Factors influencing SMEs website continuance intention in Malaysia

Telematics and Informatics 33 (2016) 150–164

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Telematics and Informatics journal homepage: www.elsevier.com/locate/tele

Factors influencing SMEs website continuance intention in Malaysia T. Ramayah ⇑, Niu Swee Ling, Seyedeh Khadijeh Taghizadeh, Syed Abidur Rahman School of Management, Universiti Sains Malaysia, Minden, 11800 Penang, Malaysia

a r t i c l e

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Article history: Received 20 February 2015 Accepted 17 June 2015 Available online 20 June 2015 Keywords: Website continuance intention CEO characteristics Organizational characteristics Technological characteristics Environmental characteristics Malaysian SMEs

a b s t r a c t The purpose of this study is to find critical determinants of Malaysian Small Medium Enterprises (SMEs) intention to continue website as a business innovation. CEO, organizational, technological, and environmental characteristics are considered as cohesive significant predictors. Further, it is aimed to examine the influence of existing level of web adoption as a moderator in small to medium firm website continuance intention. A total number of 108 SMEs participated in this research. The website continuance intention was found to be depended on CEO’s innovativeness, CEO’s IT attitude, relative advantage, and cost in Malaysian SMEs. Surprisingly, CEO IT knowledge, firm’s size, employee IS knowledge, compatibility, security, external pressure and support do not play any role on the continuance of website adoption. In addition, the moderator effect of web adoption level is revealed to have an insignificant role in this study. Understanding the influential factors of websites continuance intention would help the government to devise appropriate policies and support programmes on promoting information technology (IT) acceptance and extension among the SMEs. Likewise website owner or solution provider can gain considerable value from a better insight into key determinants of businesses website retention intention. Ó 2015 Elsevier Ltd. All rights reserved.

1. Introduction Small medium enterprises (SMEs) are recognized as the backbone to economic, development and employment growth. However, SMEs are still hesitant to embrace and adopt new technology (Dahnil et al., 2014). One reason for this reluctance may be that SMEs suffer from resource poverty compared to large companies (Thong, 2001). It is perhaps fair to assume that resource allocation and frameworks for adopting IT among large firms cannot be generalized to SMEs. Other than resource poverty of SMEs, organization structure, number of employees, and company culture may effect or cause low technology adoption levels common among SMEs. They nonetheless should initially focus on establishing web homepages in order to enable global access to company information. Scholars have illustrated ‘websites’ as communication tools that facilitate an organization ability to promote and easily modify company messages in order to overcome apprehensions and promote interests of a wide range of people (Hinson et al., 2014). Furthermore, having an online presence is a necessity for a business to boost their revenues tremendously via online activities that include the use of websites. As mentioned by scholars, SMEs can change their business through the use of the Internet and online activities (in other words, are able to see the value of the Internet to their growth strategy) (Levy and Powell, 2003). ⇑ Corresponding author. E-mail addresses: [email protected] (T. Ramayah), [email protected] (N.S. Ling), [email protected] (S.K. Taghizadeh), [email protected] (S.A. Rahman). http://dx.doi.org/10.1016/j.tele.2015.06.007 0736-5853/Ó 2015 Elsevier Ltd. All rights reserved.

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The SME sector in Malaysia plays a vital role in the country’s industrialization program and represents the mainstay of industrial development in the country (Saleh and Ndubisi, 2006; Yeoh, 2014). In 2011, SMEs in Malaysia comprised 99.2% of all business establishments and contributed about 32% of gross domestic product (GDP) and 59% of total employment in the country (SMIDEC, 2011). In view of the important role played by SMEs, the Malaysian government continues to stand committed towards the development of a robust and competitive SME sector and considers its wellbeing a key national development strategy. Surprisingly, despite significant effort and investment from the Malaysian government, website activities among SMEs remains at an inception stage and is positioned on the other side of digital divide (Le and Koh, 2002). The sustained use of existing website related activities is critical in this day to establish a firm’s foundation. Future exponential growth is predicated on web-based activities and a means of achieving Malaysia’s ‘developed nation vision.’ Ultimately, effectiveness of website deployment is determined by companies’ continuance intention to retain a web presence. Hence, promoting continuance usage of websites for SMEs in Malaysia is crucial for future growth in order for them to remain relevant in a dynamic and changing environment. In this regards, there is a need to identify and critically examine significant determinants that contribute to the sustainability of SMEs’ business based websites in Malaysia that allow its continuous growth despite the challenging competitive landscape. For SMEs specifically, the role of the Internet as a SME businesses strategy needs to be researched, particularly for strategic business development and the discovery of new business opportunities. It has been asserted that Internet technologies have entirely eased the way towards an electronic economy that enables innovative business tactics (Lecic-Cvetkovic et al., 2015). Therefore, the orientation of the modern business toward the global market implies the integration of information and communication technologies (ICTs) with Internet technologies, thus providing data flow without spatial constraints. However, earlier research has also acknowledged that ICT tools plays significant role in the development of business operations of SMEs (Mbatha, 2013). Therefore, this paper aims to examine the state of use of websites and factors that may influence website continuance in Malaysian SMEs. In view of this, the main objectives of this research are to study the critical factors that explain variance in small and medium-sized companies’ behavior in continuing their web services. Specifically the research objectives are to delineate the key determinants of Malaysian SMEs website continuance intention and to reveal the potential internal factors of SME website continuance intention from the CEO’s and organization’s perspectives. The objective of this research also includes studying the effects of external organizational variables. These include innovation and environmental characteristics of SME website sustainability as well as the influence of existing levels of web adoption as a moderator in small to medium firm website continuance intention.

