An Empirical Study of Critical Factors Relating to the Competitive Success of E­commerce Entrepreneurs in Thailand Nittana Sukasame Sang M. Lee * ABSTRACT Recent research on e­commerce and entrepre­ neurship has shown that both fields boost local and global economic growth. Yet very few studies have been conducted to investigate the key success factors of e­commerce operation in the context of Thailand. Therefore, this research explores the perceptions of Thai e­commerce entrepreneurs on the critical factors considered significant for their business’s success. The study focuses on the relationships between entrepreneurial characteristics, key success behaviors, and governmental support, and the suc­ cess of e­commerce entrepreneurs. Factors drawn from the trait approach were studied, including: achievement orientation, risk taking propensity, and locus of control. In addition, factors linked to the behaviors of e­commerce founders were examined: e­networking and e­service quality including re­ liability, responsiveness, ease of use, and self­service. Governmental support was also investigated. Success was measured in terms of growth rate, sales volume, business stability, customer acceptance, and overall satisfaction of the e­commerce entrepreneurs. The survey design was employed in this study. The target population for the research was made up of 1,544 Thai founders of e­commerce businesses; of these numbers, 375 usable questionnaires met the criterion of having at least two years of business establishment were counted for the analysis through the use of Pearson’s correlation and multiple re­ gressions. This empirical study confirms that the entrepreneurial traits of achievement orientation and locus of control are positively related to the com­ petitive success of e­commerce entrepreneurs in Thailand. In addition, the reliability, responsiveness, ease of use, and self­service functions of e­service quality are also positively related to the competitive success of e­commerce operations. The results indicate that locus of control has the highest rela­ tive weight of predictive importance toward the competitive success of e­commerce entrepreneurs in * Prof. Dr. Sang M. Lee Dissertation Advisor Thailand followed in order by reliability, ease of use, achievement orientation, and self­service. Finally, this study contributes to the scholarly research on e­commerce and entrepreneurship. The major impact of this study will be on the development and managerial implications of the critical success factors for e­commerce entrepreneurs. บทคัดยอ งานศึกษาวิจัยสาขาการพาณิชยอิเล็กทรอนิกสและการ เปนผูประกอบการ แสดงใหเห็นวาทั้งสองสาขาตางกระตุน การเติ บ โตของเศรษฐกิ จ ทั้ งในระดั บ ท อ งถิ่ น และระดั บ สากล แต กลั บมี งานวิ จัย จํา นวนไมมากนัก ที่มุงศึ กษาค น ควาปจจัยสูความสําเร็จของการดําเนินธุรกิจพาณิชยอิเล็ก- ทรอนิก ส โดยเฉพาะอย า งยิ่งในบริ บทของประเทศไทย ดั งนั้ น งานวิ จั ย นี้ จึ งได จั ด ทํ า ขึ้ น เพื่ อ สํ า รวจมุ มมองของ ผู ป ระกอบการพาณิ ช ย อิ เ ล็ ก ทรอนิ ก ส เ กี่ ย วกั บ ป จ จั ย ที่ จํา เปน ต อความสํ า เร็ จ ในการดํ าเนิ น ธุร กิ จพาณิชย อิเ ล็ ก - ทรอนิ ก ส ใ นประเทศไทย โดยมุ ง ศึ ก ษาความสั ม พั น ธ ระหวางคุณลักษณะเฉพาะของผูประกอบการ ปฏิบัติการสู ความสําเร็จ การสนับสนุนจากภาครัฐ และความสําเร็จของ ผูประกอบการพาณิชยอิเล็กทรอนิกส ปจจัยที่นํามาศึกษา ในครั้ ง ได ม าจากแนวคิ ด ด า นคุ ณ ลั ก ษณะเฉพาะของ ผูประกอบการ ไดแ ก การมุงเนนความสําเร็จ การเปดรั บ ความเสี่ ย ง และความเชื่ อ ในอํ า นาจควบคุ มของตนเอง นอกจากนี้ ยังศึกษาถึงปจจัยที่เกี่ยวของกับการปฏิบัติงาน ของผูป ระกอบการพาณิชย อิเล็ก ทรอนิ กส เช น การสรา ง เครือขายธุรกิจดวยสื่ออิเล็กทรอนิกส และการเนนคุณภาพ การใหบริการผานสื่ออิเล็กทรอนิกส ไดแก การสรางความ เชื่อมั่น การสนองความตองการลูกคา การใชงานงาย และ การบริ การตนเองของลูก ค า การวิ จั ย ในครั้ งนี้ ยังรวมถึ ง ป จ จั ย ด า นการสนั บ สนุ น จากภาครั ฐ ทั้ ง นี้ ค วามสํ า เร็ จ ผูประกอบการพาณิ ชย อิเ ล็ก ทรอนิ กส นั้น สามารถวั ดได
จากอั ตราการเติ บโต ยอดขาย ความมั่ นคงของธุ รกิ จ การ ยอมรับของลูกคา และความพึงพอใจโดยรวมของผูประกอบ การพาณิชยอิเล็กทรอนิกส การศึกษาวิจัยในครั้งนี้เปนการวิจัยเชิงสํารวจ โดยมี กลุ มตั ว อย า งเป น ผู ป ระกอบการพาณิ ชย อิ เ ล็ ก ทรอนิ ก ส จํานวน 1,544 คน และไดรับการตอบแบบสอบถามกลั บ คืนมา จํานวน 375 แบบสอบถามที่เปนไปตามขอกําหนดที่ ผู ต อบแบบสอบถามต อ งดํ า เนิ น ธุ ร กิ จ พาณิ ช ย อิ เ ล็ ก - ทรอนิกสมาเปนระยะเวลาอยางนอย 2 ป จึงจะสามารถนํา ข อ มู ล ไปวิ เ คราะห ค วามสั มพั น ธ ด ว ยสถิ ติ สั มประสิ ท ธิ์ สหสั มพั น ธ แ บบเพี ย ร สั น และสมการถดถอยเชิ งพหุ ไ ด ผลการวิ จัย แสดงใหเห็ นว า ป จจั ยคุณ ลัก ษณะเฉพาะของ ผูประกอบการ ซึ่งประกอบดวยการมุงเนนความสําเร็จและ การกําหนดอนาคตของตนเอง มีความสัมพันธในเชิงบวก กับความสําเร็ จในเชิงแขงขั นของผูประกอบการพาณิชย - อิเล็กทรอนิกสในประเทศไทย ผลการวิจัยยังแสดงใหเห็น วา การเนน คุณ ภาพการให บริก ารผ านสื่ ออิ เล็ก ทรอนิก ส เชน การสรางความเชื่อมั่น การสนองความตองการลูกคา การใช งานงาย และการบริ ก ารตนเองของลู ก คา มีค วาม สั ม พั น ธ ใ นเชิ งบวกกั บ การดํ า เนิ น ธุ ร กิ จ พาณิ ชย อิ เ ล็ ก - ทรอนิกสดวยเชนกัน นอกจากนี้ ผลการวิจัยยังพบวาความ เชื่ อ มั่ น ในอํ า นาจควบคุ มของตนเองมี อิ ท ธิ พ ลต อ ความ สําเร็จของผูประกอบการพาณิชยอิเล็กทรอนิกสในประเทศ ไทยมากที่สุด และรองลงมาตามลําดับ คือ การสรางความ เชื่ อ มั่น การใช งานงา ย การมุ งเน น ความสํ า เร็จ และการ บริก ารตนเองของลูก คา ผลการศึก ษาในครั้งนี้กอ ให เกิ ด ประโยชน ท างการศึ ก ษาวิ จั ย ในด า นการพาณิ ชย อิ เ ล็ ก - ทรอนิกสและการเปนผูประกอบการ อีกทั้งยังนําไปสูการ พัฒนาปจจัยแหงความสําเร็จสําหรับผูประกอบการพาณิชย อิเล็กทรอนิกส และการนําปจจัยเหลานี้ไปใชในการบริหาร จัดการ INTRODUCTION The study on e­commerce and entrepreneurship has dramatically increased in recent years and yielded similar results that both fields have significant impacts on economic growth and wealth creation (Acs et al., 2004; UNCTAD, 2003). According to UNCTAD’s E­commerce and