Internet bandwagon could lower their chance oI
successIul implementation oI website and email as business tools.
Hotels should avoid unnecessary techniques on their website such as
mandatory animation, music and fash introductions as they suggest a
bandwagon eIIect rather than adding value (Murphy, Olaru, Schegg,
& Frey, 2003). There is also little sense in having website Ieatures
that are not user friendly. Jeong et al., (2003) found that easy to
use websites lead to higher inIormation satisIaction and purchasing
intention.
Similarly, hotels should provide email addresses but must
avoid problems such as bounced emails, low reply quality or worse, no
reply to enquiries; they harm the hotels service quality. Alternatively,
hotels can gain an immediate competitive advantage via proper email
responses (Gherissi-Labben, Schegg, & Murphy, 2003; Murphy et al.,
2003). Hotels should train their staff on email policies to improve their
online customer service. Hotels that do not respond quickly to email
enquiries neglect an opportunity to attract additional guests. With
the Internet, customers might contact several hotels simultaneously.
Slow and incomplete replies might exclude a hotel from the set of
alternatives in the fnal decision process. A prompt quality email
reply is vital.
The fndings also provide hints Ior managers to gauge their
presence in Internet usage. The Internet evolution timeline in Figure 1
suggests potential features and dilemmas a manager could face. Some
businesses assumed that the Internet alone would solve their business
problems and developed stand-alone solutions to their businesses ;
this however, generally led to disappointing results (Garrigos-Simon,
Marqus, & Narangajavana, 2005; Porter, 2001). As the Internet does
not guarantee a success, managers must be cautious in adding website
features and using email.
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159 Research on Trust in Online Environment
10
RESEARCH ON TRUST IN ONLINE
ENVIRONMENT
KHALIL MD. NOR
INTRODUCTION
A signifcant number oI studies have included trust in their attempt
to study individuals` acceptance oI online services such as Internet
banking and e-commerce. Trust is perhaps a diIfcult construct
to operationalize but due to its relevant especially in the online
environment, where uncertainty is the call oI the day, leaving out the
concept in examining Iactors that infuence individuals` acceptance oI
online services seem to indicate that the research model is incomplete.
Trust is considered an important component in social and business
relationships whenever risk and uncertainty exist (McKnight &
Chervany, 2001). This chapter provides an overview oI the trust
construct, previous studies on trust in online environment and
summaries oI their relevant fndings.
Mayer, Davis, & Schoorman (1995) deIine trust as a
willingness to be vulnerable to the actions oI another person or
people. The willingness to be vulnerable to others implies that when
one trusts another person, he or she is willing to take the risk. The
risk a person might Iace is the harm or negative consequences oI the
trusting stance upon him or her. Normally, the trust rises when one
expect that the other person will behave in a responsible manner
(Pavlou, 2003) and the person he or she has trusted will not take
advantage oI a dependence upon him or her (GeIen, Karahanna, &
Straub, 2003a).
As previously mentioned at the opening oI this chapter,
researchers seem to agree that trust is a critical component in building
economic relationships especially in the online environment. The
online environment is basically made up oI risk and uncertainty.
The environment poses a higher threat oI possible inappropriate
opportunistic behaviors such as Iailure to deliver goods or services
as promised, or misuse and unauthorized distribution oI personal
inIormation (GeIen, 2002). Well publicized cases oI Iraud Iurther
heighten this perception oI risk and uncertainty.
PREVIOUS STUDIES
From literature, the author has Iound numerous studies that provide
empirical support indicating the importance oI trust as a direct or
indirect infuencing Iactor in an individual`s intention to engage in
online economic activities. Jarvenpaa, Tractinsky, & Vitale (2000)
examined the infuence oI an individual`s trust on the willingness to
buy in an Internet store. One hundred and eighty Iour undergraduate
and MBA students in two Australian universities participated in the
study. The study Iound that the willingness to buy in an Internet store
was aIIected by attitude and perception oI risk associated with the
store. The attitude and perception oI risk were aIIected by trust.
GeIen (2000) examined the role oI Iamiliarity and trust in
inquiring about and purchasing books on the Internet. Based on
a survey oI 217 potential users, the study Iound that Iamiliarity
aIIected both intended inquiry and intended purchase. With reIerence
to trust, the results showed that trust aIIected both intended inquiry
and intended purchase. Trust itselI was aIIected by one`s disposition
to trust.