2. Influential factors on website continuance intention Scholars defined information systems (IS) continuance behavior as continued usage of IS by adopters, where a continuance decision follows an initial acceptance decision (Kim et al., 2007). On the other hand, Gemino et al. (2006) defined website adoption as the establishment of a company website to share business information, maintain business relationships, and conduct business transactions through telecommunications networks. Usage of websites has been also considered a tool to leverage competitive advantages in a diverse range of activities (Mohammadi and Abrizah, 2013). Thereby, website continuance intention can be defined as the intention of continuance usage of a company website to share business information, maintains business relationships, and conduct business transactions through telecommunications networks. Prior empirical work on IT innovations identified four groups of technology adoption determinants whether external or internal (Lefebvre et al., 1991; Raymond, 2001; Thong, 1999). Internal factors include the characteristics of the organization’s decision makers, and characteristics of the organization itself, on the other hand external factors include characteristics of technological innovation, and characteristics of the environment in which the organization operates. Regarding to internal factors, much organizational level technology adoption research has demonstrated the profound influence of the CEO on the firm’s innovativeness and decisions to adopt technology (Thong, 1999). CEO innovativeness, IT knowledge and attitude towards IT adoption were the top predictors for technology adoption and extension by organization. In addition to that, Thong (1999) highlighted the significance of organizational predictors as the key determinants for IS adoption extension. Organizational characteristics include internal factors of the organization which are available to constrain or facilitate website adoption. In a study conducted by Jeyaraj et al. (2006), top management support, organization size, and professionalism of the IS unit stands as the best predictors of an organization’s IT adoption. Other significant independent variables include employee IS knowledge (Bharati and Chaudhury, 2006; Brand and Huizingh, 2008; Mehrtens et al., 2001; Thong, 1999, 2001), prior technology use (Dholakia and Kshetri, 2004; Kowtha and Choon, 2001), communication (Chong and Pervan, 2007; Raymond, 2001), and nature of the business (Raymond, 2001; Sulaiman, 2000). Among all these organizational factors, firm size and employees IS knowledge are the concern of the current study as they are posited to have a significant direct impact on the firm’s commitment to innovation. External factors such as technological characteristics and environmental characteristics can play a significant role in determining its continuance adoption level. In terms of technological characteristics, the most popular predictors listed in the professional literature are perceived usefulness, relative advantage, cost, security, compatibility, complexity, and observability. Nevertheless, review of past studies revealed that two technological and innovation characteristics that are more

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pertinent at an organization level are relative advantage and compatibility. In the context of Malaysia, the primary influential factors in adoption of electronic commerce are relative advantage, compatibility (Alam et al., 2008), and cost (Khatibi et al., 2007). Besides, security is one of the major barriers in adoption of electronic commerce in Malaysia (Khatibi et al., 2007). In addition, the importance of external environmental factors was frequently stressed in past studies as well. These predictors cannot be controlled by organization; rather, they affect the way firms conduct their business. Jeyaraj et al. (2006) revealed external pressure and external information sources or expertise as promising predictors of IT adoption by organization. 3. Theoretical framework and hypotheses development Review of organizational technology adoption indicates that SMEs are likely to consider many factors when contemplating website continuance adoption. In this study, the proposed model is built based on (1) characteristics of CEO, (2) heterogeneous characteristics of SMEs, (3) technological characteristics, and (4) environmental characteristics in which SMEs operates. Thus, the SMEs’ website continuance intention model is presented in the following Fig. 1. Most studies consistently confirmed CEO innovativeness has a positive association with innovation adoption over the last few years. Al-Qirim (2005) found that CEO innovativeness is related to e-commerce adoption to make the decision for more ECIT technologies (intranet, extranet, Internet-EDI and websites) among SMEs in New Zealand. Further, Jantan et al. (2001) validated the significant role of CEO innovative mindset and found that CEO innovative was associated with extent of technology adoption in Malaysian SMEs. Likewise, CEO innovativeness positively correlated to the IS adoption in Singapore (Thong, 1999). As innovators, CEOs are not only risk-takers, receptive towards new technology and view things differently, they are also consistent and visible in committing funds and resources for new technology (Jantan et al., 2001). Thereby, unless CEOs are innovative and know that there are important steps to take, in any scarce resource situation, they potentially may decide not to continue using their website as a business channel. Therefore, continuance commitment and consistency of website investment from a firm driven by CEO innovativeness is of prime important. In view of this, the first hypothesis is: H1. SMEs with more innovative CEOs are more likely to continue their business web presence. Previous studies found that CEO or the managerial IT knowledge plays a major role in organizational-level innovation adoption (Hussein et al., 2007; Thong, 1999; Thong and Yap, 1995). Further, the significant result from Thong and Yap (1995) revealed that small businesses with CEOs who are more knowledgeable about IT are more likely to adopt IT. Hussein et al. (2007) asserted that managerial IT knowledge directly and positively influence the success of IS implementation in Malaysian context. With greater knowledge, the degree of uncertainty involved in IT adoption will diminish, resulting in a less risky adoption of IT. According to Thong (1999), many small businesses were tempted to postpone adoption of an INTERNAL FACTORS Web Adoption Level CEO Characteristics - Innovativeness - IT Knowledge - IT Adoption Attitude

Organizational Characteristics - Size - Employee IS Knowledge

Website Continuance Intention

EXTERNAL FACTORS Technological Characteristics - Relative Advantage - Compatibility - Cost - Security

Environmental Characteristics - External Pressure - External Support

Fig. 1. Research framework.

