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A Study on the Factors That Influence the Consumers’ Trust on E-commerce

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 (IJCSIS) International Journal of Computer Science and Information Security,
Vol. 4, No. 1 & 2, 2009

A Study on the Factors That Influence the

Consumers’ Trust on E-commerce Adoption

Yi Yi Thaw Ahmad Kamil Mahmood

Department of Computer and Information Sciences Department of Computer and Information Sciences
Universiti Teknologi PETRONAS, Universiti Teknologi PETRONAS,
Tronoh, Perak, Malaysia Tronoh, Perak, Malaysia

P.Dhanapal Durai Dominic

Department of Computer and Information Sciences
Universiti Teknologi PETRONAS,
Tronoh, Perak, Malaysia

Abstract—The development of electronic commerce is privacy of e-commerce transactions. The present research
characterized with anonymity, uncertainty, lack of control and intends to identify the factors which are directly related to
potential opportunism. Therefore, the success of electronic consumers’ trust to adopt e-commerce in Malaysia. Therefore,
commerce significantly depends on providing security and this study is undertaken to answer the following research
privacy for its consumers’ sensitive personal data. Consumers’ questions: Do consumers’ security and privacy concerns of
lack of acceptance in electronic commerce adoption today is not online transaction significantly relate to their trust in e-
merely due to the concern on security and privacy of their commerce adoption? How do the trustworthiness and
personal data, but also lack of trust and reliability of Web
reliability of the Web vendors relate to the consumers’
vendors. Consumers’ trust in online transactions is crucial for the
adoption of e-commerce? What are the inter-relationships of
continuous growth and development of electronic commerce.
Since Business to Consumer (B2C) e-commerce requires the
security and privacy concerns, trust beliefs and risk
consumers to engage the technologies, the consumers face a perception, and how do these factors affect consumers’
variety of security risks. This study addressed the role of security, behavior intention to adopt e-commerce?
privacy and risk perceptions of consumers to shop online in order
to establish a consensus among them. The analyses provided II. LITERATURE REVIEW
descriptive frequencies for the research variables and for each of
the study’s research constructs. In addition, the analyses were
E-commerce has gained considerable attention in the past
completed with factor analysis and Pearson correlation few years, giving rise to several interesting studies and
coefficients. The findings suggested that perceived privacy of industrial application, due to the Internet has created enormous
online transaction on trust is mediated by perceived security, and change in the business environment. The Malaysian
consumers’ trust in online transaction is significantly related with Government has made a massive move by launching the
the trustworthiness of Web vendors. Also, consumers’ trust is Multimedia Super Corridor (MSC) whereby one of its seven
negatively associated with perceived risks in online transactions. flagship applications includes the active promotion of the
However, there is no significant impact from perceived security electronic business activities in the country. However, the
and perceived privacy to trust in online transactions. acceptance level of the electronic commerce by the Malaysian
consumers is still regarded very low compared to the other
Keywords-perceived security and perceived privacy; perceived parts of the world especially the developed countries like the
risk; trust; Web vendors; consumer behavior. United States and the European Union. For example, the
Small- and Medium-Sized Industries Association of Malaysia
I. INTRODUCTION said in late 2005 that less than 5% of its members were
involved in B2C business. According to Krishnan [1], the
This study focuses on the aspect of e-commerce that
majority of Malaysians interested in e-commerce are males
utilizes the Internet and World Wide Web (WWW) as the
(66%) and males below 30 years (42%) is the largest
technological infrastructure to communicate, distribute and
individual group of Malaysians interested in e-commerce.
conduct information exchange that would consequently lead to
the commercial transactions between Web vendors and Considerable numbers of research findings [2], [3] and [4]
consumers. In addition, this study would likely to identify the have indicated that although e-commerce is spreading
main security and privacy issues concerns and the worldwide, customers are still reluctant to deal with it because
trustworthiness of the Web vendors to engage in e-commerce of the security and privacy issues. A study of consumer-
transaction and the effectiveness of security methods and perceived risk in e-commerce transactions by Salam et al. [5]
applications in ensuring the confidentiality, integrity and indicated that consumers simply do not trust online vendors to

