The adoption of internet banking:

An institutional theory perspective

Received (in revised form): 30th October, 2007

Weihua Shi*
is a visiting assistant professor at the University of Southern Mississippi. She received her MA degree in Economics from Vanderbilt
University and her PhD in Finance from the City University of Hong Kong. Her research interests include behavioural finance, risk
management and banking.

Narcissus Shambare
is an assistant professor of Business Information Systems (BIS) and Director of BIS programmes at the College of Saint Mary, Omaha,
Nebraska, USA. He has more than 20 years experience in business management in manufacturing, wholesale and retail, services
and banking industries. His research interests include information security, strategic management and business education.

Jian Wang
is a professor of International Business at the University of International Business and Economics. His research interests include
e-business, international business and international trade law and practice. Dr Wang is Director of the International Business
Bridge (IBB). He has extensively published in the areas of international business, electronic business and others.

Abstract Several models have been proposed in the literature to understand technology
acceptance in which social environmental factors are not primarily addressed. Drawing upon
the social contagion theory and institutional theory, this study proposes a model to examine
three social environmental factors of normative, coercive and mimetic pressures within the
internet banking (IB) context. The model is tested using survey data from 124 respondents.
The results reveal that normative and coercive pressures significantly influence the attitude
and intention of adopting IB, while mimetic pressures appear not to. Attitude plays a
mediating role between institutional pressures and IB adoption. This study spearheads an
institutional analysis at the individual level within the IB context. The findings also provide
valuable insights for bank managers to manage the IB services.
Journal of Financial Services Marketing (2008) 12, 272–286. doi:10.1057/fsm.4760081

Keywords Internet banking, institutional theory, social contagion

INTRODUCTION number of banks and financial services

companies have been evolving their approach
The increasing popularity of the internet has
from a ‘bricks and mortar’ to a ‘clicks and
produced a paradigm shift in the method of
mortar’.1–3 Thus, for the success of most
conducting business and has created a vast
banks, it has become critical in attracting
number of challenges for businesses to
existing bank customers to adopt the options
conduct transactions using this new
of internet banking (IB).
distribution channel.1 Banking is a very
IB provides both banks and consumers
responsive industry that can find value in the
with benefits. On one side, by offering IB
use of internet technologies, so an increasing
services, banks can benefit from having fewer
staff and physical branches. It also creates
*Correspondence: College of Business, University of Southern huge cost savings through scale effects in
Mississippi – Gulf Coast, Long Beach MS 39560, USA. bank operations.4 On the other side, IB can
Tel: + 1 228 865 4505;
Fax: + 1 228 865 4588;
be extremely beneficial to consumers by
e-mail: Weihua.shi@usm.edu providing cost and time savings, reduced

272 Journal of Financial Services Marketing Vol. 12, 4 272–286 © 2008 Palgrave Macmillan Ltd 1363-0539 $30.00
www.palgrave-journals.com/fsm

