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Information & Management 41 (2004) 457–468

A model for Web adoption Thompson S.H. Teo*, Yujun Pian Department of Decision Sciences, School of Business, National University of Singapore, 1 Business Link, Singapore 117592, Singapore Received 1 September 2001; received in revised form 1 December 2002; accepted 27 May 2003

Abstract This paper introduces a model for Web adoption and examines the characteristics of different level Web sites in terms of their features. The results indicate that the extent of the features tends to increase when the Web adoption progresses from lower to higher level. Two broad Web site categories can be identified: informational and transactional Web sites. Proactive business strategy, firm size, and competitive advantage are found to be positively related to Web adoption level. Implications of these results are discussed. # 2003 Elsevier B.V. All rights reserved. Keywords: Internet; Web; Adoption; Model

1. Introduction New technologies have created innovative ways for firms to do business. The Web has been called a marketspace by some researchers. In order to leverage the potential of the Internet, firms are establishing their presence on the Web. Today, more than 95% Fortune 500 firms have Web sites. It is obvious that Internet technology may be used in different ways by different firms with different features on their Web sites, depending on the objectives of Web sites. Hence, firms may differ in terms of their level of Web adoption. Although much research has been done on the adoption of the Internet [1,20,22,24], few have examined the topic of adoption level; and most tend to be conceptual rather than empirical in nature. As understanding the dimensions of Web site development is *

Corresponding author. Tel.: þ65-68743036; fax: þ65-67792621. E-mail address: [email protected] (T.S.H. Teo).

critical for a firm’s competitive positioning [14], it is important for a firm to identify its Web adoption level.

2. Literature review Since early 1994, researchers have discussed various models of Internet adoption. For example, in their discussion about new values in a virtual value chain, Rayport and Sviokla [16] proposed a three-level process model: (1) visibility—firms strive to represent the physical operations more effectively; (2) mirroring capability—firms substitute virtual activities for physical ones; and (3) new customer relationships—firms delivering new value to customers. Nambisan and Wang [12] suggested that Web adoption can be divided into three levels: level 1—information access; level 2—work collaboration; and level 3—core business transactions. From an integrated marketing point of view, Hoffman et al. [4] illustrated six different types of Web sites.

0378-7206/$ – see front matter # 2003 Elsevier B.V. All rights reserved. doi:10.1016/S0378-7206(03)00084-3

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They were: (1) online storefront; (2) Internet presence; (3) content sites; (4) electronic malls; (5) incentive sites; and (6) search agents. This classification did not take the business activities into account. In contrast, Ho [5] classified the Web sites into three categories according to their business purposes: (1) promotion of product and services; (2) provision of data and information; and (3) processing of business transactions. This suggests that researchers often model Web adoption according to the functions of the Web sites: different levels of Web adoption can facilitate different kinds of business activities. For example, Wan and Chung [23] suggested that Web sites be classified according to the complexity of their designs, which is believed to be strongly related to their effectiveness and efficiency. 2.1. Web adoption model Taking into account an organization’s Internet strategy and its Web site’s functional characteristics, we propose a model of Web adoption according to the different business objectives of Web sites as illustrated in Fig. 1. Level 0—no Web site, only e-mail account: A firm in the Web adoption level 0 has not actually adopted the Web. Its inclusion is based on research of Teo et al. [21]. They classified Internet adoption into: nonadopters (those without Internet account), adopters without Web sites but an Internet account, and adopters with Web sites. Through an extensive examination of Web sites in Singapore, we found that some firms do not have