Universiti Teknologi PETRONAS, MALAYSIA

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engage in transactions involving money and personal issues, the Bill deals only with the way personal data is
information. According to the authors, consumer-perceived collected, stored, used and accessed.
risk is reduced with the increase in institutional trust and
economic incentive. In essence, numerous research papers have been published
during the last few years on various issues pertaining to e-
Ahmed et al. [6] surveyed that the major concerns on e- commerce. Since this paper deals with building consumers’
commerce adoption in Malaysia are: security and privacy over trust in e-commerce transaction, it only cites literature relevant
online transaction process and trust and reliability of online to the issue. The present research is intended to fill-up the gap
vendors. They suggested that in order to be successful in on Malaysian consumers regarding identification of factors
electronic marketplace, the organizations are expected to that help build their trust in greater e-commerce participation.
expend their resources and exert efforts to ensure that
consumers’ concerns are adequately addressed. Dauda et al. III. RESEARCH DESIGN AND METHOD
[7] studied the perceived e-commerce security influence on
adoption of Internet banking, and the role of national The main objective of this study is to identify the factors
environmental factors such as attitude, subjective norms, and that contribute to the consumers’ willingness to engage in e-
perceived behavioral control factors towards adoption, and commerce transactions, and further study the relationship
compares these factors with Singapore Internet banking between those factors. Therefore, this study will focus on the
adoption. They found that consumer perceived non- following sub-objectives:
repudiation, trust relative advantage Internet experience and • To study whether or not consumers’ perceived security
banking needs are the most important factors that affect and privacy of online transaction significantly affect
adoption in Malaysia. Organizations were reluctant to use e- their confidence to adopt e-commerce.
commerce as they felt that the transactions conducted
electronically were open to hackers and viruses, which were • To identify the factors of trust with web vendors to
beyond their control. Khatibi and Scetharaman [8] mentioned engage in transactions involving money and personal
that Malaysian e-commerce industry has not taken off as data.
expected. By means of a survey of 222 Malaysian
manufacturers, traders and service providers, the authors • To study the role of institutional trust and economic
concluded that from the company’s point of view, the main incentive in consumers’ perceived risk in the context of
barriers of e-commerce adoption are: concern on security and e-commerce.
privacy followed by the hustle of keeping up with the The factors considered to be influencing consumers’
technology, uncertainties regarding rules and regulations, high confidence to adopt e-commerce are grouped into four main
set up cost of Ecommerce, lack of skilled workers and so on. categories: consumers’ attitudes towards secure online
The authors suggest that any policy that aims at promoting e- transaction processing systems, privacy of consumers’
commerce should take these factors into consideration. personal data, trust and reliability of online vendors, and
According to mid-2005 survey conducted by the consumers’ perceived risk in e-commerce transactions. The
Malaysian Communications Multimedia Commission model to be tested is shown in Figure 1.
(MCMC), only 9.3% of internet users had purchased products
or services through the internet during the preceding three
months [9]. The primary reasons cited for this are: lack of Perceived
security and privacy of consumers’ personal data including Information
H1+
credit card number, identity theft, virus, break-in attacks, security
Consumers’
denial-of-service, and so on. Lincoln Lee [10], Senior Analyst, H3+ Trust in E- H7-
Telecommunication Research, IDC Malaysia, mentioned that H2+ Commerce Perceived
“the Malaysia ecommerce market has exhibited a healthy Transaction Risk
Perceived
growth rate of 70% in 2006 in comparison with that in 2005. Information
However, in order to ensure sustainable growth, there is still i
plenty of work to be done to develop this industry into a H5- H6-
mature market”. Jawahitha [11] raised serious concern on the Trustworthiness H4+ Institutional Economic
protection of Malaysian consumers dealing with e-commerce of Web Vendor trust incentives
transactions. According to her, the existing laws pertaining to
conventional businesses are not sufficient to address the issues Figure 1. Research Model.
in e-commerce. Malaysian government has already taken steps
to pass new laws and to amend some of the existing laws and Specifically, the following hypotheses are to be tested:
until this effort is materialized, the Malaysian electronic
consumers would not be having adequate protection. To H1: A consumer’s perceived security of online transaction
protect e-commerce consumers’ privacy, Malaysian legislators positively contributes to his/her trust in online transaction.
have devised a personal data protection bill [12]. The author H2: A consumer’s perceived privacy of online transaction
examined the nature, manner and scope of personal data positively contributes to his/her trust in online transaction.
protection under this Bill. She suggests that instead of being
concerned with the full range of privacy and surveillance

