THESIS-Defense_PPT_ EC, BARRIERS, (ABUALROB_Ahmed)

By Ahmed A. Abualrob
ID #: 201375035
Major : MBA in Int. Business
Thesis Defense
May- 2014
Thesis Committee
Prof. Ju Young KANG, –
Chair
Prof. Jay Ick LIM, –
Member
Prof. Minje
SUNG, - MemberSummer – 2014
The Barriers That Hinder The Adoption of
e-Commerce by Small Businesses in
Palestine : The Role of Israeli Occupation
©Ahmed ABUALROB– Thesis Defense 2014

Chapter 1 : Introduction
Chapter 2 : Literature Review
Chapter 3 : Research Model and
Hypotheses Development
Chapter 4 : Methodology
Chapter 5 : Data Analysis and Results
Chapter 6 : Discussion
Chapter 7 : Conclusion
Outline

Introduction

Small business
 Most of the Palestinian
companies are small-family
business.
(My Country Feature)
Occupation
Role
The research will tackle the
occupation restrictions as a
barriers that prevent e-
Commerce adoption in PAL.
(Research Uniqueness: will
be the first of its kind)
Why this
Topic ?
1
1.
Introducti
on
Research Motivation

 Palestine one of the developing countries that still in
the early stages of ecommerce usage (Qadri, 2013).
 This research focus on the external obstacles and
Internal by making comparison between them.
 One of the external factors had never discussed by previous
researches which is the role of the Israeli occupation.
2
Research Background
1.
Introducti
on

Resistance to
Adopt EC
External Barriers
• Government Instability
• Occupation Restriction
• Logistics Obstacles
Internal Barriers
• Perceive Losses
• Perceive Uncertainty
• Perceive Complexity
E-Commerce
Mediated Factors
•Perceive Risk
•Perceive Behavioral Control
3
Ecommerce Barriers
1.
Introducti
on

Research
Problem
 Lack of the studies
that had tackled
these Obstacles.
 Needed to study the external
hindrances that affect
the adoption of EC in Palestine
 Necessity to identify
these rampant Problems,
to help decision makers
to find a proper solution
In the near future.
Problem Statement
4
1.
Introducti
on

 Increasing the
awareness level
among business
owners in Palestine.
 The first step to go
beyond these
restraints by
examining them
scientifically.
 The wide adoption of EC
by SB. in Palestine will
have a great impact
on the economy.
 Induce the government
to find solutions.
Importance of the Study
5
1.
Introducti
on

Research
Objectives
B
E
C
D
A
Explore the factors that
hinder e-commerce
adoption by small
businesses in Palestine.
Identify the role of the Israeli Occupation
in preventing EC adoption in PAL.
Analyze the external
and internal variables
to determine whether
inner or outer factors
are more significant.
Adding a new study that
Formulate the EC barriers
In Palestine, as we lack of
studies that had tackled
this issue so far.
Come up with useful
Results for PAL. SB.
that might help them come
over these obstacles.
Research Objectives
6
1.
Introducti
on

Literature Review

Gov.
Instability
Whenever there is a change of the government;
the new administration does not normally
continue the policies, projects and programs,
instead it lefts behind (Taylor and Owusu 2012)
Political
Instability
The instable political situation does not encourage the
ecommerce adoption rather than being an obstacle, and the
whole situation in the Middle East is politically instable (Al-
Ahram Center for political and strategic studies 2008) .
Occupation
Restrictions
The Palestinian people lived in a stifling siege
organized by Israeli occupation and this siege
strongly affected the adoption and the use of
the new technology (Abu-Rahmeh 2009).
Previous Studies
The paper will focus
specifically on the political
obstacles which are crucial
hindrances that prevent
The adoption of EC by
small business in Palestine.
7
2. Literature
Review