Web Adoption Level Level 3 Business Integration

Level 0 Email

Level 1 Web Presence

independent domain names and Web sites. These normally have an e-mail account that they use to establish connectivity with customers and business partners. Based on this, we decided to classify such firms as level 0 Web adopters. Level 1—Web presence: The first level is Web presence, where firms have made the adoption decision but the implementation is still in process [18,19]. The purpose may be to occupy a domain name or simply to have presence. Generally, Web sites at this stage provide information and brochures and tend to be non-strategic in nature. Level 2—prospecting: This involves limited use of the Internet. Usually, Web adoption initiatives at this stage are spearheaded by individual departments. Thus, they are not tied to business strategy [10]. Most firms at this level establish Web sites to provide customers with product information, news, events, interactive content, personalized content, e-mail support, etc. This provides potential customers with access to the firm’s products with minimal distributing cost. Level 3—business integration: Web adoption is incorporated into the business model and integration of business processes is taking place. There are crossfunctional links between customers and suppliers and Web strategy is integrated with the firm’s business strategy. Level 4—business transformation: This is the highest level of Web adoption. It will transform the overall business model throughout the organization. The focus is on building relationships and seeking new business opportunities.

Level 4 Business Transformation

Level 2 Prospecting

Adoption

Extent of Web site features Fig. 1. Web adoption model.

T.S.H. Teo, Y. Pian / Information & Management 41 (2004) 457–468

3. Method 3.1. Sample and procedures We conducted a questionnaire survey to collect data for this study. The sample was selected from the ‘‘Singapore 1000’’ and ‘‘SME 500’’ published by the Data Processing (DP) Information Network Pte. Ltd. [3]. Only firms with Web sites and/or e-mail addresses were selected. Before the formal survey, two rounds of pretests were conducted. The first involved examination of the questionnaire by four master’s level student and two doctoral students. Based on their feedback, certain items were reworded and minor layout changes were made to improve its clarity and readability. The second round included one doctoral student and one staff member from the Business School, one vice president from a consultancy firm, and one business analyst from an online firm. As they suggested no major changes, the questionnaire was deemed ready for use. Questionnaires were sent to IT managers or top executives in 566 firms. Three weeks later, a second round mailing was carried out to those who had not responded. Five questionnaires were returned unanswered due to change of address and eight firms declined to participate. Four questionnaires were unusable due to missing responses. Thus, the final usable responses were 159, giving a response rate of 28.8%. 3.2. Instrument The construct ‘‘Web adoption level’’ was measured using paragraph descriptions of the five Web adoption levels. Organizations were asked to select the level that most closely fit their firm as follows:  Our firm has e-mail account (Internet account), but does not have Web site.  Web presence: Our firm has established its Web site, but only provides very simple firm information and brochures on it.  Prospecting: Our firm has established its Web site, and the features provided on the Web site include extensive information of the organization and its products, feedback form, e-mail support, and simple search.

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 Business integration: Our firm’s Internet strategy pertains to using the Internet for business support and cost reduction. Our Web site includes advanced features such as interactive marketing and sales, online communities, and secure online ordering.  Business transformation: Our firm’s business strategy is transformed by Internet adoption. There is cross-enterprise involvement with the focus on building relationship and developing knowledge to create new business opportunities. We are electronically integrated with our key suppliers and customers for procurement and/or supply chain activities. This method of collecting self-reported grouping data was adopted in previous research [7,17]. In addition, nineteen Web site features (see Table 1) were examined. Respondents were required to indicate the extent of each of the nineteen Web site features provided on their Web sites. Likert scales 1–5 were used to measure the extent, with 1, not at all; 2, little; 3, moderate; 4, extensive; and 5, highly extensive. The 19 Web site features were grouped into five categories: contact methods, information, customer services, transactions/online business integration, and links to other Web sites. Some Web site features, such as ‘‘contact number(s)/ address of firm’’ and ‘‘e-mail address of Webmaster’’ seem to expect binary (have/not have) answers. However, after examining some Web sites, we found that there were differences in the degree of adoption of these features at different Web sites. For example, some only provide the mailing address, while others also provided detailed telephone numbers of different departments and fax numbers. As a validation check, we cross-checked the firms’ Web sites to verify their responses. Phones calls were made, as necessary, to confirm the presence and extent of certain features. In the instrument, we also determine whether an organization is proactive or reactive in business development and technology adoption. Adapting from Miles and Snow [11], respondents were required to select whether their firms’ business strategy was proactive or reactive according to the following descriptions:  Proactive strategy: An organization with this type of strategy typically values being first in new product and market areas. The organization is willing to experiment with new technologies, and to