Incorporating the trust construct into the technology
acceptance model (TAM), Suh and Han (2002) examined the eIIect
oI trust on consumer acceptance oI Internet banking. The study was
conducted on 845 banking customers in fve major banks in Korea.
The results oI the study showed that perceived ease oI use and
perceived useIulness were signifcant predictors oI attitude. Perceived
ease oI use was signifcant on perceived useIulness and, in turn on
trust. Attitude had signifcant eIIect on behavioral intention and in turn
on actual usage. With reIerence to trust, the study Iound that the trust
construct was a signifcant determinant oI intention to use Internet
banking. Additionally, the study also Iound that trust had a signifcant
positive eIIect on attitude toward using Internet banking.
In another study, incorporating a trust construct in the
technology acceptance model, Teoh and Md Nor (2007) examined
the eIIect oI perceived security on individuals` acceptance oI mobile
banking. The study was conducted on working students in Malaysia.
The results oI the study showed that perceived useIulness, perceived
ease oI use and perceived security, all have signifcant infuence on
the intention to use mobile banking.
Using the TPB as the theoretical Iramework, George (2002)
examined whether belieIs about privacy and Internet trustworthiness
determined attitudes towards Internet purchasing, which, in turn,
aIIected intention and actual purchase. The study revealed that privacy
and Internet trustworthiness belieIs were signifcant determinants
oI attitude. The hypothesized paths between attitude and intent to
purchase and between intent to purchase and actual purchase were also
supported. Other related fndings were signifcant eIIects oI Internet
experience on actual purchase, Internet trustworthiness belieIs and
privacy belieIs.
GeIen (2002) conducted a study examining the eIIect oI
trust and its dimensions (i.e., ability, integrity, and benevolence) on
purchase and window-shopping intentions. Based on responses Irom
289 MBA students, the results oI the study showed that purchase
intention was infuenced by trust, which, in turn, was aIIected by
integrity and benevolence. On trust`s dimensions eIIect, ability had
signifcant eIIect on window-shopping intentions while integrity had
a signifcant eIIect on purchase intention.
Bhattacherjee (2002) provided a theoretical conceptualization
and empirical validation oI a new scale to measure individual trust
in online frms. His trust model hypothesized that Iamiliarity with an
online frm is a predictor Ior the consumer`s trust in the frm and that
an individual`s trust in an online frm is directly related to his or her
willingness to transact with the frm. Based on 122 usable responses
Irom online banking customers, the study supported that Iamiliarity
was a signifcant predictor oI trust and trust was a signifcant predictor
oI the consumers` willingness to transact. An additional fnding was
a signifcant eIIect oI Iamiliarity on the consumers` willingness to
transact.
Using TAM as the theoretical Iramework, GeIen et al. (2003a)
conducted an experiment examining the impact oI trust, Iamiliarity,
and perceived useIulness on purchase intention on a specifc website.
MBA and undergraduate students who represent 139 potential
customers and 178 repeat customers were involved in the study. The
study Iound a signifcant eIIect oI Iamiliarity on purchase intention
Ior both potential and repeat customers while perceived useIulness
eIIect on purchase intention was only signifcant Ior repeat customers.
The hypothesized paths Irom Iamiliarity to perceived ease oI use
and Irom perceived ease oI use to perceived useIulness were also
supported Ior both groups. With reIerence to trust`s infuence on
purchase intention, the results oI the study showed that the construct
had a signifcant eIIect on the purchase intention Ior both potential and
repeat customers. Additionally, the study also Iound that disposition
to trust and Iamiliarity were signifcant on trust Ior both groups.
Sohail and Shanmugham (2003) conducted an exploratory
study investigating Iactors that infuence Internet banking acceptance
among retail users oI banking services. The study utilized 300
responses Irom students and staII at two leading universities in
Malaysia. The respondents evaluated 27 Iactors that they Ielt would
infuence their use oI Internet banking. The study Iound that trust in
one`s bank infuences him or her to use Internet banking. Other Iactors
that infuence the adoption were Internet accessibility, attitude towards
change, computer and Internet access costs, security concerns, ease
oI use, and convenience.