ICT Level in PALEC Level in PAL
 The EC level in Palestine is
modest, and has an impact on
economic activity as a whole.
• The knowledge of EC in PAL
is : 62.4 %
• the confidence in EC is :
51.8 % , (Qadri, 2013)
 11.2% of the users
conducted EC Transactions.
 0.2% of individuals used the
internet for EC activities
(PCBS, 2012)
 ICT sector in Palestine has
reported a notable growth
in 2011.
• 47% Computer users.
• 39% Were using internet
services.
• 11% of the users who carried
EC transactions.
• 4% of the users who had
websites. (PCBS, 2012).
An overview of EC in PAL
8
2. Literature
Review

9
Services Providing Website
Shopping www.tasawaq.ps
shopping and develop mobile applications www.sanabel4it.com
Wide-products and services Online shopping www.palemart.net
Free commercial and business Ads. www.ps.opensooq.com
Free Commercial Ads and jobs ad. www.shobiddak.com
Free Commercial and jobs Ads. www.market-pal.com
Selling products by auctions www.almazad.ps
First Palestinian online educational site, in addition to the educational
services, also it introduces commercial services, such as showing products
online.
www.sef.ps/vb
Online Services in PAL
2. Literature
Review

1st
2nd
3ird
Title in
hereDOI
Theory
Title in
here
IRM
Theory
Title in
here
TOE
Framework
1. TOE framework (Tornatzky, 1990).
 Focused on the Technology,
Organization and Environment context.
2. DOI Theory (Rogers, 1995)
 Emphasized individual characteristics,
and both internal and external
characteristics of the organization.
3. The Model of Innovation
Resistance (Ram, 1987)
 Focused on the factors that
resisting EC operations .
10
Theoretical Background
Research Theories
2. Literature
Review

TOE : Government Stability, Occupation Restriction, Logist
TOE : Perceived Losses.
TOE : Perceived Uncertainty, Perceived Complexity.
DOI : Perceived Complexity, Perceived Behavioral Control,
IRM : Resistance to Adopt Technology (EC).
Research
Theories
11
2. Literature
Review
Theoretical Background

Research Model & Hypotheses Development

12
Gov.
Instability
Occupation
Restrictions
Logistics
Obstacles
Perceived
Losses
Perceived
Uncertainty
Perceived
Complexity
External Barriers
Internal Barriers
Perceived
Risk
Perceived
behavior
Control
Resistance to
Adopt EC
H1
(+)
H2 (+)
H3 (-)
H4 (-
)
H5 (-)
H6 (+)
H7 (+)
H8 (-)
H9
(+)
H10
(+)
ch Model & Hypothesis Development
Research Model

13
3. Research Model & Hypothesis
Development
Operational Definitions
Construct
(Abbreviation)
Operational Definition Reference
Government Instability (GIS)
The propensity of a change in the current government, either by
“constitutional” or “unconstitutional” means. Alesina et al. (1996)
Occupation Restrictions (ORS)
Imposing huge obstacles to prevent Palestinians from accessing
much of their land and from exploiting most of their natural
resources.
Elmusa and El-
Jaafari (2011)
Logistics Obstacles (LOB) The obstacles that hinder the delivery process of physical items. Kooistra (2008)
Perceived Losses (PL)
The financial losses extend from existing ways of operating
business transactions using e-commerce applications.
Ratnasingam (2002)
Perceived Uncertainty (PUC)
The process by which individuals perceived certain risk from
doing certain act.
Walker et al. (2003)
Perceived Complexity (PCM)
The degree to which an innovation is perceived as difficult to
understand or to use.
Aghaunor and Fotoh
(2006)
Perceived Risk (PRS) The business owner’s concern that occur before e-commerce
adoption due to the variables around.
Jarupunphol and
Mitchell (2002)
Perceived Behavioral Control
(PBC)
Refers to current beliefs about the presence factors that may
facilitate or impede performance of the behavior. Ajzen (1991)
Resistance to Adopt EC (RTAEC)
The attitude to resist the use of (EC) or any kind of innovation due
to many factors influencing the individual decision.
Lapointe and Rivard
(2005)