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innovation until the knowledge barriers are circumvented and lowered. The above findings can be applicable to the current study as well. However, SMEs’ CEOs typically tend to lack basic knowledge and awareness of IT. Consequently, some of them may possibly refuse to further allocate resources to company websites because of their inability to recognize the long-run benefits of online business activities. Thus, it’s assumed that a CEO with deeper IT knowledge is essential for continued provision of considerable significant funding for online investment. This study, therefore, proposes that, CEO IT knowledge is one of the factors necessary to retain a firm’s web presence, hence leading to the hypothesis as following: H2. The deeper the CEO’s IT knowledge, the more likely will be website technology continuance by Malaysian SMEs. Several studies from Thong and Yap (1995), Kula and Tatoglu (2003); and Seyal and Rahman (2003) empirically and consistently found a direct link between CEO or top management attitude towards IT adoption with the success of the firm’s innovation adoption process. Research conducted by Seyal and Rahman (2003), in particular, statistically validated that CEO attitude towards IT adoption was significantly and positively associated with e-commerce adoption of SMEs in Brunei. They revealed that management of small businesses strongly needs to have positive attitude toward and better understanding of the strategic importance of electronic commerce because of resource deficiency. Similarly, Lin (2006) reached the same result and revealed a positive relationship between CEOs attitudes and e-commerce adoption. This positive relationship existed because CEOs had great power to control the decision directly. Internet adoption can be regarded as a strategic decision (Kula and Tatoglu, 2003). Thereby, intuition and personal opinion of managers in SMEs play a very important role in strategic decision-making regarding the extent of Internet use. With more favorable attitudes, CEOs should be more open and receptive to continue to invest in online innovation activities, despite the recognition of Internet uncertainties and risks. Therefore, formation of positive attitude towards innovation is crucial and CEOs should more readily continue to adopt website usage if they perceive it as beneficial, compatible and relatively easy to use. This leads to the third hypothesis: H3. SMEs with CEOs who have more positive attitudes towards IT adoption are more likely to continue using their company website. In this research, firm size is measured by number of employees of SMEs. Prior research verified business size as relevant to technology adoption and suggested that smaller firms may be less likely to adopt e-commerce (Al-Qirim, 2005; Bharati and Chaudhury, 2006; Ramdani and Kawalek, 2007). Wongpinunwatana and Lertwongsatien (2003) examined the factors influencing adoption decisions in Thailand and concluded that larger sizes of SMEs are in a better position to promote innovation due to greater slack resources and being capable of absorbing the risk associated with innovation. Another study from Al-Qirim (2005) also found larger SMEs were more likely to adopt more technologies. Small and medium enterprises typically would suffer from the condition of resource poverty. Because of these distinct characteristics, SMEs are facing several constraints such as financial resources, lack of internal IT expertise and a tendency to practice short-term business planning. SMEs ought to have sufficient resources in order to retain their firms’ web presence. Having these constraints may potentially influence a firm continuing and consistently investing in online innovation activities. In view of this, the next proposed hypothesis is: H4. The SMEs’ size (number of employees) has influence on website continuance intention. A firm’s employee IS knowledge base refers to the availability of various types of explicit Internet related knowledge in this study context. It is the collection of all employee IS or IT knowledge, skills and capabilities, both from internal IT and non-IT users. According to Lawson et al. (2003), lack of IT expertise in a firm is one of the barriers to e-commerce involvement and has an effect on decisions about doing business online. Employee IS knowledge is one of the key influencers of IS adoption (Thong and Yap, 1995) and has a positive relationship with the likelihood of technology adoption decision (Thong, 1999). Therefore, an assessment of employee web-related knowledge level is suggested to ensure the continued adoption of a website in order for a small to medium firm to stay relevant with current business processes. Typically, lack of staff IT knowledge led to existing information technology not being used effectively (Lawson et al., 2003). Thereby, small to medium firm’s employee IS knowledge would have great influence on the extent to which an organization is capable of successfully adopting a website. This suggests that when SMEs are planning to continue having a web presence, they would then consider the level of employee web-related knowledge. With this, it is posited that: H5. Employee IS knowledge will positively affect SMEs website continuance intention. Relative advantage in this study is defined as the degree to which an online business is perceived as being better than the traditional brick and mortar business. It refers to the direct and indirect benefits that web technology can provide a firm. The direct advantages are related to internal efficiency of the organization like reduced cost of existing business processes. Meanwhile, indirect benefits include potential opportunities which might derive from the impact of online businesses. The positive association of relative advantage with technology adoption is consistently revealed from prior studies (Alam et al., 2008; Chong and Pervan, 2007; Lee, 2004; Lin, 2006; Premkumar and Roberts, 1999; Raymond, 2001). For instance,

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relative advantage is an influencer of Internet adoption in emails, business homepage, and e-sales (Lee, 2004) and is a key factors across multiple innovation applications (i.e., online data access, email, EDI and Internet adoption) (Premkumar and Roberts, 1999). In addition, perceived relative advantage appeared to be significantly related to the extent of e-commerce deployment by SMEs in Australia (Chong and Pervan, 2007). However, small firms adopt technology only if they perceive a need for the technology to overcome a perceived performance gap or exploit a business opportunity (Premkumar and Roberts, 1999). Therefore, if firms believe that website business activities will enhance their business efficiency and effectiveness, they would be more inclined to continue to retain their web presence. Thus, the positive perception of the benefits of having an online business presence should lead to the greater possibility of website continuance intention. Therefore, this study hypothesizes that: H6. The greater the perceived relative advantage of having online presence, the greater the website continuance intention. Compatibility in this study refers as the degree to which website technology is perceived as being consistent with existing values, past experiences, and needs of the small and medium sized enterprises (Chong, 2004). This factor is one of the popular constructs tested by many researchers in different country contexts (Al-Qirim, 2005; Chong, 2004; Lee, 2004; Premkumar, 2003; Premkumar et al., 1994; Seyal and Rahman, 2003; Thong, 1999) and revealed the importance of innovation compatibility to the extent of electronic commerce adoption in SMEs. Besides, Chong (2004) had validated compatibility as the most statistically significant factor affecting the state of e-commerce adoption. The research found that compatibility is related to the state of adoption and advised SMEs to investigate the compatibility of EC with their existing norms and needs of business before entering the EC arena. Therefore, the more an innovation is perceived consistent with present systems, attitudes, beliefs, procedures, and value systems of the adopter, the more likely it will be continued, used and adopted. Thus, if they plan to retain their business web presence, owners would have to consider the fit of their websites to the firm’s compatibilities as web-based technologies rapidly change from time to time. It is then vital for SMEs to view websites as compatible with them all along the way, and thereby the next hypothesis is proposed as the following: H7. SMEs are likely to continue to use their website when the Internet technology is highly compatible with firms’ business operations. In this research, cost is the website expense and includes its development cost and ongoing maintenance cost (Karanasios and Burgess, 2006). These include all the money and time a small to medium firm would have to invest in online innovation activities. The technological literature shows that cost will influence an innovation adoption decision. For example, Premkumar et al. (1994) empirically examined and revealed that cost is an important variable in the context of EDI. EDI adaptation requires firms to expand its external electronic links with business partners and hence must be cost effective. Premkumar and Roberts (1999) also found that Internet technologies that are perceived to be low in cost are more likely to be adopted by small firms. Likewise, Sulaiman (2000) revealed cost as a significant factor in e-commerce applications and identified cost of e-commerce as one of the four top reasons why organizations in Malaysia were not fully utilizing e-commerce applications. It is also noted by Khatibi et al. (2007) that cost is an important predictor of Malaysian manufacturing firms’ readiness for e-commerce adoption. In view of this, it is posited that SMEs are likely to continue to adopt their website when cost of the technology is low. Thus, H8. Cost will negatively influence the website continuance intention among Malaysian SMEs. Security, another technological characteristic, is included in this study. The rationale is that lack of security over the Internet increases business risk and could impede the continuance of website adoption decision. In this research, security is defined as the degree of a small to medium firm’s security issues with web presence (Sulaiman, 2000). For example, whether the firm’s website has privacy, and does not pose any security problem to company’s business operation. The significant role played by this factor could be found from Alam et al. (2008) who found that security concerns appeared to be a predictor in Malaysia Internet services usage by all non-adopters, light-adopter, and heavy adopters. Similarly, Khatibi et al. (2007) found that one of the major barriers to e-commerce in Malaysia was concern over Internet transaction security and privacy. The fear of losing trading secrets creates reluctance for SMEs to consider extending their web adoption level to a more advanced level activities such as e-commerce. With no further adoption and lack of confidence with Internet technology, this might eventually end SMEs web presence. Parker and Castleman (2007) highlighted the need to look at trust aspects associated with innovation adoption decisions by SMEs and is related to the security issue. Thus, the next hypothesis is: H9. The website continuance intention will be positively related to the perceived security of online business activities. External pressure in this study is referring to push factors from the external organizational environment. The main sources of external pressure found to be related to IT adoption are competition, social factors, dependency on other firms that were already using e-commerce, the industry, and the government (Iacovou et al., 1995). Small firms with close and significant trading relationships with online business partners may feel pressure to the extent of website adoption recommended by their