In another study, Md Nor and Pearson (2007) investigated the
eIIect oI trust on Internet banking acceptance. The study was based
on the innovation diIIusion theory (IDT). The results oI the study
showed that trust, relative advantage and trialability were signifcant
Iactors that infuenced attitudes to use Internet banking. Further
examination oI the standard coeIfcients indicated that trust is the most
infuential Iactor. This indicates the importance oI trust in infuencing
individuals in accepting an online service.
Integrating trust and risk with the TAM, Pavlou (2003)
investigated Iactors that infuence consumers to engage in online
transactions. Two empirical studies were conducted involving 103
student and 155 online consumers, respectively. In both samples,
the results oI the study revealed that perceived risk and perceived
useIulness both signifcantly aIIected intention to transact. With
reIerence to trust, trust was Iound to be a signifcant predictor oI
intention to transact. Trust was also Iound to aIIect perceived risk,
perceived useIulness, and perceived ease oI use in both samples.
Using TAM as the theoretical base, GeIen, Karahanna, and
Straub (2003b) investigated trust in online shopping. The study was
conducted on undergraduate and graduate business students. Based
on 213 responses, the results oI the study revealed that trust and two
belieIs identifed by TAM, perceived useIulness and perceived ease
oI use, had signifcant eIIect on purchase intention. Other related
fndings were signifcant eIIect oI these Iactors on trust: calculative-
based belieIs (the vendor has nothing to gain by cheating), structural
assurances (there are saIety mechanisms built into the Web site), and
situational normality (having typical interIace).
In a recent study, Md Nor and Pearson (2008) decomposed
trust into fve dimensions i.e., disposition to trust, perceived structural
assurance, perceived competency, perceived benevolence and
perceived integrity. Utilizing the decomposed theory oI planned
behavior as the main theoretical Iramework, they examined the
relationship oI the fve dimensions oI trust with trust and intention
to use Internet banking. The study was conducted on business
school students and MBAs at Iour public universities in Malaysia.
The results oI the study showed that disposition to trust, perceived
structural assurance, and perceived integrity were signifcant Iactors
that infuenced trust and consequently trust signifcantly infuenced
the intention to use Internet banking. The study supports the
multidimensionality oI trust and its role in infuencing individuals
to adopt Internet banking. Table 1 below summarizes the studies
discussed above.
Source Technology Relevant Findings
Jarvenpaa et al.
(2000)
Internet store (shopping
activities: book as a
giIt, book Ior a course,
holiday trip, work-
related trip)
Attitude and perception oI
risk aIIected the willingness
to buy in an Internet store.
Trust aIIected the attitude
and perception oI risk. Trust
was aIIected by consumer`s
perception oI size and
reputation oI the store.
GeIen (2000) Internet store
(buying book)
Intended inquiry and
intended purchase was
infuenced by trust and
trust was aIIected by one`s
disposition to trust.
Suh and Han (2002) Internet banking Trust signifcantly aIIected
the intention to use and
attitudes toward using
Internet banking.
George (2002) Internet purchase Privacy and Internet
trustworthiness signifcantly
infuenced attitude toward
Internet purchasing. Attitude
had a signifcant eIIect on
intent to purchase.
GeIen (2002) Internet store (buying
book)
Trust infuenced the
purchase intention. Trust
was aIIected by integrity and
benevolence.
Bhattacherjee
(2002)
Internet banking Familiarity was signifcant
Iactor in infuencing
consumers` willingness to
transact. Trust infuenced
consumers` willingness to
transact online. Trust was
infuenced by Iamiliarity.
GeIen et al. (2003a) Internet store
(buying book)
Trust was a signifcant
predictor oI purchase
intention Ior both potential
and repeat customers.
Familiarity and disposition
to trust were signifcant on
trust Ior both customers.
Sohail and
Shanmugham
(2003)
Internet banking Trust was a signifcant Iactor
that infuences individuals
to use Internet banking.
Other Iactors that have
been Iound to aIIect the use
were Internet accessibility,
attitude towards change,
computer and Internet
access costs, security
concerns, ease oI use, and
convenience.
Pavlou (2003) Internet store Trust was a signifcant
predictor oI intention
to transact. Trust had
a signifcant eIIect on
perceived risk, perceived
useIulness, and perceived
ease oI use.