dependency on time and location, quick
responses to complaints, more service variety
and improved services quality.5–7 Owing to
the enormous benefits for both parties, IB
has motivated both banks and consumers to
offer and use IB services, respectively. In fact,
IB adoption in the US has averaged 15
per cent year-to-year growth during the
2001–2006 period.8
However, as internet technology is a rather
recent innovation, it is still a great challenge
of overcoming the resistance of existing bank
customers to adopt this new technology in
handling their financial transactions.4 It is
critical, therefore, to understand what factors
facilitate or inhibit IB adoption.
A considerable number of studies in the
literature have examined IB adoption. Most
of these studies were from technical and
customer personal perspectives. For example,
Shih and Fang1 and Liao and Shao9
examined the influences of attitude and
norm on behavioural intention and actual
usage of IB using the Theory of Reasoned
Action (TRA) and the Theory of Planned
Behavior (TPB). Chau and Lai,2 Cheng et
al.,7 Wang et al.,10 and Sukkar and Hasan11
investigated perceived usefulness and
perceived ease of use of IB using the
Technology Acceptance Model (TAM). Tan
and Teo12 investigated the impact of
consumer’s attitude, norms and perceived
behavioural control on IB adoption.
Hernandez and Mazzon13 proposed and
tested a more comprehensive model in which
the consumer’s innovation characteristics
(eg relative advantage, demonstrability and
visibility), norms and individual characteristics
(eg education, age, gender and income) were
proposed to influence the intention and
actual usage of IB.
However, due to the exposure to the social
environment, social actors (eg individuals,
groups and organisations) are likely to
develop their beliefs, attitudes and behaviours
consistent with those of their environments.14
Therefore, we speculate that social factors
also play an essential role in influencing IB
© 2008 Palgrave Macmillan Ltd 1363-0539 $30.00 Vol. 12, 4 272–286
The adoption of internet banking
adoption. However, there is a paucity of
studies that have adequately addressed the
social factors in IB adoption context. To fill
this gap, drawing upon the social contagion
theories and institutional theories, this study
postulates that coercive, normative and
mimetic social forces are also significant
determinants of IB adoption.
In the following sections, the theoretical
background, conceptual model and research
hypotheses are presented, followed by a
discussion of the research methodology. This
is followed by the analyses and results. Finally,
the managerial and theoretical implications,
limitations and conclusions of the study are
presented.
THEORETICAL BACKGROUND AND
CONCEPTUAL MODEL
Theoretical background
The social contagion theory argues that the
social actors’ (eg individuals, groups and
organisations) beliefs, attitudes and behaviours
are related to the beliefs, attitudes and
behaviours of others in the network to
which they are linked. To be more specific,
within the technology acceptance context,
social contagion refers to the social actors’
attitudes of technology adoption that are
significantly influenced by other actors
(eg family and colleagues for individuals,
customers, suppliers and partners for
companies) who have direct connections or
share similar social networks. The underlying
logic of the influences of social ties on social
actors’ attitudes and behaviours towards
innovation adoption is that the social ties
may have built up a collection of implicit
rules, which may be both imposed on and
upheld by the actors’ attitudes and
behaviours.
In the literature, there are several
innovation adoption theories that consider
these implicit and implied rules. The TRA,
proposed by Fishbein and Ajzen,15 posits that
behavioural intentions are determined by an
Journal of Financial Services Marketing 273
 Shi, Shambare and Wang
individual’s attitude toward the behaviour
and subjective norms surrounding the
performance of the behaviour. The TPB,
proposed by Ajzen,16 is an extension of TRA.
It posits that behavioural intentions are a
function of an individual’s attitude toward the
behaviour, the subjective norms and the
individual’s perception of behavioural control.
The TAM is an adaptation of TRA in the
information systems (IS) field and posits that
perceived usefulness, perceived ease of use
and subjective norm determine an
individual’s intention to adopt an
innovation.17 The Model of Personal
Computer Utilization (MPCU) proposed
such factors as technology complexity,
facilitating conditions and social factors as
influencing innovation adoption.18,19 In
Roger’s and Moore and Benbasat’s Innovation
Diffusion Theory (IDT),20,21 factors such as
relative advantage, ease of use and image are
postulated to influence individual technology
acceptance. Parasuraman22 proposed the
Technology Readiness Index (TRI) to
measure readiness to embrace technology-
based products and services. In this model,
customers’ propensity to adopt new
technologies is from ‘an interplay between
drivers (optimism, innovativeness) and
inhibitors (discomfort, insecurity) of
technology readiness’ (p. 317). However, only
personal factors, rather than any social factors,
are considered in this model. Although most
of these models consider various social
influence factors, such as subjective norm in
TRA, TPB and TAM, social factors in
MPCU, and image in IDT, the discussion was
generally fragmented and there is a lack of
specific focus on such issues.23 Therefore, in
the present study, we apply institutional
theory to organise these factors and expand
their depth and breadth.
The institutional theory posits that the
beliefs, attitudes and behaviours of individuals
and groups are strongly influenced by various
networks and interactions.24 It also addresses
the role of institutions in explaining the
behaviour of social actors, and provides a
274 Journal of Financial Services Marketing Vol. 12, 4 272–286
perspective which can help to assess the
formal and informal rules (ie institutions) that
can strongly shape the beliefs, attitudes and
behaviours of social actors.25–27 The
institutional theory holds that the institutions’
influences on the beliefs, attitudes and
behaviours of social actors are subtle but
pervasive.
Scott24 defined institutions as ‘social
structures that have attained a high degree of
resilience’ (p. 48). Once internalised, that is
encoded into actors through a socialisation
process, institutions transform to a pattern of
attitudes and behaviours, which will shape
actors’ future attitudes and behaviours and
provide stability and meaning to social life.
After institutions are established, they become
authoritative guidelines for social behaviours
and are taken for granted.28 Afterwards, the
actors may not even realise that their
behaviours are in fact partly shaped by
institutions.
The institutional theory focuses on social
actions taken to gain legitimacy rather than
for monetary or utility optimisation.29 It
suggests that once institutions are established,
they create constraints that are locally rational
in an economic sense, but collectively they
may be suboptimal.30 From this view,
institutional theories are quite different from
the rational economic perspective, which
emphasises individual self-interest, conscious
decision making, and economic optimisation.
Although the institutional theory has been
primarily applied at the organisational
level,30–32 it is nonetheless applicable at the
individual level. Scott24 pointed out that
institutions can operate at the level of
‘localized interpersonal relationships’ (p. 48).
Hughes33 also argued that ‘institutions exist
in the integrated and standardized behavior
of individuals’ (p. 319). In fact, early
institutional theory and analyses, especially in
economics areas, were at the individual level.
For example, Veblen34 argued that ‘not only
is the individual’s conduct hedged about and
directed by his habitual relations to his
fellows in the group, but these relations,
© 2008 Palgrave Macmillan Ltd 1363-0539 $30.00