Development Report 2003, there is a positive contribution of information communication technology (ICT) to productivity growth. Through the application of ICT, firms will become more competitive, new markets will be accessed, and new employment opportunities will be created. All of these will result in the generation of wealth and sustainable economic growth. Likewise, research on entrepreneurship has claimed that entrepreneurship generates income, reduces unemployment, and sus­ tains economic growth and development (Reynolds et al., 2003). This confirms the entrepreneurship theory that through the use of innovation, an entrepreneur can contribute substantially to econo­ mic growth and development (Drucker, 1998). Additionally, the improvement in the conditions for the survival of new ventures and the promotion of entrepreneurship are currently seen as more important than before. Most previous research on entrepreneurial success has been done in exploring the links between the entrepreneurial characteristics and their business’s success in general contexts (Evans & Volery, 2001). Although, there are explosive numbers of e­commerce operations worldwide, research with respect to the critical success factors of e­commerce entrepreneurial ventures has not been given much attention. Few studies, especially on entrepreneurial success factors, have been conducted within the context of virtual environment or e­commerce (Jeffcoate et al., 2002). This study focuses on the e­commerce businesses operated by entrepreneurs. The research aims to answer two main questions: 1) what are the critical factors associated with the success of e­commerce entrepreneurs? and 2) to what extent, are the critical factors related to the success of e­commerce entrepreneurs? Most of the research on e­commerce ventures has been done in mostly developed countries in the West, whereas recently high entrepreneurial activities are found in the Asian developing countries (Reynolds et al., 2002). Hence, the study of e­ commerce entrepreneurs in developing countries such as Thailand will help to fill this gap. Additionally, much of the research on e­commerce ventures in Thailand has been done on the early stage of adoption or the diffusion of innovation, but the study of e­commerce operations is scarce. It was hoped that this study would advance knowledge of e­ commerce and entrepreneurship and contribute to a better understanding of the e­commerce practices in Thailand. THEORITICAL FRAMEWORK The Domain of Entrepreneurship The field of entrepreneurship discipline is young and emerging (Neck, 1999). The domain of entrepre­ neurship consists of innovation, traits, behaviors, and rates as shown on Figure 1. Starting with Schumpeter (1934) viewed the innovation as the heart or the central characteristic of entrepreneurial endeavors. According to Schumpeter (1943), entrepreneurial behaviors are the source of competition, not the market force of supply and demand. However, the essence of Schumpeter’s approach is that entrepre­ neurs are competitive and always strive to gain an
edge over their competitors (Gary, 2002). Con­ sequently, the trait research focused on the entrepreneurs’ characteristics such as need for achievement, internal locus of control, high risk­taking propensity, and tolerance for ambiguity (McClelland, 1961; MacMillan, 1965). Gartner (1988) argued that research on entrepreneurship should focus on the behaviors of an entrepreneur including the process, function, and activity of new venture creation. Later, the rate approach grounded in the ecology of organization formation was introduced (Alrdrich, 1990). Rate research focused on the environmental condition generation variation in the number of founding over time (Neck, 1999). Figure 1: The Domain of Entrepreneurship Research Behavioral Approach (Gartner, 1988)
Innovation (Schumpeter, 1934) Trait Approach (McClelland, 1961) Rate Approach (Aldrich, 1990) The present study was focused on the relationship between the critical factors and the success of the e­commerce entrepreneurs. The entrepreneurial traits of achievement orientation (McClelland, 1961), locus of control (Rotter, 1966), and risk­taking propensity (Brockhaus, 1980) were used in developing the theoretical framework. In addition, the external factor of government support and the behavioral approach of managerial factors such as e­networking skills and SERVQUAL dimensions (Parasuraman et al., 1988) of e­service were incorporated in the framework. The proposed research model for the study was depicted in Figure 2. Figure 2: Conceptual framework of factors relating to the success of e­ commerce entrepreneurs Trait Factors Achievement Orientation Risk­Taking Propensity Locus of Control Managerial Factors Successful E­commerce Entrepreneurs
E­ Networking
E­ Service Quality
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Reliability
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Responsiveness ·
Ease of Use
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Self­Service External Factor Governmental Support ·
·
·
·
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Growth Rate
Sale Volume
Business Stability
Customer Acceptance