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Table 1 Web site features Classification

Web site features

Detailed description

Contact methods

WEB_B WEB_G WEB_H WEB_I

Contact number(s)/address of firm e-mail address of Webmaster e-mail address of marketing staff e-mail address of management staff

Information

WEB_A WEB_C WEB_D WEB_M

Firm information/overview Financial report Products/services information Search on firm’s Web site

Customer service

WEB_E WEB_F WEB_J WEB_K WEB_L

Frequently asked questions (FAQ) Customer service/assistance Feedback form Guest book Online community

Transactions/online business integration

WEB_N WEB_O WEB_P WEB_Q WEB_R

Online marketing Online ordering Electronic payment Electronic integration with supplier(s) Electronic integration with customer(s)

Links

WEB_S

Links to other Web site(s)

take advantage of new opportunities or innovations enabled by new technologies.  Reactive strategy: An organization with this type of strategy attempts to locate and maintain a secure niche in a relatively stable product or service area. Often the organization is not at the forefront of developments in the industry. The organization tends to adopt ‘‘proven’’ rather than new technologies in the business operations. In addition, we assessed the impact of Web adoption on the organization’s competitive advantage (in terms of differentiation, cost reduction, innovation, growth, and alliance) using items on a 7-point scale (1, extremely little; 7, extremely much) adapted from Lederer et al. [9]. The instrument also captured the demographic characteristics of responding firms in terms of industry type, hierarchical level of respondents and firm size.

followed by retail/trading, architecture/engineering, travel/tourism/hotel, finance/banking/insurance, and business services. Over 90% of respondents held managerial positions. The average number of years in the firm and industry were 6.6 and 11.1, respectively. The high hierarchical level of respondents coupled with the number of years of tenure in the firm and industry give some assurance as to the validity of the sample, since management level respondents are more likely to know about a firms’ Internet strategy and its implementation. Establishing a Web site is relatively cheap but the maintenance of Web site is more expensive. 61.7% of participating firms have less than 10 IT/IS employees. This could be due to outsourcing of Web site maintenance to specialized Web service providers. 4.2. Web adoption level

4. Results and discussion 4.1. Respondents profile Table 2 presents the demographic data of respondents. About 23% came from the manufacturing industry,

Among the 159 respondents, the distribution of Web adoption levels is: 27 in level 0, 48 in level 1, 52 in level 2, 18 in level 3, and 14 in level 4. As firms in level 0 do not have Web sites, a Web site feature data analysis was not applicable.

T.S.H. Teo, Y. Pian / Information & Management 41 (2004) 457–468 Table 2 Demographic profile

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Table 2 (Continued ) Demographic profile

Demographic profile

Percentage

Industry Manufacturing Retail/trading Architecture/engineering Travel/tourism/hotel Finance/banking/insurance Business services Computer/IT Health/medical Real estate/property Others Missing

23.3 15.7 11.3 10.7 10.1 8.8 4.4 3.8 3.8 6.9 0.6

Hierarchical level CIO/IT manager Chairman/managing director/CEO General manager/vice president/director Other managers Finance/accounting manager Marketing manager System analyst/engineer/leader Others Missing

35.8 15.7 12.6 11.9 10.7 5.0 4.4 3.1 0.6

Number of employees 0–100 101–300 301–600 601–1000 1001–2000 >2000 Missing

23.9 27.7 13.8 8.2 7.5 17.6 1.3

Number of IT/IS employees 200 Missing

60.4 17.6 5.0 2.5 3.8 9.4 1.3

Average annual revenue S$

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