GeIen et al. (2003b) Online book vendor and
CD vendor
Trust had a signifcant eIIect
on purchase intention. Trust
was aIIected by calculative-
base belieIs, structural
assurances, and situational
normality.
Teoh and Md Nor
(2007)
Mobile banking Perceived useIulness,
perceived ease oI use and
perceived security were
signifcant Iactors that aIIect
the intention to use mobile
banking.
Md Nor and Pearson
(2007)
Internet banking Trust, relative advantage
and trialability were Iound
signifcantly aIIected
attitude towards Internet
banking. Attitude was
signifcant Iactor that aIIect
the intention to use Internet
banking.
Md Nor and Pearson
(2008)
Internet banking Disposition to trust,
perceived structural
assurance, and perceived
integrity were signifcant
Iactors that infuence trust
and consequently trust
signifcantly infuenced the
intention to use Internet
banking
Table 1: Studies on Trust in Online Environment and their relevant
fndings
CONCLUSION
This chapter provides a brieI overview oI the concept oI trust,
previous studies on trust in online environment and summaries
oI their relevant fndings. Previous studies utilizing trust in their
research model presented in this chapter should not be considered
exhaustive as there are many other studies that have been leIt out. The
purpose oI reviewing previous studies is to show the importance oI
trust in understanding individuals` acceptance to use online services.
Examining previous studies presented in this chapter seems to reveal
that the research track in the study oI trust in online environment
includes taking trust at the Iace value, using antecedents oI trust to
represent the degree oI trust and decomposing the trust construct.
Extending and expanding the studies Irom these three perspectives
and in other online environments may lead us to a better understanding
oI trust in the online environment.
REFERENCES
Bhattacherjee, A. (2002). Individual trust in online frms: Scale development
and initial test. Journal oI Management InIormation Systems, 19(1),
211-241.
GeIen, D. (2000). E-commerce: The role oI Iamiliarity and trust. Omega,
28, 725-737.
GeIen, D. (2002). Refections on the dimensions oI trust and trustworthiness
among online consumers. The DATA BASE Ior Advances in
InIormation Systems, 33(3), 38-53.
GeIen, D., Karahanna, E., & Straub, D.W. (2003a). Inexperience and
experience with online stores: The importance oI TAM and trust.
IEEE Transactions on Engineering Management, 50(3), 307-321.
GeIen, D., Karahanna, E., & Straub, D.W. (2003b). Trust and TAM in online
shopping: An integrated model. MIS Quarterly, 27(1), 51-90.
George, F.F. (2002). Infuences on the intent to make Internet purchases.
Internet Research: Electronic Networking Applications and Policy,
12(2), 165-180.
Jarvenpaa, S.L., Tractinsky, N., & Vitale, M. (2000). Consumer trust in
an Internet store. InIormation Technology and Management, 1,
45-71.
Mayer, R.C., Davis, J.H., & Schoorman, F.D. (1995). An integrative model
oI organizational trust. Academy oI Management Review, 20(3),
709-734.
McKnight, D.H., & Chervany, N.L. (2001). What trust means in e-commerce
customer relationships: An interdisciplinary conceptual typology.
International Journal oI Electronic Commerce, 6(2), 35-59.
Md Nor, K and Pearson, J. M. (2007). The Infuence oI Trust On Internet
Banking Acceptance, Journal oI Internet Banking and Commerce,
12(2), 1-10.
Md Nor, K. and Pearson, J.M. (2008). An Exploratory Study Into The
Adoption oI Internet Banking in A Developing Country: Malaysia,
Journal oI Internet Commerce, 7(1), 29-73.
Pavlou, P.A. (2003). Consumer acceptance oI electronic commerce:
Integrating trust and risk with the technology acceptance model.
International Journal oI Electronic Commerce, 7(3), 101-134.
Sohail, S., & Shanmugham, B. (2003). E-banking and customer preIerences
in Malaysia: An empirical investigation. InIormation Sciences,
150, 207-217.
Suh, B., & Han, I. (2002). EIIect oI trust on customer acceptance oI Internet
banking. Electronic Commerce Research and Applications, 1,
247-263.
Teoh, C. H. and Md Nor, K. (2007). Consumer Acceptance oI Mobile
Banking, Journal oI Technology Management and Entrepreneurship,
6(1), 1-17.

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