Overall Satisfaction Success Success can be measured by quantitative and by qualitative criteria. Hisrich (2000) indicated that suc­ cess can be measured in terms of sales growth, income, employment trends, and satisfaction. He also found that success has two distinct dimensions: economic success and entrepreneur’s satisfaction. Gartner (1988) defined an entrepreneur as an indivi­ dual who establishes and manages a business for the primary purposes of profit and growth. Growth is a key objective for entrepreneurial ventures as it stimulates success (Ireland et al., 2001) and appears to be a primary goal of good entrepreneurships (Feindt et al., 2002). While some research has used financial performance such as return on investment as key indicators, others have used owner satisfaction in areas such as achievement of profit goal, business stability, number of employees’ growth, and annual sales volume (Miller, 1983). New firms often are initiated because founders prefer to work for themselves rather than take direction from an organizational superior (Liao et al., 2003). This is consistent with a traits approach, whereby effectiveness may be judged by the most basic type of criteria, such as monthly cash flow or mere survival (Lumpkin & Dess, 1996). In the past, self­reported data of business growth and sales volume by entrepreneurs has had better internal con­ sistency and content validity compared with other self­reported data of venture performance (Chandler & Hanks, 1993). In Thailand, Thai­Chinese entre­ preneurs tend to keep their businesses low profile and refrain from disclosing information about their earnings. Therefore, non­financial goals or indicators of the owners such as overall satisfaction, growth rate, sale volume, business stability, and customer acceptance were utilized in this study. The key performance indicators facilitating entrepreneurial sustenance and growth in the e­commerce context include entrepreneurial characteristics, managerial processes, and effective support systems (Kanungo, 1998). In other words, the effort here would be high­ lighting key traits found in successful entrepreneurs, the entrepreneurial behaviors or managerial factors, and the external factor of supportive systems pro­ vided by the government. These three dimensions are deemed to collectively determine entrepreneurial success. Trait Factors Personality theories emphasize the importance of entrepreneurs’ personal characteristics that are ex­ tremely important for venture success (MacMilland, 1965). Entrepreneurial traits focus on identifying the general demographic and unique psychological characteristics of entrepreneurs, with particular em­ phasis on those characteristics that would indicate a propensity for success. According to Powell and Bimmerle (1980), entrepreneurial traits are regarded as distinguishing characteristics or qualities that pre­ dispose a person to initiate a venture. The study of personal traits assumes that entrepreneurs possess certain personality traits, motives, and values that drive them to the choice of an entrepreneurship career (Ibrahim & Ellis, 1993). The entrepreneurial trait research asserts that entrepreneurs can be recognized by personal traits such as the risk­taking propensity, achievement orientation, and locus of control (Wainer & Rubin, 1999). Achievement orientation McClelland’s need for achievement has the longest history of personal characteristic measures associated with the creation of new ventures (Ibrahim & Ellis, 1993). According to McClelland (1961), an individual with a high need for achieve­ ment is characterized as having a desire to take personal responsibility for decisions, a tendency to work harder at tasks requiring mental manipulation, setting goals and trying to achieve them, and a tendency to think and plan ahead. Achievement orientation is required by almost all entrepreneurial ventures (Kuratko & Hodgetts, 1995). They live under constant pressures – first, for their firms to survive start­up, then to stay alive, and finally to grow (Ibrahim & Ellis, 1993). The archetype success­ ful e­commerce entrepreneur is supposed to em­ body achievement motivation which facilitates the creation and development of enterprises in competitive environments. Furthermore, previous studies have shown that the founders of e­commerce businesses with a high level of need for achieve­ ment are more successful than others (Feindt et al., 2002). This leads to the following hypothesis: Hypothesis 1: Achievement orientation is positively related to the success of Thai e­commerce entrepreneurs. Risk­taking propensity Risk­bearing is an essential characteristic of entrepreneurs (Bygrave, 1989; Ibrahim & Ellis, 1993). According to Brockhaus (1980), risk­taking propensity is defined as the perceived probability of receiving the rewards associated with success of a proposed situation. His empirical study measured risk­taking perceptions by using a choice dilemma questionnaire asking the respondents to choose between a safe alternative and a more attractive but risky one. Additionally, the results from one study of risk­taking preferences demonstrated that organizational founders exhibit a stronger risk­ taking propensity, as well as a higher tolerance for ambiguity, than do non­entrepreneurial individuals (Begley & Boyd, 1987). Kuratko and Hodgetts (1995) also indicated that successful entrepreneurs are willing to take risks and they attribute success in business to their ability to take a chance and calculated risk (Ibrahim & Ellis, 1993). The following hypothesis is therefore proposed: Hypothesis 2: Risk­taking propensity is positively related to the success of Thai e­commerce entre­ preneurs.