being of an institutional character, vary as the
institutional scheme varies’ (p. 629). Based
on this argument, his later study35 defined
the institutions as ‘settled habits of thought
common to the generality of man’ (p. 239).
Similarly, Cooley36 argued that ‘the individual
is always cause as well as effect of the
institution’ and ‘in the individual the
institutions exist as habit of mind and of
action’ (p. 314).
Conceptual model and hypotheses
Drawing upon the social contagion theory
and institutional theory, we propose a
conceptual model (see Figure 1) to
investigate how institutional forces influence
the acceptance of IB by individuals. In the
proposed model, we postulate that three
institutional forces influence both the
attitudes and the intention of adopting IB.
Attitude and intention
Attitude and adoption intention are two
widely examined variables in the literature of
technology acceptance. Attitude is defined as
the individual’s feelings about performing a
behaviour. It is determined through assessing
beliefs towards the consequences arising from
a behaviour and the desirability of these
consequences.16 It is a common supposition
that individuals’ social behaviours are
motivated by their behavioural attitudes. For
example, TAM postulates the attitudinal
explanations of intention to use a specific
technology or service.17 In addition, the
TRA and TPB models also posit that attitude
(together with subjective norm and perceived
behavioural control), is an essential
determinant of adoption intention.15,16
Empirically, the literature has illustrated that
attitude has a significant influence on the
Institutional Forces
• Coercive
• Normative
• Mimetic
Figure 1 Conceptual model
© 2008 Palgrave Macmillan Ltd 1363-0539 $30.00 Vol. 12, 4 272–286
The adoption of internet banking
intention to adopt IB.1,2,7 Therefore, we
postulate:
H1: Customers’ attitudes positively influence
their intention to adopt IB.
Institutions
In TAM, perceived usefulness and perceived
ease of use are determinants of attitude, while
no determinant is incorporated to explain
attitude in the original TRA and TPB. Shih
and Fang 1 extended TRA by proposing
information quality, transaction speed, user-
friendliness, and security as determinants of
attitude in the IB context. However, as
discussed already, those proposed determinants
of attitude are technical and personal level
factors. In the present study, we postulate
institutional forces as determinants of attitude.
The institutional theory sheds light onto
the importance of institutional environments
to attitudes and behaviours of social actors.
The theory argues that in modern societies,
social actors are typified as systems of
rationally ordered rules and behaviours.37,40
Therefore there are widespread social
conceptions of appropriate structures,
attitudes and behaviours. The institutional
theory posits that social actors face pressures
to conform to these shared notions of
appropriate structures, attitudes, and
behaviours, which suggests that social actors
are subject to pressures to be compatible with
the shared notions.38 DiMaggio and Powell30
and Scott 24 suggested three institutional
pressures — coercive, normative and mimetic.
These three elements move ‘from the
conscious to the unconscious, from the
legally enforced to the taken for granted’
(p. 36).39
Attitude Intention
Journal of Financial Services Marketing 275
 Shi, Shambare and Wang
Coercive pressures are defined as formal or
informal pressures exerted on social actors to
adopt the same attitudes, behaviours and
practices, because they feel pressured to do so
by more powerful actors.30 Previous
empirical evidence suggests that, at the
organisational level, coercive pressures may
stem from a variety of sources, like resource-
dominant organisations (eg suppliers,
customers), regulatory bodies and parent
corporation.40 In general, there are two types
of coercive pressures — competition and
regulation. Competitive pressure arises from
the threat of losing competitive advantage.
Regulatory pressure may rise from
government agencies and professional
regulatory bodies.29 The literature has cited
the influence of coercive pressures on
innovation acceptance. For example, Wang
and Cheung41 found that coercive pressure
was positively related to travel agencies’
adoption of e-business. Zhu et al.42 indicated
that the regulatory environment plays an
important role in e-business diffusion.
At the individual level, it seems unlikely
that there are coercive pressures from
regulatory bodies and resource-dominant
organisations identified at the organisational
level. However, at the individual level, IB
individuals may still face coercive pressures
from other sources. For example, to use such
financial services such as mortgage, loan and
retirement account management, banks may
require users to embrace IB. Employees may
be required to use IB for payroll checks.
Therefore, we hypothesise:
H2: Individuals experiencing higher coercive
pressure are more likely to use IB.
Normative pressures occur when social actors
voluntarily, but unconsciously, copy other
actors’ same attitudes, behaviours and
practices. The institutional theory suggests
that social actors are more likely to imitate a
certain action if that action has been taken
by a large number of other actors. Social
276 Journal of Financial Services Marketing Vol. 12, 4 272–286
actors are then compelled to adopt certain
behaviour due to their desire for legitimacy
and not necessarily for suitability.43 However,
this imitation or copying is not coerced by
any powerful actors, neither is it conscious.
On the contrary, attitudes, behaviours and
practices demonstrated for a long time by
most actors in the same social context
become so legitimised as the ‘right’ way
things are done that individuals often come
to believe that these practices and behaviours
represent the ‘only’ way to do things.29 The
normative pressures may lead social actors
who have not adopted the innovation to
experience dissonance and hence discomfort
when peers whose approval they value have
adopted the innovation.30,44 Previous studies
have demonstrated this imitation. For
example, Granovetter45and Krassa46 suggest
that decisions to engage in a particular
behaviour depend on the sheer number
of similar others in the environment that
have already done likewise.
In the context of IB, normative pressures
suggest that individuals will be more likely to
adopt IB if they perceive that a large number
of other individuals in their social network
have already adopted IB. In many cases,
individuals may be afraid that they will be
deemed ‘old fashioned’ or ‘laid back’ if they
do not follow the current trend. These
phenomena have been described before as
Bandwagon theories.47 Therefore, we
hypothesise:
H 3: Individuals experiencing higher normative
pressure are more likely to use IB.
Mimetic pressures force social actors to behave
by seeking examples of established practices
and behaviours to follow through voluntarily
and consciously copying the same practices and
behaviours of other successful and high-status
actors.30 They mimic the course of action of
such successful and high-status actors due to
the belief that actions taken by successful
actors will be more likely to yield positive
© 2008 Palgrave Macmillan Ltd 1363-0539 $30.00

outcomes. In addition, through imitating the
actions of other successful and high-status
actors, actors can economise on search
costs and minimise experimentation costs,
and avoid risks inherent from being the
first-movers.40
In the IB context, individuals may
selectively imitate the attitudes and
behaviours that have been adopted by
higher-status individuals. Individuals may
believe that they can acquire higher status or
associate with higher status individuals by
imitating attitudes and behaviours taken by
elite groups and high-status individuals.
Therefore, it suggests that individuals will be
more likely to adopt IB if their social ties
who they perceive as high-status have already
adopted IB. Therefore, we hypothesise:
H4: Individuals experiencing higher mimetic
pressure are more likely to use IB.
Controls
Demographic variables may have the
potential to influence IB adoption, especially
when social factors are considered. We
include gender, age and income in our
research model as control variables.
The literature suggests that gender and age
are important variables when examining
social factors. For example, women tend to
be more sensitive to others’ opinions and
thus more salient to social influences.23,48
Similarly, older individuals are more likely to
be salient to social influences.49 In addition,
wealthy individuals appear more likely to use
IB.50 Individuals with high income may
subscribe to more banking services, thus the
use of IB may bring more benefits to those
individuals. Therefore, this may suggest that
they may be more inclined to adopt IB. Tan
and Teo12 found that higher banking needs
lead to higher IB adoption. Roger20
suggested that IB is more likely to be
adopted if the innovation meets a felt need.
Therefore, we speculate that individuals
© 2008 Palgrave Macmillan Ltd 1363-0539 $30.00 Vol. 12, 4 272–286
The adoption of internet banking
with higher incomes are more likely to
adopt IB.
METHODOLOGY
Measures
To enhance the content validity of the
measurements, the questionnaire was designed
based on an intensive review of the literature.
The questionnaire was then reviewed by
academic researchers with expertise in survey
methodology, IB, and innovation adoption.
Wherever possible, existing measures that had
been used in previous studies were adopted.
The questionnaire was also pilot-tested using
bank customers who had IB experience. The
feedback from the pilot test was used to
improve the readability and the quality of
the questions in the instrument. The
questionnaire is shown in the appendix, and
the design for the measurement items is
described below.
The measures for the institutional forces
(ie normative, coercive and mimetic) were
adapted from Liang et al.32 and Teo et al.40
Specifically, for normative forces, the
respondents were asked to indicate the
degree to which others in their social
network were using IB. For coercive force,
the respondents were asked the degree to
which IB was required for their financial
transactions. For mimetic force, the
respondents were asked the degree to which
they agreed that individuals who were using
IB had a high status. In all these measures, a
Likert-type scale of 1–7 was used. A score
of 1 indicates ‘strongly disagree’ with the
statement, whereas 7 indicates ‘strongly agree’
with the statement.
The scale with three items for adoption
intention of IB was adapted from Cheng
et al.,7 Venkatesh and Morris48 and
Hernandez and Mazzon.13 The scale with
four items for attitudes was adapted from
Cheng et al.7 and Venkatesh et al.,23 Similarly,
a Likert-type scale of 1–7 was used for these
measures.
Journal of Financial Services Marketing 277
 Shi, Shambare and Wang