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trading partner. There are several studies that empirically examined and found external pressure as a significant factor in innovation adoption. For instance, Al-Qirim (2005) empirically tested that extended adopters would adopt more ECIT to compete more effectively in the marketplace. In a study of SMEs in the travel industry of Canada, Raymond (2001) suggested the ways in which small to medium firms used Internet-based technologies were determined by the external environment in which these firms operated. He found that environmental pressure is derived from competitors, suppliers, business partners, customers and the expectations of a sales presence. This is also confirmed by Mehrtens et al. (2001) which stated the pressure of Internet adoption comes from the expectations of Internet users, who are typically the customers. Chong (2004) also reached a similar conclusion and revealed that pressure from both customer and competitors can be used to predict e-commerce adoption. In view of the substantial evidences from existing studies, the following hypothesis is: H10. Higher perceived external pressure from customers, suppliers and partners will lead to greater intent to continue using a website. External support in this paper refers to the extent to which external mediating entities such as community agencies, government, vendors or consultants provide knowledge, training, maintenance, and other technical support on web-based technology to the adopting organization (Thong, 1999). For example, SMEs typically will seek an external IT consultant’s advice and prefer to use hosted applications by an application service provider due to the firm’s scarcity of resources such as internal IT expertise, time and finance. A website is an innovation that has widely been outsourced at low hosting services because this implementation is relatively faster in implementing at lower cost. On the other hand, government initiatives and support as well as support from non-competitive industry players may also encourage adoption. Intervention from government may include subsidies, financial incentives, free or low-cost training and support to encourage extensive usage of the online framework as a business channel. Thong (2001) found external support to be a significant determinant of successful information systems implementation in SMEs in Singapore. Further, Scupola (2003) found that government interventions by way of subsidies, state support, financial incentives, and training encouraged e-service usage. Meanwhile, Al-Qirim (2005) had also noted that if extended adopters retained negative perceptions about technology vendors and were not pleased with their services, it would impede their adoption decisions for more intranet, extranet, Internet-EDI and website adoption. Hence, when the effectiveness level of external support is high, the success level of the innovation adopters tends to be high and will likely to continue utilizing the technology. In view of the important role played by external support in lowering the IS knowledge barrier of SMEs, it is then hypothesized that: H11. SMEs website continuance intention is positively related to the extent of external support.

3.1. Moderator: web adoption level Web adoption level is divided to two groups (i.e., basic and advanced) in five sub-categories, starting from level 0 (email adoption) to level 4 (business transformation) in this study, which is adopted from the Teo and Pian (2004) web adoption model. Literature also revealed that limited studies were conducted in examining the moderator effect of IT adoption extension by organization. Brand and Huizingh (2008) postulated the effect of innovation adoption level as moderator for further technology adoption in the e-commerce context. Their study yielded a greater understanding of how various factors influence the intention to adopt an innovation by including the innovation adoption level. Meanwhile, the moderating effect of environmental hostility was found to play a significant role for the technology adoption by SMEs in Malaysia (Jantan et al., 2001). Very few studies empirically examined the moderators’ effect of continuance technology adoption. Brand and Huizingh (2008) had postulated the effect of innovation adoption level as moderator for further technology adoption in the e-commerce context. Hence, in this study it is hypothesized that the current level of web adoption will moderate the relationship of SMEs website continuance intention and its determinants. With this, it’s posited that: H12. The positive relationship of SMEs website continuance intention and its determinants will be stronger and a negative relationship will be weaker when a firm is at an advanced web adoption level. 4. Method 4.1. Data collection procedure and sample Data were collected from SMEs across different industries in Malaysia who had an active web presence to obtain information on website continuance intention. Targeted respondents were the top management responsible for or significantly involved in IT decisions. These mainly included the CEO, owner or key executives of SMEs who had the final decision making authority on website related matters. According to SMECORP (2014), 2008, there are about 22,134 SMEs and 3335 (15.07%) accessible population with web presence and 2331 (10.53%) SMEs with an active website from 29 defined industry groups. Active or valid websites from this study were those companies with reachable web addresses and invalid web address included those whose domain name had expired and had an offline website. Around 1500 SMEs were sent the questionnaire