H2: Occupation restrictions positively affects to perceived
H1: Government Instability positively affects perceived risk
H3: Occupation restrictions negatively affects perceived be
H4: Logistics obstacles negatively affects perceived behavi
Hypotheses
Development
External Factors
14

H6: Perceived uncertainty positively affects perceived risk
H5: Perceived losses negatively affects perceived behavior
H7: Perceived complexity positively affects perceived risk.
H8: Perceived complexity negatively affects perceived beh
Hypotheses
Development
Internal Factors
15

H10: Perceived behavioral control positively affects resista
H9: Perceived risk positively affects resistance to adopt EC
Hypotheses
Development
Perceived Risk
and Perceived
behavioral
control
16

Methodology

17
Constructs Description
Government
Instability (GI)
I feel the current political situation does not encourage me to invest in e-Commerce.
I believe that our government situation is not stable and susceptible to change.
If the government has changed, the policies and regulations will be changed too, and that would be
risky to invest in any kind of business.
I don't feel confident in the government and politics.
Occupation
Restrictions (OR)
The occupation restrictions prevent me to adopt EC.
I believe it is hard to adopt EC because of the Israeli occupation.
I believe that the occupation siege and the checkpoints would be an obstacle after the adoption of
EC.
I believe that EC is risky business because the Israeli restrictions.
Logistics Obstacles
(LO)
I believe that Palestine lack of good transportation system.
I believe that EC will not succeed under insufficient logistics services.
I feel it is risky to adopt EC with inadequate logistics.
I believe that the delivery process will take too much time because of the Israeli’s checkpoints on the
Palestinian roads.
Perceived Losses (PL)
I believe that EC is not profitable in Palestine to adopt it in my business.
I feel the profit in my business will not change, if I adopt online services.
I feel that EC will not increase the financial benefits rather than increase the financial losses in my
business.
4. Methodology
Measurements

18
Constructs Description
Perceived Uncertainty (PUC)
I believe that EC would be inefficient to adopt in my business.
I believe EC would not develop my business efficiently.
I feel that EC is not an innovative tool in my business.
Perceived Complexity (PCM)
I feel EC is complicated and it is adventurous to adopt in my business.
I believe that learning EC is too difficult.
I believe the employees will not easily learn EC system.
Perceived Risk (PRS)
I feel EC is a risky system.
I feel I cannot adopt technology that I do not know.
I feel the adoption of EC in Palestine is chancy.
Perceived Behavioral Control
(PBC)
I’m afraid to take a decision to adopt online transaction in the current political environment.
I expect that EC will not make any changes in my business in the future.
I’m confident that EC will not be a productive tool in my business.
Resistance to Adopt EC
(RTAEC)
I believe that EC is not a development tool for small business in Palestine.
I feel that e-Commerce in Palestine is still immature to adopt it.
I feel the current surrounding environment discourage me to invest in e-Commerce.
I believe that e-Commerce will not achieve what I expected from in the long run.
4. Methodology
Measurements

Gathering
Relevant Data
The resistance
of small
business’s
owner to
adopt EC
Describe and
analyze the
Data using
structural
equation
Modeling
(SEM) & SPSS
Come up with
a complete
understanding
of the real
obstacles that
prevent EC
adoption by
small Business
in Palestine.
Research Methodology
4. Methodology
19

Primary Data
Includes
Surveys instrument,
by using 7 Likert scale
questionnaire, to evaluate each
statement of each construct.
20
4. Methodology
Data Sources

Pilot test
(Using 20 Sample)
Official Survey
(Collecting 161 Sample)
Analysis
Instruments
(Using structural
Equation Modeling
(SEM) and (SPSS)
packages.
Data Analysis
(Analyzing 137 Sample)
* Conducting online questionnaire using
Docs.google
Data Collection
4. Methodology
21