The measures for controls of age, income Table 1 Respondent profile

and gender were adapted from Cheng et al.7 Per cent
and Tan and Teo.12 The respondents were
Gender
asked to identify the pre-defined groupings Male 41
of their age, income and gender. Female 59

Age
Data collection Under 24 years 39.1
25–34 years 31.5
35–49 years 26.1
The participants used in the study were non- 50 or over years 3.3
traditional students who were all full-time
Income
employees with several years of working Less than $20,000 32.6
experience. Following Chau and Lai,2 we $20,000~$29,999 19.6
consulted several experienced bankers who $30,000~$49,9999 25
$50,000~$69,999 10.9
were in charge of the IB services. Similar to $70,000~$89,999 3.3
Chau and Lai,2 these banking professionals $90,000 or more 3.3
Missing 5.4
indicated that their target customers of IB
services would be college-educated,
computer-literate, 20–50-year-olds and
DATA ANALYSES AND RESULTS
employed individuals. This segment of target
customers is also consistent with the previous We used partial least squares (PLS) to analyse
studies.50,51 Therefore, our sampling of non- our data. Unlike LISREL-type structural
traditional students was considered equation modelling (SEM), which is based
appropriate. on the covariance structure of the latent
A total of 152 questionnaires were variables, PLS is a component-based
distributed during class. Individuals were approach,52 thus can avoid two problems:
informed that the participation in the study inadmissible solutions and factor
was voluntary and their responses would be indeterminacy.53 PLS examines the
kept confidential and would be analysed only significance of the relationships between
at the aggregate level. A total of 145 research constructs and the predictive power
questionnaires were returned. Twenty-one of of the dependent variable54; thus it is better
them were partially completed and suited for explaining complex relationships
consequently excluded from the data analysis, and building theories, as Wold55 argued ‘In
resulting in a total of 124 usable responses large, complex models with latent variables
(82 per cent). PLS is virtually without competition’ (p. 590).
The respondent profile is presented in In addition, PLS places minimal restrictions
Table 1. Among the 124 respondents, 92 per on the sample size and residual distributions.56
cent respondents were using various IB PLS analyses simultaneously a measurement
services, and 8 per cent were not using model describing the relationships between a
any IB service. Regarding gender and age, research construct and the indicators used to
41 per cent were male, 59 per cent female, measure the construct (ie factor loadings) and
39.1 per cent were under 24 years old a structural model depicting the relationships
and 57.6 per cent were between 25 and 50 between research constructs (ie path
years old. As for income, most of them had coefficients).53
annual income of less than $70,000, among
which 32.6 per cent were less than $20,000,
Measurement model
19.6 per cent were between $20,000 and
$30,000, and 35.9 per cent were between We display descriptive statistics for the
$30,000 and $70,000. measurement items in Table 2. Unlike

278 Journal of Financial Services Marketing Vol. 12, 4 272–286 © 2008 Palgrave Macmillan Ltd 1363-0539 $30.00
 The adoption of internet banking

Table 2 The measurement model

Construct Item Loading Std. Error t-Statistic Composite AVE

reliability

Normative NF1 0.7025 0.1603 4.3835 0.891 0.735

NF2 0.9551 0.1063 8.9866
NF3 0.8938 0.1414 6.3209

Coercive CF1 0.9400 0.0340 27.6813 0.845 0.651

CF2 0.8067 0.1022 7.8914
CF3 0.6470 0.1860 3.4793

Mimetic MF1 0.9607 0.1294 7.4256 0.961 0.891

MF2 0.9603 0.1200 8.0058
MF3 0.9097 0.1427 6.3733

Attitude BE1 0.9468 0.0126 75.2334 0.972 0.895

BE2 0.9109 0.0328 27.7457
BE3 0.9660 0.010 94.4310
BE4 0.9603 0.0076 126.4765

Intention IN1 0.9702 0.0075 128.9980 0.979 0.939

IN2 0.9599 0.0142 67.5187
IN3 0.9768 0.0105 93.3523

Age AGE 1.00 0.00 0.00 NA NA

Gender GEN 1.00 0.00 0.00 NA NA
Income INC 1.00 0.00 0.00 NA NA
Note: All t-statistics are significant at the 0.001 level; AVE=Average Variance Extracted; NA: not applicable to single-item measures

LISREL-type SEM which provides global
good-of-fitness indices, PLS provides
t-statistics for factor loadings. As shown in
Table 2, all of the t-statistics of the factor
loadings were significant at the p < 0.01 level.
Based on the results of the measurement
model, we analysed the convergent validity,
discriminant validity and reliability of all of
the multiple-item scales, following the
guidelines in the literature.57 We assessed
reliability in terms of item reliability and
composite reliability. Item reliability was
examined by means of factor loadings of the
items of the construct. It is widely accepted
that items with loadings of 0.7 or more have
adequate item reliability. Table 2 shows that
except for item 3 of the construct coercive
forces (CF3), all other factor loadings are
higher than 0.7, indicating acceptable item
reliability. We kept CF3 in the model due to
its closeness (0.6470) to the threshold value
of 0.7 and its content validity. Construct
composite reliability is similar to and superior
to Cronbach’s alpha because it considers the
actual factor loadings instead of assuming an
equal weight for each item.57 The composite
reliabilities in our measurement model ranged
from 0.845 to 0.979, which are all above the
recommended value of 0.70,58 suggesting
adequate construct reliability.
We assessed convergent validity in terms
of average variance extracted (AVE), which
explains the variance that is measured by the
construct in relation to the measurement
error. Convergent validity requires an AVE
of no less than 0.50.57 Table 2 shows that all
AVE values were above the recommended
value of 0.50 (ranging from 0.651 to 0.939),
thus demonstrating adequate convergent
validity.
Discriminant validity was assessed by
comparing the AVE of each individual
construct with the shared variances between
this individual construct and all of the other
constructs. A higher AVE than shared
variance for an individual construct suggests
discriminant validity.57 Table 3 shows the
inter-construct correlations off the diagonal