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survey through stratified random sampling. A total of 125 questionnaires were returned where 108 were usable for data analysis purpose. To ensure that there is no Common Method Bias in the questionnaire survey, we performed Harman’s single factor test which revealed that the first factor accounted for 26.81% of variance which is less than the threshold level of 50% of total variance explained (Podsakoff et al., 2003). Around 25 industries participated in this research. Most of the firms (15.7%) were from the ICT industry sector followed by manufacturing related services of 14.8% (see Appendix I). Around 47.2% of SMEs were already established for more than 10 years. 88% of ownership structure were private limited (Sdn. Bhd.). A majority (46.3%) of the responding SMEs had a total of five to twenty employees, 30.6% with 20–50 employees, 18.5% with 51–101 employees, and 4.6% with 100–151 employees. In terms of years of website use, 35.2% of the firms use website between 2 and 4 years, 25.9% between 4 and 6 years, 14.8% between 10 years or more, 14.8% less than 2 years, 9.3% between 6 and 8 years, and 9.3% between 8 and 10 years. There was a majority of 66.7% firms which were using external web solution providers. While Internet businesses are widespread globally, the demographic figure revealed that majority (81.5%) of the studied sample was on the basic level of web adoption. Most of the respondents (69.4%) were holding high managerial positions (Director, Vice President, CEO or Owner). Meanwhile, 38.9% of respondents were claimed to work with an existing company between 5 and 10 years and 30.6% of respondents had overall working experience between 14 and 21 years. The results of demographic profile are presented in Appendix II. 4.2. Measurement All constructs and the items were adapted from extant literatures and were modified to suit the purpose of this study. All major scale items except for size and the web adoption level are based on a five-point Likert-scale ranging from strongly disagree (1) to strongly agree (5). CEO innovativeness (6-item), IT knowledge (2-item), and attitude towards adoption of IT (3-item) were adapted from Al-Qirim (2005) and Thong and Yap (1995). IS knowledge with 3-item were adapted from Thong (1999). Relative advantage (7-item) and compatibility (3-item) were adapted from Chong and Pervan (2007), cost (3-item) from Premkumar and Roberts (1999), and security (5-item) from Shergill and Chen (2005), Tarafdar and Zhang (2005). External pressure with 5-item were adapted from Grandon and Pearson (2003), and external support with 5-item from Premkumar and Roberts (1999). Website continuance intention with 3-item were adapted from Bhattacherjee (2001). The web adoption level was based on five levels; Level 0 (no website adoption), Level 2 (Web Presence), Level 2 (Prospecting), Level 3 (Business Integration), and Level 4 (business transformation), which were adopted from Teo and Pian (2004) and Teo (2007). Apparently all of these five levels were categorized into two clusters, which is basic (level 0–2) and advanced (level 3–4) web adoption level for the analysis. Size of organization was measured by the number of employees, according to the work of Thong (1999). 4.3. Assessment of measurement model We considered the structural equation model (SEM) with PLS approach to achieve our research objectives and analyze the measurement and structural model. At the beginning, the convergent validity was examined. This includes indicator loadings, average variance extracted (AVE), and composite reliability (CR). Based on the results presented in Table 1, indicators loading for all items exceeded the recommended value of 0.5 suggested by Hair et al. (2009) but factor loading of one item (ITK2) is 0.416 which remained, as the AVE of the variable is 0.566. However, three items (EP3, EP5, ES2) were deleted due to low factor loading. AVE were in the range of 0.557 and 0.737, which exceeded the recommended value greater than 0.50, and the CR ranged from 0.7 to 0.935, which exceeded the recommended value of 0.7 recommended by Hair et al. (2009). Table 1 shows the results of measurement model. After convergent validity, the discriminant validity was tested. It was assessed by examining the correlations between the measures of potentially overlapping constructs following Fornell and Larcker (1981). As shown in Table 2, this study presents that the square root of AVEs are greater in all cases than the off-diagonal elements in their corresponding row and column, suggesting that the required discriminant validity has been achieved. In total, the measurement model demonstrated adequate convergent validity and discriminant validity. 4.4. Descriptive statistics of the latent constructs The mean value of all the eleven latent variables range from 2.691 to 4.281 with the standard deviation ranging from 0.763 to 1.036 on a five point Likert scale. However, mean values of all the variables were found to be above the midpoint 2.50. IT attitude scored the highest with a mean value of 4.281, while cost showed the lowest mean value at 2.691. The dispersion values reported through standard deviation indicates that the highest value showed by external pressure at 1.036, and lowest value showed by IT attitude at 0.763. Table 3 lists the result obtained from the descriptive analysis. 4.5. Assessment of structural model The prime evaluation criteria for the goodness of the structural model is that the R2 measures the coefficient of determination and the level of significance of the path coefficients (beta values) (Hair et al., 2011). The results of the current research

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T. Ramayah et al. / Telematics and Informatics 33 (2016) 150–164 Table 1 The results of measurement model. Variables

Items

Factor loading

AVE

CR

Innovativeness

INNO1 INNO2 INNO3 INNO4 INNO5 INNO6

0.882 0.866 0.848 0.835 0.705 0.642

0.642

0.914

IT knowledge

ITK1 ITK2

0.980 0.416

0.566

0.692

IT attitude

ITA1 ITA2 ITA3

0.845 0.901 0.819

0.732

0.891

Size

SIZE

1.000

SIM

SIM

IS knowledge

ISK1 ISK2 ISK3

0.835 0.784 0.902

0.709

0.879

Relative advantage

RA1 RA2 RA3 RA4 RA5 RA6 RA7

0.672 0.802 0.887 0.880 0.788 0.870 0.822

0.673

0.935

Compatibility

COM1 COM2 COM3

0.898 0.850 0.826

0.737

0.894

Cost

COS1 COS2 COS3

0.695 0.893 0.902

0.698

0.873

Security

SEC1 SEC2 SEC3 SEC4 SEC5

0.758 0.732 0.872 0.939 0.898

0.712

0.925

External pressure

EP1 EP2 EP4

0.898 0.780 0.659

0.617

0.826

External support

ES1 ES3 ES4 ES5

0.883 0.590 0.822 0.651

0.557

0.830

Website continuance intention

WCI1 WCI2 WCI3

0.903 0.789 0.713

0.649

0.846

Web adoption level

WAL

1.000

SIM

SIM

Note: SIM = single item measures, AVE = average variance extracted, CR = composite reliability.

show that R2 value for website continuance intention is 0.572 suggesting that 57.2% of the variance in Website continuance intention can be explained by the firms’ internal and external factors. The path coefficients of the structural model have been measured and bootstrap analysis (resampling = 1000) was performed to assess the statistical significance of the path coefficients (Table 4). The results revealed that among the internal factors, CEO innovativeness and CEO attitude towards adoption of IT has a positive relationship with website continuance intention with b = 0.172, p < 0.05 and b = 0.442, p < 0.01 respectively. Regarding to external factors, relative advantage has a positive relationship with website continuance intention with b = 0.226 and significant at p < 0.05. Furthermore, the relationship between cost and website continuance intention has support with b = 0.149 and is significant at p < 0.05. Thus, H1, H3, H6, and H8 are supported. Table 4 shows the results. 4.6. Moderating effect We hypothesized that the level of web adoption is moderate on the relationship between SMEs’ website continuance intention and its determinants. However, the results revealed an insignificant relationship of web adoption level as the t-value of the relationships were less than the minimum cut-off value of 1.64.