Data Analysis & Results

5. Data Analysis and Results
Measurement Model & Statistics
Latent Variables Construct Item
Count
Mean St.
Government Instability GIS 4 5.001 1.277
Occupation Restrictions ORS 4 5.132 1.255
Logistics Obstacle LOB 3 5.003 1.002
Perceived Losses PL 3 4.094 1.104
Perceived uncertainty PUC 3 4.076 1.504
Perceived Complexity PCM 2 4.925 1.315
Perceived Risk PRS 3 4.079 1.471
Perceived Behavioral Control PBC 3 5.026 1.329
Resistance to Adopt EC RTAEC 3 4.926 1.168
22

Types of Analysis and the Instruments
Confirmatory Factor
Analysis
Using SPSS 2.1
& SmartPLS 2.0
Reliability
(α,CR)
Convergent
Validity
(FL)
Discriminate
Validity
(AVE)
Measurement Model
23

Variables Items Factor Loading Cronbach’s alpha (α) CR AVE
Government
Instability
(GIS)
GIS1 0.857
0.863 0.899 0.691GIS2 0.875
GIS3 0.853
GIS4 0.732
Occupation
Restriction
(ORS)
ORS1 0.826
0.843 0.894 0.680
ORS2 0.855
ORS3 0.854
ORS4 0.758
Logistics Obstacles
(LOB)
LOB2 0.908
0.885 0.929 0.813LOB3 0.884
LOB4 0.912
Perceived Losses
(PL)
PL1 0.969
0.883 0.910 0.772PL2 0.828
PL3 0.831
Perceived Uncertainty
(PUC)
PUC1 0.922
0.855 0.909 0.770
PUC2 0.887
PUC3 0.821
Perceived Complexity
(PCM)
PCM2 0.982
0.965 0.982 0.966PCM3 0.983
Perceived Risk
(PRS)
PRS1 0.815
0.843 0.881 0.712
PRS2 0.846
PRS3 0.869
Perceived Behavioral
Control (PBC)
PBC1 0.807
0.798 0.872 0.694PBC2 0.886
PBC3 0.803
Resistance To Adopt
EC (RTAEC)
RTAEC2 0.922
0.901 0.938 0.835RTAEC3 0.888
RTAEC4 0.930
Measurement Model
24

Measurement Model
Inner Factor Loading & Cross
Loading
Construct Indicator
Component
1 2 3 4 5 6 7 8 9
GIS
GIS1 .171 .904 .126 -.010 -.064 .047 .116 -.079 .082
GIS2 .173 .937 .102 -.034 -.070 .057 .092 -.011 .079
GIS3 .158 .899 .125 -.057 -.085 .078 .091 .117 .063
GIS4 .303 .709 .107 .052 .030 -.013 .287 .040 .027
ORS
ORS1 .163 .127 .754 -.044 -.093 .056 .346 .068 -.039
ORS2 .206 .075 .851 -.090 -.043 .072 .117 -.006 .081
ORS3 .240 .060 .830 -.108 .017 -.004 .110 -.076 .156
ORS4 .033 .264 .795 -.115 .119 .155 .078 .159 .340
LOB
LOB2 .766 .256 .145 -.011 .033 .208 .139 .029 .152
LOB3 .734 .153 .189 -.110 .135 .026 .125 .282 .134
LOB4 .799 .135 .280 .007 .073 .150 .099 .050 .127
PL
PL1 -.039 -.064 -.130 .836 -.043 .055 -.074 .082 -.149
PL2 .083 -.039 -.064 .921 .063 .030 .037 -.011 -.038
PL3 -.089 .013 -.070 .894 .040 -.076 -.074 .011 .117
PUC
PUC1 -.058 -.028 -.060 .005 .882 .094 .128 -.002 -.014
PUC2 .093 -.057 -.014 -.104 .876 .060 .021 .026 -.028
PUC3 .053 -.093 .056 .171 .853 -.086 .023 -.042 .037
25