© 2008 Palgrave Macmillan Ltd 1363-0539 $30.00 Vol. 12, 4 272–286 Journal of Financial Services Marketing 279
 Shi, Shambare and Wang
Table 3 Correlations of latent variables
X1 X2
Mimetic (X1) 0.944
Coercive (X2) 0.386 0.807
Normative (X3) 0.282 0.268
Age (X4) − 0.116 − 0.111
Income (X5) 0.072 0.037
Gender (X6) − 0.137 0.015
Attitude (X7) 0.096 0.392
Intention (X8) 0.077 0.343
Note: Square root of Average Variance Extracted (AVE) is shown on the diagonal of the matrix; Inter-construct correlation is shown off the
diagonal; NA: not applicable to single-item measures
of the matrix. A comparison of all of the
correlations and square roots of the AVEs on
the diagonal indicated adequate discriminant
validity.
Structural modelling
The structural model was assessed by
estimating the path coefficients and the R2
values. Path coefficients indicate the strength
of the relationships between the independent
variables and dependent variable. R2 values
indicate the amount of variance explained by
the exogenous variables and measure the
predictive power of the structural models.59
We calculated path coefficients and t-statistics
for hypothesised relationships using a
bootstrapping technique. Results of
hypothesis testing are presented in Figure 2
and discussed in the following paragraphs.
The significant path coefficient from
attitude to adoption (b = 0.814, p < 0.01)
provided support for H1. As indicated by path
coefficients, coercive and normative forces had
significant influences on attitude (b = 0.376
and 0.214, respectively; p < 0.01). This result
confirmed our theoretical expectation and
provided support for H2 and H3. However, as
indicated by path coefficient, mimetic forces
had no significant impacts on attitude
(b = 0.109, NS), suggesting rejection of H4.
Regarding controls, the paths from age,
income and gender to IB adoption were all
insignificant (b = − 0.042, 0.058, 0.044,
respectively).
280 Journal of Financial Services Marketing Vol. 12, 4 272–286
X3 X4 X5 X6 X7 X8
0.857
− 0.036 NA
0.055 0.414 NA
0.115 0.142 − 0.081 NA
0.284 − 0.101 0.102 0.032 0.946
0.339 − 0.094 0.120 0.059 0.825 0.969
As shown in Figure 2, our model
explained 19.8 per cent of the variance in
attitude and 68.5 per cent in IB adoption
intention. The magnitude of these R2s
provides additional evidence in support of
the research model.
Post hoc analyses
As demonstrated in Figure 2, normative and
coercive forces relate significantly to attitude,
and in turn attitude relates to IB adoption.
This causal chain signifies the mediating
effect of attitude on the relationship between
institutional forces and IB adoption. To test
this mediating effect, we followed Baron and
Kenny’s procedure60 to examine two more
models. The first model (see Figure 3)
removes the mediator of attitude and
connects all three institutional forces to
adoption directly. The second model connects
all three institutional forces directly to IB
adoption in addition to the mediating links,
as shown in Figure 4. Another run of PLS
analysis was conducted to test these two
models. The model shown in Figure 3
yielded significant links from normative and
coercive forces to IB adoption. In addition,
the explained variance of IB adoption
significantly drops from 0.685 to 0.226. The
results of the model shown in Figure 4
demonstrate that the direct effects of
normative and coercive forces on IB
adoption are insignificant. Meanwhile, the
explained variance of IB adoption only
© 2008 Palgrave Macmillan Ltd 1363-0539 $30.00
 The adoption of internet banking

Institutional Forces

Coercive

H2
:0
.3
Age

76
ns

*
042
-0.

H3: 0.214* H1: 0.814* 0.058ns

Normative Attitude Adoption Income
0.0
R2=0.198 R2=0.685 44 ns

9 ns
10
Gender

4:
0.
H

Mimetic

*p<0.01; ns: not significant

Figure 2 Results of conceptual model

slightly increases from 0.685 to 0.696. These
results jointly indicate that the influences
of normative and coercive forces on IB
adoption are completely mediated by attitude.
However, regardless of the model we
tested, mimetic forces had no significant
influence on either attitude or IB adoption.
This remains an interesting question for
future research.
DISCUSSION AND CONCLUSIONS
This study examined social factors by
applying social contagion theory and
institutional theory. The analysis results
provide insightful managerial and theoretical
implications as discussed in the following
section.
Implications
With the preceding analysis results, we
demonstrated how institutional forces
influence attitude and intention of using IB.
The results have managerial implications for
bank managers and theoretical implications
for researchers.
First, our analysis illustrated that two types
of institutional forces, coercive and normative,
have significant influence on attitude and
intention to use IB. These findings may shed
light on how bank managers could better
market their IB services and, thus accelerate
the rate of adoption. The results indicate that
IB can benefit from social influences that
could result in potential customers jumping
onto the IB bandwagon. When an increasing
number of customers jump onto the IB
bandwagon, banks’ investments in IB could
be recouped more quickly. To be specific,
banks may need to work on improving
normative and coercive forces. Regarding
normative forces, banks may need to build an
IB user base and conduct referral champions
to create normative expectations. Regarding
the coercive forces, banks may provide
certain services available only on the internet
and ‘provide inducements’ for IB users
(p. 53).24 In addition, banks may work with
other businesses, such as furniture stores,
online stores, and mortgage brokers. When
customers use those services, they may be
required to use the corresponding IB services
associated with those businesses.