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Table 2 The results of discriminant validity analysis. 1 1 2 3 4 5 6 7 8 9 10 11 12 13

Compatibility Cost External pressure External support Innovativeness IS knowledge IT attitude IT knowledge Relative advantage Security Size Web adoption level Website continuance intention

2

3

4

5

6

7

8

9

10

0.859 0.171 0.346

0.836 0.345

0.785

0.320

0.115

0.388

0.746

0.529 0.587 0.512 0.452 0.700

0.077 0.013 0.138 0.087 0.048

0.203 0.197 0.235 0.230 0.384

0.222 0.206 0.208 0.108 0.357

0.801 0.372 0.472 0.427 0.481

0.842 0.523 0.341 0.506

0.856 0.314 0.404

0.752 0.364

0.820

0.355 0.129 0.220

0.037 0.189 0.028

0.294 0.068 0.121

0.249 0.064 0.016

0.316 0.062 0.147

0.340 0.055 0.149

0.212 0.063 0.012

0.286 0.249 0.192

0.510 0.060 0.210

0.560

0.200

0.282

0.235

0.512

0.400

0.649

0.248

0.544

11

12

0.844 0.018 0.385

NA 0.271

NA

0.293

0.045

0.027

13

0.805

Note: diagonals (in bold) represent the squared root of average variance extracted (AVE) while the other entries represent the correlations.

Table 3 The results of descriptive analysis.

Innovativeness IT knowledge IT attitude IS knowledge Relative advantage Compatibility Cost Security External pressure External support Website continuance intention

No of items

Mean

Std. deviation

6 2 3 3 7 3 3 5 3 4 3

3.900 3.681 4.281 3.827 3.714 3.849 2.691 2.917 3.358 3.000 4.392

0.780 0.816 0.763 0.896 0.836 0.852 1.025 1.015 1.036 0.863 0.775

Table 4 The results of structural model. Hypothesis

Relationship

H1 H2 H3 H4 H5 H6 H7 H8 H9 H10 H11

Innovativeness ? WCI IT knowledge ? WCI IT attitude ? WCI Size ? WCI IS knowledge ? WCI Relative advantage ? WCI Compatibility ? WCI Cost ? WCI Security ? WCI External pressure ? WCI External support ? WCI

Beta 0.172 0.111 0.442 0.025 0.061 0.226 0.106 0.149 0.023 0.111 0.012

SE

t-Value

Decision

0.098 0.090 0.110 0.064 0.106 0.110 0.114 0.083 0.083 0.085 0.094

1.766* 1.229 4.032** 0.389 0.578 2.055* 0.927 1.809* 0.271 1.299 0.131

Supported Not supported Supported Not supported Not supported Supported Not supported Supported Not supported Not supported Not supported

WCI = website continuance intention. * p < 0.05. ** p < 0.01.

4.7. Predictive relevance (Q2) Predictive sample reuse technique, popularly known as the Stone-Geisser’s Q2, can be applied as a criterion for predictive relevance besides looking at the magnitude of the R2. Henseler et al. (2009) also utilized this measure to assess the research model’s capability to predict. Based on the blindfolding procedure, Q2 evaluates the predictive validity of a model via PLS. Q2 values larger than zero indicates that the exogenous constructs have predictive relevance for the endogenous construct (Hair et al., 2011). The Q2 of Website continuance intention (CV Red = 0.352) signifies that the research model has good predictive relevance.