Locus of control Locus of control has received much interest in entrepreneurship research and has been identified as one of the most dominant entrepreneurial charac­ teristics (Brochkhaus, 1980; Rotter1966). Clearly, locus of control refers to the entrepreneurial perception that all events in their lives are under their control and thus they can influence events and determine their own fate (Ibrahim & Ellis, 1993). Rotter (1966) indicated that an internal locus of control affects learning by motivating and supporting an individual activity. Brochkhaus (1980) viewed locus of control as individuals who believe in their ability to control the environment through their own actions. In general, it means the ability and will to be self­ directed in the pursuit of opportunities (Lumpkin & Dess, 1996). Many studies point out that founders of new businesses have more locus of control than non­founders and the ability for entrepreneurial success is also related to internal locus of control (Begley & Boyd, 1987; Brochkhaus, 1980; Rotter, 1966). Hence, it is hypothesized that: Hypothesis 3: Locus of control is positively related to the success of Thai e­commerce entrepreneurs. Managerial Factors A growing body of evidence suggests that the more successful firms, over time, are those that engage in higher levels of entrepreneurial activity (Morris, et al., 2002). An entrepreneur in the behavioral approach is viewed as a person who effectively manages resources and implements an appropriate strategy, and controls systems to pursue a window of opportunity (Ibrahim & Ellis, 1993). Recent research suggests that organization strategy and the competency of the entrepreneur are the key success factors in venture creation (Korunka et al., 2003). Gary (2002) concluded that successful and sustained entrepreneurship implies a high level of managerial competence. According to Ireland et al. (2001), entrepreneurial behaviors and strategic actions are at the heart of wealth creation. However, studies have shown that Internet­based commerce ventures, which are most likely to survive and grow in the virtual environment, rely on the following sets of skills or practices: information technology technical and managerial skills (McKenney, 1988), and e­networking (Knouse & Webb, 2001). E­networking A recent study by Shaver (2003) on the critical success factors of small and medium enterprises revealed that networking is perceived as important. Similarly, Hills et al. (1997) indicated that entre­ preneurial networks are important to successful opportunity recognition. As today’s products and services exist in digital form, they are delivered through information­based distribution channels such as Internet. The Internet has changed the way people communicate, how they share information with others, and how they do business. In addition, electronic networking (e­networking) has become even more established, e­commerce venture net­ working has moved beyond traditional means of communication such as telephone, fax, and letters (Knouse & Webb, 2001). Through the use of the Internet, e­commerce entrepreneurs can receive the latest information faster with low cost (Evans & Volery, 2001). Also, they can easily set up tele­ conferencing with their business partners. This can expose them to new realms of information and contacts and allow them to exploit new opportunities more quickly. Internet networking has definite advan­ tages over other types of networking. Additionally, network maintenance is cheaper and easier than face­ to­face or even telephone interactions. The relative ease of access and low maintenance requirements can provide stronger ties as well as more extensive contacts between the e­commerce ventures and their customers and business partners (Knouse & Webb, 2001). In line with the above reasoning, it is hypo­ thesized that: Hypothesis 4: E­networking is positively related to the success of Thai e­commerce entrepreneurs. E­service quality In e­commerce operations, e­service quality mea­ sures have been applied to assess the managerial factors associated with the web site success (Devaraj et al., 2002). The dimensions of e­service quality including reliability, responsiveness, ease of use, and self­service are positively related to the success of e­commerce entrepreneurs. Reliability Twenty–years of research on service quality has shown that reliability is the most important of all service dimensions (Zeithanl, 2002). Reliability refers to the ability to perform the promised service accurately and consistently including frequently updating the website and accuracy of online purchasing and billing. Santos (2003) referred to reliability as the ability to perform the promised service accurately and consistently, including frequency of updating the website, prompt reply to customer inquiries, and accuracy of online purchasing and billing. In e­commerce, a critical concern of trading partners is the reliability of the system underlying its electronic service and transaction processing systems (Greenstein & Vasarhelyi, 2002). The concept of reliability, however, encompasses critical attributes; security of data, business policies, transaction processing integrity, and privacy of data (Applegate et al., 2002). Voss (2003) indicated that reliability has been one of the major causes of dissatisfaction in e­commerce for order fulfillment and it includes the ability to connect to the web, minimum downtime, and systems not crashing. Therefore, reliability can be one of the most significant measures used to assess customer perceptions of e­commerce service quality (Voss, 2003). Thus, the following hypothesis is suggested:
Hypothesis 5: Reliability of e­service quality is positively related to the success of Thai e­commerce entrepreneurs. Responsiveness One of the most widely used dimensions of SERVQUAL, developed by Parasuraman et al. (1988) is responsiveness. Responsiveness refers to the ability to deal effectively with complaints and prompt­ ness of service (Van Riel et al., 2003). According to Carlson (2000), customers expect Internet retailers to respond to their inquiries promptly. Prompt responses help customers resolve their problems and make decisions in a timely fashion (Korper & Ellis, 1999). Additionally, web­based customers want to find desired information quickly and accurately (Zeithaml et al., 2000). Studies on responsiveness of web­based service reveal that there is a significant positive correlation between the speed in delivery of service and user satisfaction (Hoffman & Navak 1996). Hence, it is hypothesized that: Hypothesis 6: Responsiveness of e­service quality is positively related to the success of Thai e­commerce entrepreneurs. Ease of use Ease of use is the single most important need to fulfill for potential customers (Korper & Ellis, 1999). Several researchers have found ease of use to be an important factor in the evaluation of an electronic service option (Dabholkar, 1996; Lockett & Littler, 1997). Online customers are not technically savvy and they may quit easily rather than tolerate too many difficulties. Thus, easy access to valuable information is a strong requirement of e­commerce and e­service (Voss, 2003). According to Zeithaml et al. (2000), ease of use involves simplicity in access, in download, and in navigation online. Kaynama and Black (2000) revealed that online customers want a professional, clear, and concise site and they want to be able to find the right products and conduct their transactions quickly. The most frequently cited complaints are long download time, difficulty of use, and obsolete content. Usability is the key as e­commerce entrepreneurs must keep their customer needs at the top of the web design priority list (Korper & Ellis, 1999). Therefore, this leads to the following hypothesis: Hypothesis 7: Ease of use of e­service quality is positively related to the success of Thai e­commerce entrepreneurs. Self­service Laudon and Laudon (2002) emphasized that the web and other network technologies are inspiring new approaches to customer service and support. In addition, these changes have occurred mainly through the development of technology­based self­ service formats, which enable consumers to perform services for themselves quickly and conveniently (Bobbit & Dabholkar, 2001). Personal service is a matter of costs and costs have often been the driving force behind the introduction of standardized self­ service systems that reduce service production costs and enable firms to gain a competitive advantage (Selnes & Hansen, 2001). Self­service through the Internet can simultaneously cut the costs of customer service while increasing its quality. Through the use of the web­based self­service, however, customers can find answers to their questions twenty­four hours a day and seven days a week. Since many customers ask common questions, the organizations may pro­ vide a FAQ (frequently asked questions) section that can save an organization significant time and money (Greenstein & Vasarhelyi, 2002). Web­based self­ service also allows customers to track orders or the status of their accounts online without human intervention. Therefore, self­service technology potentially yields a result of greater satisfaction and reduces cost on customer service (Carlson, 2000). This is hypothesized that: Hypothesis 8: Self­service of e­service quality is positively related to the success of Thai e­commerce entrepreneurs. External Factor The success of e­commerce enterprises depends not only on the drive, initiative, and managerial strategy of the e­commerce entrepreneurs but also on the existence of effective support systems. Support services are usually provided by the government agencies. Government support Supportive government is significant for the development of both e­commerce and entrepreneur­ ship to thrive in a dynamic environment. Many national governments have invested numerous financial budgets on ICT (OECD, 2004) and imple­ mented a wide range of programs and procedures to facilitate and enhance entrepreneur activities (Reynolds, 2003). According to Feindt et al. (2002), supportive government can nurture entrepreneurial activity by giving the free market an opportunity to operate under the laws of supply and demand. In Thailand, the government has taken an active role in the establishment of e­commerce infra­ structure. In order to boost the e­commerce initia­ tives, the Thai government in 1998 established the Electronic Commerce Resource Center (ERCR) within the National Electronics and Computer Tech­ nology Center (NECTEC). ERCR has three main tasks: 1) to raise awareness about e­commerce and promote cooperation between private and public sectors; 2) to collect information and monitor e­commerce development; and 3) to help develop e­commerce capacity through training. Thailand’s national e­commerce vision is to strengthen the competitive advantage of Thai entrepreneurs, especially SMEs, by using e­commerce as a vehicle
for exporting goods and services and also for domestic trade (NECTEC, 2005). The government support policy is a key component for accelerating the growth of e­commerce entrepreneurs in Thailand (Gray & Sanzogni, 2004). Thus, the following hypothesis is proposed: Hypothesis 9: Government support is positively related to the success of Thai e­commerce entre­ preneurs. RESEARCH METHODOLOGY Initially, the theoretical literature from various sources was reviewed to design the research framework. Next, in­depth interviews were con­ ducted in order to develop the instrument for study. Subsequently, the quantitative phase was conducted through the self­report questionnaires that had been developed based upon literature review, published scales, and findings from in­depth interviews. A preliminary version of the questionnaire was pilot tested. For the specific context of the present study, the e­commerce entrepreneurs in Thailand were chosen as units of analysis. According to the annual GEM report, in 2002, the levels of entrepreneurial activity are