Measurement Model
Inner Factor Loading & Cross
Loading
Construct Indicator
Component
1 2 3 4 5 6 7 8 9
PCM
PCM2 .247 .026 .108 .045 .013 .914 .056 .001 .141
PCM3 .240 .086 .099 -.006 .034 .912 .088 .095 .121
PRS
PRS1 .095 .252 -.019 -.087 .109 .550 .603 .251 .282
PRS2 .073 .068 .279 -.085 .083 .099 .831 .084 .136
PRS3 .266 -.034 .334 -.107 .136 .163 .638 .038 .200
PBC
PBC1 .285 -.030 .210 -.008 -.046 .024 .227 -.118 .764
PBC2 .182 .116 .194 -.064 -.025 .198 .119 .126 .818
PBC3 .290 .305 -.022 .012 .065 .295 .009 .248 .607
RTAEC
RTAEC1 .924 .008 .023 .051 -.018 .069 .074 .298 .064
RTAEC2 .834 .084 .070 .023 -.066 .227 .115 .089 .112
RTAEC3 .788 .056 .070 -.085 .050 .002 .095 .343 .097
RTAEC4 .867 .085 .111 .065 -.045 .123 .120 .102 .141
26

Measurement Model
Construct Correlation & Discriminant Validity
Constructs GIS ORS LOB PL PUC PCM PRS PBC RTAEC
GIS 1.00
ORS .404 1.00
LOB .492 .477 1.00
PL -.093 -.093 -.199 1.00
PUC -.049 .092 .009 .028 1.00
PCM .202 .378 .249 .397 .062 1.00
PRS .464 .457 .496 .488 .422 -.145 1.00
PBC .386 .511 .425 -.131 .060 -.051 .171 1.00
RTAEC .383 .820 .348 .479 .367 -.050 .394 .017 1.00
* The elements on the diagonal are the square root of the average variance
extracted (AVE).
The off- diagonal elements are the correlations among all constructs.
27

28
Gov.
Instability
Occupation
Restrictions
Logistics
Obstacles
Perceived
Losses
Perceived
Uncertainty
Perceived
Complexity
External Barriers
Internal Barriers
Perceived
Risk
Perceived
behavior
Control
Resistance to
Adopt EC
0.292***
0.308***
0.202**
0.320***
-0.069
0.166**
0.276***
0.230***
0.211**
0.377***
***p<0.01, **p<0.05 ( Supported Not Supported )
Structural Model
Results of SEM –
Research Model

29
Structural Model
Testing-Results
- Path Coefficient
Hypothesis Standardized coefficient T-value Results
(H1) GIS->PRS 0.292*** 3.966 Supported
(H2) ORS->PRS 0.308*** 3.515 Supported
(H3) ORS->PBC 0.202** 1.983 Supported
(H4) LOB->PBC 0.320*** 3.156 Supported
(H5) PL->PBC -0.069 0.746 Not supported
(H6) PUC->PRS 0.166** 2.322 Supported
(H7) PCM->PRS 0.276*** 3.412 Supported
(H8) PCM->PBC 0.230*** 2.607 Supported
(H9) PRS->RTAEC 0.211** 2.036 Supported
(10) PBC->RTAEC 0.377*** 3.807 Supported
***p<0.01, **p<0.05

Discussion

Owner’s
Resistance to
Adopt EC
Occupation restrictions show
a strong positive significant
and indirect relationship with
RTAEC factor mediated by
PRS and a strong negative
significant and indirect
relationship with RTAEC
mediated by PBC factor
Logistics obstacles
demonstrated a significant,
negative and indirect
impact on RTAEC
mediated by PBC factor
The indirect significant
positive & negative impact
of PUC & PCM factors on
RTAEC mediated with PRS
& PBC factors respectively
Occupation
Restrictions
Logistics
Obstacles
Internal
Factors
(Uncertainty,
Complexity)
Government
Instability
Government instability
factor exhibited a positive
significant and indirect
relationship with RTAEC
mediated by PRS factor
6. Discussion
Discussion Supported
Hypotheses
30