© 2008 Palgrave Macmillan Ltd 1363-0539 $30.00 Vol. 12, 4 272–286 Journal of Financial Services Marketing 281
 Shi, Shambare and Wang

Institutional Forces

Coercive

0.3
07 *

ns Age
7
13
-0.

0.259* 0.161ns
Normative Adoption Income

0.0
R2=0.226 44 ns

ns
85 Gender
0.0

Mimetic

*p<0.01; ns: not significant

Figure 3 Results of model with direct effects only

Institutional Forces

0.012ns
Coercive
0.3
85
*

ns Age
0.114ns 03
8
-0.

0.206* 0.789* 0.054ns

Normative Attitude Adoption Income
0.0
R2=0.203 R2=0.696 29 ns
2 ns

Gender
10
0.

0.021ns
Mimetic

*p<0.01; ns: not significant

Figure 4 Results of model with both direct and indirect

Secondly, our results revealed that coercive (b = 0.376, 0.214, respectively). This finding
pressures have higher influences on attitude suggests that it may be more efficient for
and intention than normative pressures banks to exert coercive forces than normative

282 Journal of Financial Services Marketing Vol. 12, 4 272–286 © 2008 Palgrave Macmillan Ltd 1363-0539 $30.00

forces to promote the adoption of their IB
services.
Thirdly, our analysis showed no significant
influence of mimetic institutional forces on
attitude or intention of using IB. It appears
that the high profiles of IB adopters may not
influence IB adoption of others with lower
profiles. This finding suggests that bank
managers may not need to segment their
potential IB customers according to their
profiles for this purpose.
Fourthly, the results demonstrated that
attitude plays a mediating role between
institutional forces and intention. This finding
clearly depicts a mechanism in which the
institutional forces, particularly coercive and
normative, influence the formation of
consumers’ attitudes toward using IB, which in
turn determine the intention of using IB. It
suggests that bank managers should improve
their services to promote consumers’ positive
attitude. It is evident that social factors, in
particular the normative and coercive forces,
are key determinants of attitude.
Fifthly, the control variables of age, gender
and income demonstrate no significant
impact on the intention to use IB. This is
consistent with previous studies on IB. For
example, Lai and Li61 analysed the invariance
across TAM constructs and found that age
and gender have no significant influence on
attitude and intention of using IB. This
finding suggests that the IB market may not
need to be segmented in terms of
demographic characteristics.
Lastly, this study contributed significantly
to the literature from several aspects. To the
best of our knowledge, our study was a
pioneer study of applying the institutional
theory at the individual level, while most
previous studies were involved in the use of
institutional theory at the organisational level.
In addition, our study also contributed to the
technology acceptance literature by
examining institutional factors in IB settings,
while previous studies examined IB primarily
from technical and personal perspectives.
Although previous studies also investigated
© 2008 Palgrave Macmillan Ltd 1363-0539 $30.00 Vol. 12, 4 272–286
The adoption of internet banking
social factors, such as social norm and
image, our model incorporated a richer set
of social factors with expanded depth and
breadth.
Limitation and future research
directions
Although this study makes significant
contributions to the literature and provides
valuable insights, it has also several limitations.
Our findings must be interpreted in the light
of these limitations.
First, our sample involved only a specific
user group in a particular geography. The
findings may not be fully generalisable to
other user groups in other geographies.
Special caution should be taken when
extrapolating or generalising these findings
to different cultural and social environments.
Secondly, although it is common to use
students as survey respondents in academic
research (as has been the case in previous
studies2), it is important to question ‘whether
students differ systematically from the target
population in general’ (p. 138).2 Future
studies may use real bank customers as
participants to re-examine the social
influence factors in IB. Finally, the research
model explained almost 70 per cent and 20
per cent of the variance of intentions and
attitudes, respectively. The 30 per cent and 80
per cent of the variance unexplained suggests
that some factors important to the acceptance
of IB were omitted in our study. Future
studies may use a richer set of variables,
including not only social factors but also
technical and personal factors, as predictors
to provide better explanatory power for IB
behaviours.
REFERENCES
1 Shih, Y. Y. and Fang, K. (2006) ‘Effects of network quality
attributes on customer adoption intentions of internet
banking’, Total Quality Management & Business Excellence,
Vol. 17, No. 1, pp. 61–77.
2 Chau, P. Y. K. and Lai, V. S. K. (2003) ‘An empirical
investigation of the determinants of user acceptance of
Journal of Financial Services Marketing 283
 Shi, Shambare and Wang
internet banking’, Journal of Organizational Computing &
Electronic Commerce, Vol. 13, No. 2, pp. 123–145.
3 Gopalakrishnan, S., Wischnevsky, J. D. and Damanpour,
F. (2003) ‘A multilevel analysis of factors influencing the
adoption of internet banking’, IEEE Transactions on
Engineering Management, Vol. 50, No. 4, pp. 413–426.
4 Mattsson, J. and Helmersson, H. (2005) ‘Internet
banking: Modeling the e-competence of customers with
a text-analytic cit approach’, International Journal of Bank