high among developing countries in Asian. Among those 37 GEM countries, interes­ tingly, Thailand scores at 18.9% which is the highest rate of entrepreneurship activity (Reynolds et al., 2002). The high entrepreneurship rating in developing countries reflects both a high level of firm creation and the classification of existing firms as entrepre­ neurial (Acs et al., 2004). The sample population for this study consisted of e­commerce entrepreneurs who have run their web­based businesses for at least two years and have previously registered with the Department of Business Development, Ministry of Commerce, Thailand. In addition, the study was conducted throughout the country in order to be representative of all Thailand. The target population was 1,794 Thai founders of e­commerce operation. Of these numbers, 250 founders were used for the first and the second pilot tests. Hence, the large­scale survey was carried out with 1,544 e­commerce entrepreneurs in December 2005. A total of 375 responses were obtained resulting in a 24% response rate. Table 1 shows the demographic information of respondents that met the criteria of the study. RESULTS Respondent Profile According to Table 1, men constituted the majority of the sample in the study and about 38% were women. Based on age, it appears that most of the respondents were in the early stages of their careers, with the largest group of 45% in the 25 to 34 years of age category and another 27% in the 35 to 44 category. They were well educated; 54% of them hold a bachelors degree and 17% hold a masters degree or higher. Forty­five percent are sole owners and another 35% are partnership owners. Nearly 39% have work forces of 1 to 4 employees in their company. Sample characteristics appear to be repre­ sentative of the affluent middle to upper middle classes in Thailand. Table 1: Demographic Information of Respondents Characteristic Gender Male Female Age 18­24 years 25­34 years 35­44 years 45­54 years 55­64 years Education Secondary school Diploma/certificate Bachelor’s degree Master’s degree or higher Number of Owner One owner Two owners 3­5 owners 6 or more owners Number of Employee No employee 1­4 employees 5­9 employees 10­19 employees 20 employees or more N = 375 Valid Frequency Percent 230 145 61.3 38.7 29 167 101
59
19 7.7 44.5 26.9 15.7 5.4 20
90 202
63 5.3 24.0 53.9 16.8 169 134
50
21 45.2 35.8 13.4 5.6 17 138 151
59
10 4.7 38.6 42.2 20.7 2.8 Reliability of Construct In the case of reliability analysis, Cronbach’s alpha which measures internal consistency was employed. Its value refers to the degree to which items in a set are homogeneous (Peterson, 1994). A minimum alpha of 0.6 suffices for the early stages of study and alpha values greater than 0.7 are considered to be adequate for testing the reliability of factors (Nunnaly, 1978). In the present study, all constructs tested in the pilot and field survey had alpha coefficients exceeding 0.6. Thus, it can be concluded that this instrument has internal consistency and is therefore reliable for further data analysis. Validity of Construct For the construct validity, the most common approach is to factor analysis each construct or factor to check for unifactoriality (Churchill, 1979). To establish construct validity, factor analysis can play a valuable role in the validation of constructs. Hair et
al. (1998) described how factor analysis can identify sub­dimensions by grouping variables based on item inter­correlations. Factor loading indicates the correlation between variables and factors. Variables with high loadings in the same factor form a group. A factor loading value of 0.50 and higher is regarded as good and significant, and 0.45 as fair (Hair et al., 1998). Also, the principle components analysis with Varimax rotation was used in all cases. Overall, the factor loadings in the present study achieved eigenvalues greater than one and were considered practically significant for the study (Hair et al., 1998). This indicated that the sets of measures in each construct represented the concepts well and, therefore, confirmed that the measures in the study achieved construct validity. As a result, further analysis and interpretation of the study can be conducted. Correlation Analysis Correlation analysis shows the univariate correlation between critical factors and success of e­commerce entrepreneurs. The results of hypothesis testing are depicted in Table 2. Overall, the cor­ relation is significant with a p­value less than 0.01. The findings reveal that there are positive associa­ tions between the perceptions of success and the six factors: a) achievement orientation; b) locus of control; c) reliability; d) responsiveness; e) ease of use; and f) self­service. Hence, H1, H3, and H5­H8 that state that these factors are positively related to the success of Thai e­commerce entrepreneurs are supported. Yet, the results on H2, H4, and H9 testing show that there is no significant relationship between success and the three factors: a) risk taking pro­ pensity; b) e­networking; and c) government support and then these hypotheses are not supported. Table 2: The Results of Hypothesis Testing Variables Dependent Success N Mean SD Independent Pearson’s Correlation Results r p­value Supported H1: Achievement orientation 366 3.59 .62 .44** .000 Yes H2: Risk taking propensity 374 3.10 .61 .07 .027 No H3: Locus of control 375 3.38 .93 .79** .000 Yes H4: E­networking 370 3.21 .70 .00 .326 No H5: Reliability 369 3.68 .63 .61** .000 Yes H6: Responsiveness 375 3.93 .71 .21** .001 Yes H7: Ease of use 373 3.66 .66 .58** .000 Yes H8: Self­service 365 3.73 .56 .20** .001 Yes H9: Government support 364 3.65 .55 .01 .368 No Note: *. Correlation is significant at the 0.05 level (1­tailed). **. Correlation is significant at the 0.01 level (1­tailed). Relative Contributions The multiple regressions were further conducted to measure multivariate correlation between critical factors and success of e­commerce entrepreneurs. Multiple regression analysis can establish a set of independent variables explains a proportion of the variance in a dependent variable at a significant level through a significance test of R 2 , and can establish the relative predictive importance of the independent variables by comparing beta weights (Hair et al., 1998). The betas reflect the estimated unique contribution of each independent variable. The total nine variables proposed to have a positive relationship with the success of Thai e­commerce entrepreneurs accounted for 58% of the total predicable variances as illustrated in Table 3. This suggested that the nine variables could predict the success of Thai e­commerce entrepreneurs very well. The study also shows the relative contributions of the critical factors for the predication of the competitive success of Thai e­commerce entrepreneurs. The locus of control accounted for the highest weight of relative predictive importance (b = .40) toward competitive success of e­commerce entrepreneurs in Thailand followed in order by reliability (b = .33), ease of use (b =.19), achievement orientation (b = .08), and self­service (b =.05).
Table 3: The Results of Relative Contributions Variable Achievement orientation Risk­taking propensity Locus of control E­networking Reliability Responsiveness Ease of use Self­service Government B .094 .046 .478 .019 .316 ­.080 .192 .054 .025 SE B .043 .052 .059 .050 .038 .053 .027 .029 .016 b .087* .043 .401* .017 .331* ­.079 .192* .050* .023 Note: R 2 =. 58; AR 2 = .52 (ps < .05); *p < .05 DISCUSSION The findings in this study supported several hypotheses. The results of correlation analysis indicate that six hypotheses formulated for this study are statistically accepted. The results show that successful Thai e­commerce entrepreneurs are those with an achievement orientation, locus of control, and an emphasis on e­service quality ­­ especially the reliability, responsiveness, ease of use, and self­ service features. The study also shows the relative contribution of the critical factors for the predication of the competitive success of Thai e­commerce entrepreneurs. The locus of control has the highest weight of relative predictive importance toward the competitive success of e­commerce entrepreneurs in Thailand followed in order by reliability, ease of use, achievement orientation, and self­service. Overall results in the study confirm the literature of e­ commerce and entrepreneurship. However, some findings were unexpected and perhaps need more explanation. The finding of the risk taking propensity was not consistent with the previous studies. This does not necessarily imply that successful Thai e­commerce entrepreneurs do not take risks. But it supports the notion of Schumpeter (1934) that risk taking is not an essential trait of entrepreneurs as he believed that innovation is the central characteristic of entrepre­ neurs (Carland, et al., 1984). Further, Brockhaus (1980) supported Schumpeter with empirical results demonstrating that risk taking behavior cannot be used as a distinguishing characteristic of entrepre­ neurship. This can be interpreted that Thai e­com­ merce entrepreneurs tend to be innovative rather than risk taking persons. Another approach to explain the finding is through Hofstede’s (2003) extensive global research (70 nations) on five cultural dimensions. Thailand is somewhat unique with its highest ranking by Hofstede on uncertainty avoidance. This indicates a society with a low level of tolerance for uncertainty. As a result of this high uncertainty avoidance characteristic, the society does not readily accept change and is very risk adverse. Thailand’s rank of 64 is slightly higher than the Asian average of 58. According to Hofstede’s cultural dimensions, this suggests that Thai e­com­ merce entrepreneurs do not take risks because of the influence of their culture. In addition, the study on e­networking was not statistically significant and inconsistent with previous study. The explanation could be that most of their business networks are familiar with using traditional means of contacts such as telephones and facsimiles. They may be not technically savvy and they may quit easily rather than tolerate too many difficulties. As a result, this can be an obstacle for them to do so. In addition, the diffusion of information commu­ nication technology (ICT) in Thailand might be not instilled widely and adequately to respond to the development of e­commerce in the country. Hence, it might be suitable to test this concept within the developed countries where the diffusion of ICT has already been instilled. Finally, the finding on government support is not congruent with those of previous studies as the Thai e­commerce entre­ preneurs have not perceived the importance of the support from the Thai government. Perhaps they might feel that the government does not provide the right kinds of support to meet the needs of the e­commerce entrepreneurs. Therefore, to enable e­commerce to flourish in Thailand, the government should regularly assess the needs of e­commerce entrepreneurs and provide the necessary supports such as counseling or training programs for them. CONCLUSION The findings of this study have important practical implications. The study has provided some preliminary evidence concerning the critical success factors for e­commerce entrepreneurs in the context of Thailand. Government agencies and practitioners can also use the findings in this study as