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Custom Impact of National Culture on E-commerce essay paper sample

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The aim of the study was to assess the impact of Hofstede’s cultural dimensions on the adoption of E-commerce in two countries i.e. USA and Canada. The cultural parameters evaluated included individualism, power distance, long term orientation, masculinity and uncertainty avoidance. The main hypothesis was to prove that differing consumer attitudes exist in the two countries. Such disparities could be attributed to varying cultural values as measured using Hofstede’s cultural dimension scores. Data was collected by way of questionnaire and phone interviews. The total number of respondents was 1000 and they were required to give the most appropriate medium of product information and purchasing i.e. either online or offline. The data was analyzed using the Shapiro-wilk test.

Key words: E-commerce, Hofstede’s framework, cultural values

Introduction

E-commerce (Electronic commerce) is the transaction of services and goods over the internet and also any form of computer network. It’s inclusive of any online process that entails paying, marketing, developing, servicing and delivery of products. With the advent of Information Technology, there has been an immense growth of trade conducted online. More than ever before, individuals can access the internet at home, school and/or the work place. Currently, E-commerce is rife and occurs at a large scale with companies utilizing it as a marketing strategy to reach as many customers as possible. As a result of the internet’s interactive nature, companies generate ample data on the customers and even business prospects. This is carried out via questionnaires, taking orders and site registration.

                The application of E-commerce is subject to cultural factors and the goal of this study is to assess the impact of cultural dimensions using Hofstede’s framework.  The adoption of new technologies does not solely depend on economic factors. The application of ICT varies in developed countries that are at par in terms of economic growth (Donthu & Garcia A,1999, p.53).  The study will evaluate the customer attitude in the neighboring countries-Canada and America- to discern the influence of culture on the rate of E-commerce application.

Literature Review

            The process of purchasing products is greatly aided by the internet. Several models have been exhibited in different purchasing processes. For instance, customers utilize the internet to source for information concerning a particular product. They will look up customer reviews as they compare the portfolio posted by different suppliers. Hence several websites support pertinent phases of a purchasing process. International companies have to consider cultural factors as it will guide the process of adopting the most suitable marketing strategy. Website customization and addition of various features might make a website attractive to a site visitor, information has to be relevant and serve the functional purpose of the website. 

            Internet connectivity has had a very positive impact on globalization and companies can sell their products to various nations. Such markets might have been difficult to access without immense expenditure on marketing. E-commerce provides a very cheap means of marketing and the only cost incurred is via domain charges for system maintenance of websites. Hofstede’s framework provides the means of accessing cultural dimension influencing e-commerce adoption. Hofstede (1980) defines culture as the collective mind programming by a society/community which makes it distinct from any other human group. There are five dimensions that distinguish each culture i.e. individualism, power distance, uncertainty avoidance and long term orientation. These Hofstede cultural dimensions are widely used in ICT research to describe the correlation between culture and IT with regard to research across countries. Ample research has proven that national culture greatly affects the user acceptance of any technological application (Rodgers & Harris, 2003, p.323).

E-commerce is characterized by several limiting factors and the main ones cited in literature include payment security, privacy issues, lack of confidence in sellers and need to examine products physically. Most buyers fear receiving goods late and in a bad state.

Trust issues clearly dominate consumer fears with regard to e-commerce adoption. In a study carried out by Straub (1994), the diffusion of e-mail was compared between the United States and Japan. Uncertainty avoidance played a significant role in the adoption rate of ICT. In a similar study the role of three Hofstede cultural dimensions were applied to assess E-commerce adoption in the United States and China (Pavlou and Chai, 2002, p.34). The individualism score was 91 for USA and 20 for China. The index for power distance was 80 and 40 for China and USA respectively.  LTO was 118 for China and 29 for USA (Hofstede & Hofstede, 2009, p.1).

Table1: Hofstede’s cultural scores in USA and Canada

 

Power Distance

Individualism

Uncertainty Avoidance

Masculinity

Longterm Orientation

USA

35

85

40

45

25

Canada

35

75

40

60

20

 

Methodology

A survey was carried out in both Canada and USA to access the impact of national culture on E-commerce adoption. The survey was carried out in a limited time-span of 5 months since e-commerce behavior is bound to evolve. It was conducted by way of questionnaire and phone calls. Consent was sought from randomly selected persons prior to the actual study. Adequate information on the purpose of the study was given to potential respondents. The privacy of respondents and confidentiality of the information given was safeguarded. 20 general products were selected and each respondent was required to respond to questions relating to purchasing. This covered information gathering, supplier selection as well as the actual purchase of a product. The respondents were required to give the most convenient and appropriate medium they would use. The options provided included online means, offline means such as friends and family. A total of 1000 respondents participated in the survey. 800 questionnaires were returned and 200 phone conversations were conducted. 400 questionnaires and 100 phone conversations were conducted from each country. However the respondents are not an adequate representation of the population in both countries.

The respondent had to assign a value in the range of 1-4 on the most appropriate medium that would serve as a source of information in the course of making a purchase. 1-very appropriate, 2-appropriate,3-somewhat appropriate,4-not appropriate. Data analysis was done using Shapiro-wilk test to evaluate the normality of data distribution.

 

 

 

 

Results

Table 2: Wilcoxon-test to compare responses for ‘very appropriate’ for

‘Communication with seller’ and ‘Internet’ to find product information

 

USA Female

z

-5.5904

 

Estimated difference size

0.4884

 

Asymp. Sig. (2-tailed)

0.0000 (a)

USA Male

z

-6.0888

 

Estimated difference

0.4538

 

 

Asymp. Sig. (2-tailed)

0.0000 (a)

Canada Female

z

-0.1461

 

Estimated difference

0.0157

 

Asymp. Sig. (2-tailed)

0.8838 (b)

Canada Male

z

-1.9943

 

Estimated difference

0.1548

 

 

Asymp. Sig. (2-tailed)

-1.9943

 (a=negative ranks; b=positive ranks)

 

Discussion and Recommendations

There is a significant difference in the USA response groups. The Internet is the medium of choice for looking up information on any product. Conversely the Canadian respondent groups did not exhibit any significant difference. Physical contact with the seller is the most appropriate source of information as compared to the internet. Overall USA respondents value the internet as a medium of product information more than the Canadians.

These findings are of practical use since they prove that customer preference on the utilization of E-commerce varies. The United States market is more values the internet as a source of product information. Canadians generally prefer physical contact with sellers and less likely to source for products online. These findings serve as a guide for companies venturing into the Canadian and United States market. An expensive well tailored website would be appropriate for the United States market as opposed to the Canadian market. Hofstede’s framework is an appropriate tool in assessing the impact of cultural values on the rate of E-commerce adoption.

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