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5. Discussion The objective of this study is to investigate the potential predictors of SMEs website continuance intention. At the same time, this study also aims to investigate the moderating effect of web adoption level on the relationship between SMEs’ website continuance intention and its determinants. The website continuance intention was found to depend on CEO innovativeness, CEO IT attitude, relative advantage, and cost among Malaysian SMEs. SMEs with chief executive officers who are more innovative and have a more positive attitude towards IT adoption are more likely to retain and expedite their company website. It shows that top management innovativeness and attitude towards IT adoption could lead to website continuance adoption. This empirical result corroborates with findings from other scholars who validated the significant role of CEO innovative mindset and IT attitude on technology adoption (Al-Qirim, 2005; Jantan et al., 2001; Lin, 2006; Seyal and Rahman, 2003). A reasonable explanation could be that a CEO plays a major role in the small to medium business decision making process and typically formation of a favorable or unfavorable attitude towards an innovation takes place before a decision to adopt is made (Thong and Yap, 1995). Hence, their positive perception on online technology is of prime importance. The CEOs would be more open towards continuance website adoption when they are sure that the Internet is one of the best ways to do things better. When their expectations are met, it will demonstrate a more positive attitude towards web business presence continuance leading to a higher level of satisfaction. Subsequently, the satisfaction will influence the continuance of website adoption. In other words, website success fosters continuance. As posited, relative advantage is found to have a significant effect on website continuance intention in Malaysian SMEs which is similar to other studies as well (Brand and Huizingh, 2008). Hence, it is suggested that the greater the perceived relative advantage of having an online presence, the greater the SMEs website continuance intention is. On the other hand, it could be concluded that if small firms do not perceive a website as a better alternative to existing business practices after they have already adopted it, it is likely that the implementation would be discontinued. Among these advantages are enhancing the corporate image and building stronger business linkages with partners and clients, developing new business opportunities, reducing cost of operations and increasing sales and market share. Even though the majority of SME websites are still at a basic web adoption level, respondents from Malaysian SMEs generally agree that websites will bring substantial benefits. They are more likely to continue adopt website technology because of the relative benefits gained compared to low web hosting cost. Cost is revealed to impact SMEs’ website continuance intention in a negative way. Cost is an important predictor in Malaysian manufacturing firms and is a significant factor in e-commerce applications. In fact, cost was identified as one of the top reasons why organizations in Malaysia are not fully utilizing its applications (Khatibi et al., 2007; Sulaiman, 2000). If the cost to invest in online innovation activities is higher, SMEs’ website intention tends to be lower. Hence, SMEs that adopt a web presence perceive their website as requiring substantial expenses to maintain ongoing website hosting practices. It is a fact that the high cost of a company website is a bottleneck for small businesses. From the frequencies analysis in Table 1, it is revealed that the majority of the responding firms (66.7%) outsourced their web solution. As a result, the cost of continuing to adopt a website is a concern for the SMEs. On the other hand, some other variables in this study have an insignificant relationship on website continuance intention among SMEs in Malaysia. Hussein et al. (2007) found that managerial IT knowledge directly and positively influences the success of IS implementation in Malaysian context. This relationship in the current study is found to be insignificant. It was quite surprising as we believed that with greater knowledge, the degree of uncertainty involved in IT adoption will diminish. In this case SMEs are tempted to adopt website continuously even without having dependency on a CEO’s IT knowledge. Size seems to have no association with website continuance adoption, which mirrors the findings by Dholakia and Kshetri (2004). Small and medium enterprises typically suffer from resource poverty such as the lack of financial resources or absence of internal IT expert, but this does not affect the website adoption issue. SMEs ought to have sufficient resources in order to retain their firms’ web presence. Based on SME definition by size from SMIDEC (2011), a range of 1–150 employees firms have and access to almost similar resources in Malaysia context. The hypothesis that larger enterprises within these two groups (i.e., small and medium) will not necessary be more affordable in continuing their web presence is therefore rejected. Employee IS knowledge does not support SMEs’ website continuance adoption intention in line with past studies (Chong, 2004). From the demographic Table 1, the frequency analysis shows that the majority (66.7%) of responding SMEs are currently using online solutions from external providers to host their websites. In this solution, normally SMEs would highly depend on the expertise and IT skills from outside vendors. Thereby, employee IS knowledge is no longer in a question. This depicts that once companies are involved in online business activities which use external web solutions from third-parties, the level of staff web knowledge would become irrelevant in their website continuance adoption intention. Companies with more knowledgeable IT staffs might lower the IS knowledge barrier, but would not necessarily increase their confidence level to continue to adopt website technology. Indirectly, this suggests that SMEs with a higher degree of IS knowledge may not necessarily be in a better position to continue to adopt and implement their website. Compatibility is not good predictor for website continuance intention in this study, which is contradict with past studies (Al-Qirim, 2005; Chong, 2004). The more an innovation and technology is perceived consistent with present systems, attitudes, beliefs, procedures, and value systems of the adopter, less effect on website continuance intention in Malaysian SMEs. Their owners may not realize that the fit of their websites to the firm’s compatibilities might be due periodic cycles of rapid technology change. It is then not vital for SMEs to maintain a view of websites as compatible with them all along the way.

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Perceived security does not have an association with Malaysian SMEs website continuance intention. This contradicts research done by Alam et al. (2008). From the frequencies analysis, most of the firms’ websites (61.1%) are well established for at least 2–5 years, which suggests that websites setup of SMEs are empirically sustainable in Malaysia. It suggests that online business activities are being well implemented by small and medium firms and that they are compatible with their business values, beliefs and day-to-day operations. One plausible explanation of the finding is that the justification of major innovation issues will normally be encountered at the very beginning of the adoption stage. Therefore, responding firms may perceive security as not important since more than eighty percent of them already have more than 2 years of web presence experience. The finding may also be caused by the fact that Malaysian SMEs are still not clear or aware of the potential threats and security issues of establishing an online website. Another plausible explanation of this result may be partly due to the low website utilization profile of Malaysian SMEs. Around 81.5% of the SMEs are at the basic web adoption level. Basically, low-level web adopters are not involved in online transactions and hence in order to retain their web presence, security concerns are not a issue. There is no apprehension on how to derive a security plan like whether to enable a high-encrypted and secure sockets level (SSL) website, unless they are planning to move-up to a more advance, transactional based online business portal. Environmental characteristics such as external pressure were found not to be significant in this study. This result suggests that higher perceived external pressure from competitors, customers, suppliers and trading partners will not necessarily lead to greater intent of SMEs to continue to adopt a website in Malaysia. Thong (1999) also found that external environment factors have no direct effect on the extent of small business IS adoption. For example, competition (as one of the measurement dimensions of external pressure) appeared to have no direct ‘‘push’’ for small and medium sized businesses. In addition, external support posits no influence on SMEs website continuance intention in this study. Scholars also mentioned that external support from government is negatively related to e-commerce adoption (Chong, 2004). Website business activities, like e-commerce, is a rapidly changing phenomenon. Thereby external support from government tends to be driven by individual initiatives rather by institutionalized support. In many cases, small to medium firms website owners may have achieved a higher state of adoption by themselves and tend to be more independent. Therefore their continuance intention to having an online web presence is has no in relationship with external support. The moderator effect of web adoption level is revealed to have an insignificant role in this study. The relative importance of these predictor variables did not decrease or increase as the level of web adoption involvement changes. This is contradictory to past studies (Brand and Huizingh, 2008). It suggests that Malaysian SMEs retain equal positive perceptions about the impact of all factors on their website continuance adoption decision without regard to the role of level of web adoption. 6. Implications The current study suggests that management should focus more on CEO innovativeness, CEO attitude towards IT adoption, website relative advantage, and cost, as they are stronger predictors for SMEs to continue their online business activities. CEOs in small to medium sized firms need to understand that their innovativeness and attitude towards website technology adoption will help firms to be successful all the time in continuing their use of technology. There is also a need to increase awareness of online advantages and positioning a website as an emerging business enabler. Advertisements or programs are some of the examples which can help to achieve this objective. CEOs of small and medium firms need to be well educated and convinced of the benefits of using a website for their business operations. This will lead to greater levels of confidence and more favorable perceptions of web-based technology. On the other hand, web solution providers can heed these factors to clearly highlight and create awareness of e-business usefulness among SMEs’ owners or CEOs. This, hopefully, would encourage greater interest of SMEs to continue having a business web presence, and consequently allow website vendors to generate continued business income and create more business opportunities. Government agencies in Malaysia can take appropriate measures to develop and re-introduce training programs which is tailor made for these CEOs. Relevant assistance should be revised to include more effective training and education pertaining to the use of the Internet as a strategic business tool. Seminars or motivation programs to unveil the varied perspectives and advantages of websites to bring more favorable CEO attitude, necessary resources and numerous policies, measures and regulation toward website continuance adoption is needed. Public policy makers can foster productivity and growth by setting up more advertisements for SMEs to keep them aware and closer to relative advantage gained via web-based technologies and by introducing new programs to encourage more favorable IT adoption attitudes among owners of firms. Incentive provisions to SMEs, as well as fund distributions according to SMEs online activity involvement and performance, will also be an effective avenue to maintain website continuance. Tax subsidies may also be one of the potential mechanisms to SMEs who have certain levels or number of years of website adoption to pursue website continuance. Website quality can be improved through certification programs for web solution providers and by giving tax subsidies to providers that train their customers on web-based business related technology. The current research model can be used as a guideline for future studies, especially in Malaysia or other Asian settings. Researchers could replicate this study from the context of any country worldwide and compare the result and verify the culture context influence. 7. Limitations and future research Although this study contributes to identifying some major predictors for Malaysian SMEs website continuance intention, there are some limitations. Although the response rate was reasonable, the small sample size is the most obvious limitation