Marketing, Vol. 23, No. 6, pp. 470–483.
5 Turban, E., King, D., Lee, J. K. and Viehland, D. (2000)
‘Electronic Commerce: A Managerial Perspective’,
Prentice-Hall, Upper Saddle River, NJ.
6 Suh, B. and Han, I. (2002) ‘Effect of trust on customer
acceptance of internet banking’, Electronic Commerce
Research & Applications, Vol. 1, No. 3/4, pp. 247–263.
7 Cheng, T. C. E., Lam, D. Y. C. and Yeung, A. C. L. (2006)
‘Adoption of internet banking: An empirical study in
Hong Kong’, Decision Support Systems, Vol. 42, No. 3,
pp. 1558–1572.
8 Anonymous (2007) ‘Exploring the growth of internet
banking and bill pay’, Community Banker, Vol. 16, No. 4,
p. 68.
9 Liao, S. and Shao, Y. P. (1999) ‘The adoption of virtual
banking: An empirical study’, International Journal of
Information Management, Vol. 19, No. 1, pp. 63–74.
10 Wang, Y. S., Wang, Y. M. W., Lin, H. H. and Tang, T. I.
(2003) ‘Determinants of user acceptance of internet
banking: An empirical study’, International Journal of Service
Industry Management, Vol. 14, No. 5, pp. 501–519.
11 Sukkar, A. A. and Hasan, H. (2005) ‘Toward a model for
the acceptance of internet banking in developing
countries’, Information Technology for Development, Vol. 11,
No. 4, pp. 381–398.
12 Tan, M. and Teo, T. S. H. (2000) ‘Factors influencing the
adoption of internet banking’, Journal of the Association for
Information Systems, Vol. 1, pp. 1–42.
13 Hernandez, J. M. C. and Mazzon, J. A. (2007) ‘Adoption
of internet banking: Proposition and implementation of
an integrated methodology approach’, International Journal
of Bank Marketing, Vol. 25, No. 2, pp. 72–88.
14 Carley, K. M. and Kaufer, D. S. (1993) ‘Semantic
connectivity: An approach for analyzing symbols in
semantic networks’, Communication Theory, Vol. 3, No. 3,
pp. 183–213.
15 Fishbein, M. and Ajzen, I. (1975) ‘Belief, Attitude,
Intention, and Behavior: An Introduction to Theory
and Research’, Addison-Wesley, Reading, MA.
16 Ajzen, I. (1991) ‘The theory of planned behavior’,
Organizational Behavior and Human Decision Processes,
Vol. 50, No. 2, pp. 179–211.
17 Davis, F. D. (1989) ‘Perceived usefulness, perceived ease of
use, and user acceptance of information technology’, MIS
Quarterly, Vol. 13, No. 3, pp. 319–339.
18 Triandis, H. C. (1977) ‘Interpersonal Behavior’, Brooke
Cole, Monterey, CA.
19 Thompson, R. L., Higgins, C. A. and Howell, J. M.
(1991) ‘Personal computing: Toward a conceptual
model of utilization’, MIS Quarterly, Vol. 15, No. 1,
pp. 124–143.
20 Rogers, E. (1995) ‘Diffusion of Innovations’, Free Press,
New York.
284 Journal of Financial Services Marketing Vol. 12, 4 272–286
21 Moore, G. C. and Benbasat, I. (1991) ‘Development of an
instrument to measure the perceptions of adopting an
information technology innovation’, Information Systems
Research, Vol. 2, No. 3, pp. 192–222.
22 Parasuraman, A. (2000) ‘Technology readiness index
(TRI): A multiple-item scale to measure readiness to
embrace new technologies’, Journal of Service Research,
Vol. 2, No. 4, pp. 307–320.
23 Venkatesh, V., Morris, M. G., Davis, G. B. and Davis, F. D.
(2003) ‘User acceptance of information technology:
Toward a unified view’, MIS Quarterly, Vol. 27, No. 3,
pp. 425–478.
24 Scott, W. R. (2001) ‘Institutions and Organizations’, 2nd
edn, Sage, Thousand Oaks, CA.
25 North, D. C. (1989) ‘Institutional change and economic
history’, Journal of Institutional and Theoretical Economy,
Vol. 145, No. 4, pp. 238–245.
26 North, D. C. (1990) ‘Institutions, Institutional Change
and Economic Growth’, Cambridge University Press,
Cambridge, UK.
27 Burkhardt, M. E. (1994) ‘Social interaction effects
following a technological change: A longitudinal
investigation’, Academy of Management Journal, Vol. 37,
No. 4, pp. 868–896.
28 Scott, W. R. (2004) ‘Institutional theory’, in Ritzer, G.
(ed) ‘Encyclopedia of Social Theory’, Sage, Thousand
Oaks, CA, pp. 408–414.
29 Harcourt, M., Lam, H. and Harcourt, S. (2005)
‘Discriminatory practices in hiring: Institutional and
rational economic perspectives’, International Journal
of Human Resource Management, Vol. 16, No. 11,
pp. 2113–2132.
30 DiMaggio, P. J. and Powell, W. W. (1983) ‘The iron cage
revisited: Institutional isomorphism and collective
rationality in organizational fields’, American Sociological
Review, Vol. 48, No. 2, pp. 147–160.
31 Ang, S. and Cummings, L. L. (1997) ‘Strategic response
to institutional influences on information systems
outsourcing’, Organization Science, Vol. 8, No. 3,
pp. 235–256.
32 Liang, H., Saraf , N., Hu, Q. and Xue, Y. (2007)
‘Assimilation of enterprise systems: The effect of
institutional pressures and the mediating role of top
management’, MIS Quarterly, Vol. 31, No. 1, pp. 59–87.
33 Hughes, E. C. (1936) ‘The ecological aspect of
institutions’, American Sociological Review, Vol. 1, No. 2,
pp. 180–189.
34 Veblen, T. B. (1909) ‘The limitations of marginal
utility’, Journal of Political Economy, Vol. 17, No. 9,
pp. 620–636.
35 Veblen, T. B. (1919) ‘The Place of Science in Modern
Civilization and Other Essays’, Huebsch, New York.
36 Cooley, C. H. (1909) ‘Social Organization: A Study of the
Larger Mind’, Charles Scribner’s Sons, New York.
37 Weber, M. (1946) ‘Essays in Sociology’, Oxford University
Press, New York.
38 Burt, R. S. (1987) ‘Social contagion and innovation:
Cohesion versus structural equivalence’, American Journal
of Sociology, Vol. 92, No. 6, pp. 1287–1335.
39 Hoffman, A. W. (1997) ‘From Heresy to Dogma: An
Institutional History of Corporate Environmentalism’,
New Lexington Press, San Francisco, CA.
© 2008 Palgrave Macmillan Ltd 1363-0539 $30.00