a vehicle for improving and increasing the performance and success of e­commerce operations among the entre­ preneurs and small and medium enterprises. As for e­commerce entrepreneurs, these results will help them to have a better understanding of the current situation regarding the key success factors which can contribute to their businesses’ success. In addition, this study contributes to the growing body of know­ ledge for both entrepreneurship and e­commerce in several ways. First, most of the research on e­commerce ventures has been done in mostly developed countries in the West, whereas recently high entrepreneurial activities are found in the Asian developing countries. The study of e­commerce entrepreneurs in developing countries such as Thailand can fulfill this gap as well. Second, much of the research on e­commerce ventures in Thailand has been done on the early stage of adoption or the diffusion of innovation, but the study of e­commerce operations is scarce. This study could advance knowledge of e­commerce and entrepreneurship and contribute to a better understanding of the
e­commerce practices in Thailand. Hence, the pre­ sent study adds to the empirical body of knowledge and also contributes to the literature of e­commerce and entrepreneurship. However, the study has a few limitations that need to be addressed as well as directions for future research. The present study was confined to assessing the effects of the critical factors on the success of e­commerce entrepreneurs in Thailand. A recent analysis suggested that most e­commerce and entrepreneurship research has been generated in the U.S. and Western Europe (Thomas & Mueller, 2000). The transferability of these findings to con­ texts where the socioeconomic environments may be vastly different remains in question. This study made several cross­cultural references to the U.S. studies. This might not be completely appropriate, but it is unavoidable because there have not been many previous studies of e­commerce entrepreneurs in Thailand. Differences in the results of this study compared to other studies might be due to cross­ cultural differences, both in terms of socioeconomic settings and e­commerce operations. Furthermore, the indicators of business success in this study were focused on the perceptions of the owners only. Objective performance data is very difficult to obtain, but it is a better approach to determining the success of the e­commerce entrepre­ neurs. This study could have provided a more com­ prehensive understanding about the competitive success of e­commerce ventures if it expanded its base to include customer perceptions. In order to see the critical success factors of other segments of the economy, similar studies could be conducted in different sectors such as the financial sector or the trading sector. 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Shaver, S.A. (2003). Critical success factors for manufacturing networks as perceived by net­ work coordinators. Journal of Small Business Management, 41(4), 325­345. Thomas, A. S. & Mueller, S. L. (2000). A case for comparative entrepreneurship: Assessing the relevance of culture. Journal of International Business Studies, 31(2), 287­301. United Nations Conference on Trade and Develop­ ment (UNCTAD). (2003). E­commerce and development report 2003. New York and Geneva: United Nations. Van Reil, A. C. R., Semeijn, J., & Janssen, W. (2003). E­service quality expectations: A case study. Total Quality Management & Business Excellence, 14(4), 437­451. Voss, C. A. (2003). Rethinking paradigms of service­ service in a virtual environment. International Journal of Operations & Production Management, 23(1), 88­104. Wainer, H.A. & Rubin, I.M. (1999). Motivation of R&D entrepreneurs: Determinants of company success. Journal of Applied Psychology, 53(3), 178­184. Zeithaml, V. A. (2002). Service excellence in electro­ nic channels. Managing Service Quality, 12(3), 135­155. Zeithaml, V. A., Parasuraman, A. & Malthotra, A. (2000). A conceptual framework for under­ standing e­service quality: Implications for future research and managerial practice. Working Paper, Report Nr. 00­115. Cambridge, MA: Marking Science Institute. Dr. Nittana Sukasame received her Ph.D. in Business Administration from Bangkok University in collabora­ tion with University of Nebraska, Lincoln, U.S.A. She completed her M.Ed. in Vocational Education from Colorado State University, U.S.A. and her B.A. in English from Khon Kaen University. Currently, she is a full­time lecturer for undergraduate and graduate programs in the School of Business Administration, Bangkok University. Her particular field of interest includes telecommuting, e­service, e­commerce, IT new venture, and entrepreneurship. Professor Dr. Sang M. Lee is currently the University Eminent Scholar, Regents Distinguished Professor, Chair of the Management Department, Executive Director of the Nebraska Productivity and Entre­ preneurship Center, and Director of the Center for Albanian Studies. He received his Ph.D. degree in Management from the University of Georgia in 1969. He also served as Professor at Virginia Poly­technic Institute and State University prior to coming to the University of Nebraska in 1976. Dr. Lee is an inter­ nationally known expert in the fields of decision sciences, productivity management, and global business. He has authored or co­authored 50 books, mostly in the field of management. He has published more than 260 journal articles, and 750 original papers. He helped establish the Ph.D. Program in Business at Bangkok University, Thailand. He is a frequent consultant and trainer for a number of business, non­profit, and government organizations in the U.S. and abroad.