Government Instability
Occupation Restrictions
Have been confirmed extensively in Qadri (2013),
Harb (2009) and Ibrahim and Beaudet (2012)
Consistent with previous literature supposition by
Studies, A. C. f. P. S. (2008) and Alesina et al. (1996)
Empirically supported by literature such as
Al-Hudhaif and Alkubeyyer (2011)
Internal Factors (Uncertainty, Complexity)
Logistics Obstacles
Discussion Consistency with Pervious
Research
6. Discussion
The outcomes are consistent with the
findings of prior researchers such (Barki
et al. 1993, Corrêa 1994, Huff 1978) for
PUC & with Van Akkeren and Cavaye
(1999) for PCM
31

Perceived
Losses
Perceived Losses doesn’t influences the
owner’s resistance to adopt EC as the analysis
has shown insignificant relationship between
(PRS) and (RTAEC) factor mediated with (PBC)
Path Coefficient Results
The proportion of the path coefficient of perceived losses in
this study (standardized coefficient = -0.069; t-statistic =
0.746) and these results is contradicting the findings in
previous research like Cloete et al. (2002) who noted that
applying e-Commerce caused losses for the business firms.
Also contradicting with Thong and Yap (1996) where they
have stated that owners will not adopt losses in their
business as EC reveals only loss, thus the owner’s
perception about this losses will push to resist the adoption.
Discussion Rejected
Hypothesis
6. Discussion
32

Zwass (1996) Has pointed that this losses is totally depends on the business and
it is diverse from one to another, the study has handled different sectors in
Palestine which means several opinions in terms of EC losses. And this
insignificant impact of perceived losses on owner’s behavior emphasizes that the
owners have less concern in terms of perceiving losses from EC. In the same
context, the results reflects that Palestinian small business owners have an
adequate awareness of EC benefits, which can approve that the strongest
obstacles that resist the adoption of EC are the political factors including
occupation restrictions. In essence, the research supports perceived losses as
an important contributor to hinder EC in Palestine based on the previous studies.
Nevertheless, the research has shown different results It must however be
considered for any future adoption of EC in Palestine.
6. Discussion
Discussion Rejected Hypothesis
Interpretation
34

The findings of this study
showed a strong positive
and direct impact of PRS
on the RTAEC. the
greater proportion
(43.4%) of the variation
of perceived risk. It also
showed a significant
influence on the
resistance to adopt factor
support the previous studies
such as (Hong and Zhu
2006, McNally and Obied
2014, Qadri 2013)
The study confirmed also
that PBC has a positive
significant and direct
influence on RTAEC. The
finding is consistent with
number of previous
studies like (Dutton and
Shepherd 2006, Marcus
1981, McElroy et al. 2007,
Mutz 2005, Rosa et al.
2006) All those
researchers allude to the
significant role of the
behavioral control on the
business owner
PRS PBC
6. Discussion
Discussion Mediated
Factors
RTAEC
35

Conclusion

The study will be a substantial and beneficial for many parties in Palestine
The research will be the first of its kind that has tackled the occupation
impacts on EC
The research will offer additional data regarding the barriers
that affect EC adaption by small businesses in PAL.
The focus on small business come due to limited and scarce data
in this area, therefore this research is a great contribution
The study will serve as a guideline for any future research in the related discipline
Research
Contribution
Contributions
7. Conclusion
36

37
IV. The collected data will
be available to different
stakeholders, such as,
business owners,
government and policy
makers
II. The research will
help to raise up the
awareness level of
businesses’ owners
about EC obstacles.
I. The findings of this study will have
significant implications in the perspective
of research on e-Commerce business
behavior in the future.
III. The study will help policy
makers in the future to find out
solutions to the current obstacles
are facing EC in Palestine.
7. Conclusion
Implications

Text Research
Limitations
Text
 The sampling pool was restricted
to mainly business owner’s circles
 The results of the study might also be biased
given to people have little experiences of online
transactions or have no information about it
sometimes
 The study depends on few
references that have done in
this topic due to the lack of
research in this discipline in
Palestine
 there was some
difficulties to collect
the data as most of
the respondents
were busy
7. Conclusion
Limitations
38

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