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in this study. Caution is needed therefore in the interpretation of the results. Nevertheless, this study is able to cover almost all SMEs industry groups and sectors in Malaysia (representing the actual SMEs industry group composition of Malaysia). Hence generalized conclusion may be possible. Secondly, the majority of actual responding firms from this study are CEOs or owners of the companies queried. Relying on the perception of one key informant, the owner-manager or CEO, might imply cognitive biases. There’s a potential that responding firms would agree more on socially desirable answers rather than truthfully express their honest feelings and opinions. Besides, questionnaire length might limit the ability to explore the influence of a potentially important determinant of the firm’s continuance intention on online business activity. Hence future research can build on the significant factors in this research by introducing new factors and measures to provide new insights for SMEs website continuance intention determinants. Future research should look into extending the model to include other, untested factors from the four main technology adoption characteristics (CEO, organizational, technological, and environmental characteristics). A test on potential a moderator should be carried-out for further website continuance intention determinants study. 8. Conclusion Overall, the research findings revealed that there are strong relationships between CEO innovativeness, CEO attitude toward IT adoption, perceived relative advantage, and cost on Malaysian SMEs website continuance intention. These findings further endorsed the significant role of the CEOs in Malaysian SMEs. CEO’s continuing involvement and positive attitude towards website adoption appears significant and apparently their affirmative involvement is crucial for online business activity sustainability in Malaysia. The greater the perceived relative advantage of having an online presence, the greater the website continuance intention is in SMEs. SMEs are likely to continue adopt their website when cost of the technology is reasonable and less. This result of this study has revealed that the majority of Malaysian SMEs are still in its formative phase, with more than eighty percent firms found to be categorized under the basic web adoption level. Therefore, addressing this issue is crucial in Malaysia, which is actively being promoted as a knowledge-based country to differentiate it from other countries such as China, Vietnam, and Thailand. Both CEO’s characteristics and technological characteristics are significant factors of Malaysian SMEs website continuance intention. The outcome of this study hopefully can help to provide better insights for small to medium enterprises, especially in their strategic web related business planning to face intense globalization competition and new challenges. Appendix I

Industry group

Frequency

Percentage

Business & Professional Services Chemical Petrochemical Products Distribute Trade Inc. Wholesale & Retail Education & Training Electrical & Electronics Inc. Telecommunication Food Beverage Healthcare Hospital Services ICT Logistics Machinery & Engineering Manufacturing Related Services Metal Products Mfg of Professional, Medical, Scientific & Measuring Devices/Parts Miscellaneous Palm Oil Based Products Pharmaceutical Plastic Products Rubber Products Services Provider Textile & Apparels & Leather Tourism Transport Equipment Wood & Wood Products

3 4 3 1 5 5 6 1 17 1 9 16 6 2 13 2 2 2 1 2 2 2 1 2

2.8 3.7 2.8 0.9 4.6 4.6 5.6 0.9 15.7 0.9 8.3 14.8 5.6 1.9 12 1.9 1.9 1.9 0.9 1.9 1.9 1.9 0.9 1.9

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Appendix II. Demographic profile

Category

Frequency

Percentage

Years of firm establishment Less than 2 years 2–4 years 4–6 years 6–8 years 8–10 years 10 or more years

4 18 15 9 11 51

3.7 16.7 13.9 8.3 10.2 47.2

Ownership structure Sole proprietorship Partnership Private limited (Sdn. Bhd.) Others

5 5 95 3

4.6 4.6 88 2.7

Number of employees 5–20 20–50 51–101 100–151

50 33 20 5

46.3 30.6 18.5 4.6

Years of website use Less than 2 years 2 to less than 4 years 4 to less than 6 years 6 to less than 8 years 8 to less than 10 years 10 or more years

6 38 28 10 10 16

14.8 35.2 25.9 9.3 9.3 14.8

Web solution provider Internal (in-house) External (outsource) Others

32 72 4

29.6 66.7 3.7

Web adoption level Level 0 – email adoption Level 1 – web presence Level 2 – prospecting Level 3 – business integration Level 4 – business transformation

3 37 48 15 5

2.8 34.3 44.4 13.9 4.6

Basic/advanced web adoption level SME Basic level (level 0–2) Advanced level (Level 3–4)

88 20

81.5 18.5

Job level Executive Manager Senior Manager Director/Vice President/CEO/Owner Others

12 12 7 75 2

11.1 11.1 6.5 69.4 1.9

Working experience with current firm Less than 5 years 5 to less than 10 years 10 to less than 15 years 15 to less than 20 years 20 years or more

35 42 17 7 7

32.4 38.9 15.7 6.5 6.5

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Appendix II (continued) Category

Frequency

Percentage

Overall working experience Less than 7 years 7 to less than 14 years 14 to less than 21 years 21 to less than 28 years 28 years or more

17 28 33 17 15

15.7 25.9 30.6 15.7 13.9

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