40 Teo, H. H., Wei, K. K. and Benbasat, I. (2003) ‘Predicting
intention to adopt interorganizational linkages: An
institutional perspective’, MIS Quarterly, Vol. 27, No. 1,
pp. 19–49.
41 Wang, S. and Cheung, W. (2004) ‘E-Business adoption by
travel agencies: Prime candidates for mobile e-business’,
International Journal of Electronic Commerce, Vol. 8, No. 3,
pp. 43–63.
42 Zhu, K., Kraemer, K. L., Xu, S. and Dedrick, J. (2004)
‘Information technology payoff in e-business
environments: An international perspective on value
creation of e-business in the financial services industry’,
Journal of Management Information Systems, Vol. 21, No. 1,
pp. 17–54.
43 Flanagin, A. J. (2000) ‘Social pressure on organizational
website adoption’, Human Communication Research, Vol. 26,
No. 4, pp. 618–646.
44 Van Den Bulte, C. and Lilien, G. L. (2001) ‘Medical
innovation revisited: Social contagion versus marketing
effort’, American Journal of Sociology, Vol. 106, No. 5,
pp. 1409–1435.
45 Granovetter, M. (1978) ‘Threshold models of collective
behavior’, American Journal of Sociology, Vol. 83, No. 6,
pp. 1420–1443.
46 Krassa, M. A. (1988) ‘Social groups, selective perception,
and behavioral contagion in public opinions’, Social
Networks, Vol. 10, No. 1, pp. 109–136.
47 Abrahamson, E. and Rosenkopf, L. (1993) ‘Institutional
and competitive bandwagons: Using mathematical
modeling as a tool to explore innovation diffusion’,
Academy of Management Review, Vol. 18, No. 3,
pp. 487–517.
48 Venkatesh, V. and Morris, M. G. (2000) ‘Why don’t men
ever stop to ask for directions? Gender, social influence,
and their role in technology acceptance and usage
behavior’, MIS Quarterly, Vol. 24, No. 1, p. 115.
49 Morris, M. G. and Venkatesh, V. (2000) ‘Age differences
in technology adoption decisions: Implications for a
changing workforce’, Personnel Psychology, Vol. 53, No. 2,
pp. 375–403.
50 Sathye, M. (1999) ‘Adoption of internet banking by
Australian consumers: An empirical investigation’,
International Journal of Bank Marketing, Vol. 17, No. 6/7,
p. 324.
51 Akinci, S., Aksoy, S. and Atilgan, E. (2004) ‘Adoption of
internet banking among sophisticated consumer segments
in an advanced developing country’, International Journal
of Bank Marketing, Vol. 22, No. 3, pp. 212–232.
52 Lohmoller, J. B. (1989) ‘The PLS program system: Latent
variables path analysis with partial least squares
estimation’, Multivariate Behavioral Research, Vol. 23, No. 1,
pp. 125–127.
53 Fornell, C. and Bookstein, F. L. (1982) ‘Two structural
equation models: LISREL and PLS applied to consumer
exit-voice theory’, Journal of Marketing Research, Vol. 19,
No. 4, pp. 440–452.
54 Chin, W. W. (1998) ‘Issues and opinion on structural
equation modeling’, MIS Quarterly, Vol. 22, No. 1,
pp. 7–16.
55 Wold, H. (1985) ‘Partial least squares’, in Kotz, S. and
Johnson, N. (eds) ‘Encyclopedia of Statistical Sciences’,
Wiley, New York, pp. 581–591.
© 2008 Palgrave Macmillan Ltd 1363-0539 $30.00 Vol. 12, 4 272–286
The adoption of internet banking
56 Chin, W. W., Marcolin, B. L. and Newsted, P. R. (2003)
‘A partial least squares latent variable modeling approach
for measuring interaction effects: Results from a Monte
Carlo simulation study and an electronic mail adoption
study’, Information Systems Research, Vol. 14, No. 2,
pp. 189–217.
57 Fornell, C. and Larcker, D. F. (1981) ‘Evaluating structural
equation models with unobservable variables and
measurement error’, Journal of Marketing Research, Vol. 18,
pp. 39–50.
58 Nunnally, J. (1978) ‘Psychometric Theory’, 2nd edn,
McGraw-Hill, New York.
59 Barclay, D., Higgins, C. and Thomson, R. (1995) ‘The
partial least squares approach to causal modeling, personal
computer adoption and use as an illustration’, Technology
Studies, Vol. 2, No. 2, pp. 285–309.
60 Baron, R. M. and Kenny, D. A. (1986) ‘The moderator–
mediator variable distinction in social psychological
research: Conceptual, strategic, and statistical
considerations’, Journal of Personality and Social Psychology,
Vol. 51, No. 6, pp. 1173–1182.
61 Lai, V. S. and Li, H. (2005) ‘Technology acceptance model
for internet banking: An invariance analysis’, Information
& Management, Vol. 42, No. 2, pp. 373–386.
APPENDIX
Instrument
Normative forces
— (NF1) I have seen what others do using
their IB
— (NF2) Many people in my social network
(friends, family, and workmates,
classmates) use IB
— (NF3) IB is very visible in my social
network (friends, family, and workmates,
classmates)
Coercive forces
— (CF1) Many of my financing tasks
requires me to use IB
— (CF2) Many transactions can be
accomplished only when using IB
— (CF3) My financial interactions with my
company, friends, and other businesses
force me to use IB
Mimetic forces
— (MF1) People around me who use IB
have more prestige than those who do not
Journal of Financial Services Marketing 285
 Shi, Shambare and Wang

— (MF2) People around me who use IB Age

have a high profile
— (MF3) Using IB is a status symbol for — Under 24 years
people around me — 25–34 years
— 35–49 years
Attitude — over 50 years

— (BE1) Using IB is a good idea Income (before taxes)

— (BE2) I would feel that using IB is
pleasant — Less than $20,000
— (BE3) In my opinion, it would be — $20,000–$29,999
desirable to use IB — $30,000–$49,999
— (BE4) In my view, using IB is a wise idea — $50,000–$69,999
— $70,000–$89,999
Intention — $90,000 or more

— (IN1) I would continue to use IB for my Gender

banking needs
— (IN2) Continuing to use IB for handling — A: Male
my banking transactions is something I — B: Female
would do in the future
— (IN3) I would continue to see myself
using IB for handling my banking
transactions

286 Journal of Financial Services Marketing Vol. 12, 4 272–286 © 2008 Palgrave Macmillan Ltd 1363-0539 $30.00
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.