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H3: The influence of a consumer’s perceived privacy of respondents who are not willing to purchase online in the near
online transaction on trust is mediated by perceived security. future were asked about the reason(s) for that. The major
reason (35.5%) was cited to be the concern on security and
H4: A consumer’s trust in online transaction is positively privacy of their personal data, followed by lack of interaction
related with the trustworthiness of Web vendor. (about 27.1%) and cannot feel product (about 22.4%). All the
H5: The increase in institutional trust reduces consumers’ respondents were also asked about their opinion on credit card
perceived risk in online transaction. security for online purchases. The majority of the respondents
(about 54.1%) believe that the use of credit card for online
H6: The increase in economic incentives reduces consumers’ purchases is not safe, while about 11.8% believe somewhat
perceived risk in online transaction. safe. About 8.2% of the respondents are indifferent on online
H7: A consumer’s trust in online transaction is negatively credit card security and the remaining (about 24.7%)
associated with perceived risk in online transaction. respondents are not sure about this.
A survey instrument in the form of questionnaire was A. Descriptive Analysis
developed that consisted of three sections. Section 1 consisted
of questions to collect respondents’ personal information (i.e., 1) Information security concerns: Regarding online
gender, age, race, etc). Section 2 consisted of questions information security concerns, only 10.6% of the respondents
covering some of the variables related to online purchase and agree that they would feel totally safe providing sensitive
adoption of electronic commerce. Specifically, the questions information about themselves over the Web while majority
were designed to collect information on frequency of internet (about 57.7%) of the respondents do not believe this, and
use, frequency of online purchases, intention to continue about 31.8% of the respondents remained neutral on this
online purchasing, etc. Section 3 consisted of questions question. On the online payment, about 22.4% of the
covering some of the variables related to factors affecting e- respondents agree that the payment information they enter
commerce security, privacy, and trust as well as risk online is safe and accessible only by the intended persons
perceptions. Questions in this section collected information
related to attitudes towards secure online transaction while majority (about 41.1%) of the respondents do not
processing system, privacy of personal data, trustworthiness of believe this. The remaining 36.5% of the respondents
Web vendors, and consumers’ perceived risk. All the variables remained indifferent to the question. On the integrity of the
in this section employed Likert scale with endpoints ranging online transactions, only 11.8% of the respondents believe that
from 1 (strongly disagree) to 5 (strongly agree). the information they enter online is not altered in transit while
33.0% of the respondents do not believe this. The remaining
Before sending the questionnaires to the mass, it was pre
and pilot tested through a series of informal interviews with majority (about 55.3%) of the respondents remained neutral on
faculty and doctoral students to ensure that they were properly this question. About 17.6% of the respondents agree that they
operationalized. The items measures were suitably modified or would not hesitate to make purchase from the Web because of
adapted from extant literature. Based on pilot study with 25 security issues of sensitive information and about 40.0% of the
master and doctoral students for comprehensiveness, clarity respondents do not agree this. The remaining 42.4% of the
and appropriateness, 5 items for perceived security, 6 items for respondents remained indifferent to the question. Overall,
perceived privacy, 5 items for trustworthiness of Web vendors, about 31.8% of the respondents believe that there is an
3 items for consumers’ perceived risk, 2 items for economic adequate control in place to ensure security of personal data
incentive, 2 items for institutional trust and 2 items for transmitted during online transaction processing while about
consumers’ trust were incorporated into the study instrument.
30.6% of the respondents do not believe this, and about 37.6%
In this survey, the target group of respondents were the
internet savvy students. 85 full-time final year undergraduate of the respondents remained neutral on this question.
students (50.6% males and 49.4% females) from two local 3

universities are participated in this study. The majority of the

respondents (about 98.8%) are age between 20 to 30 while 2.9

remaining about 1.2% is age between 31 to 40. In term of 2.8

races, about 57.6% are Malay while about 18.8% are Chinese 2.7

and about 15.3% are Indian.

Mean

2.6

IV. DATA ANALYSIS 2.5

Out of the 85 respondents, almost all the respondents 2.4

(about 96.5%) report that they frequently use the internet 2.3

while the remaining 3.5% seldom use the internet. The Feel safe
providing info
Accessible only
by intended
Info is not Not hesitate to
altered in transit purchase for
Adequate
control to

respondents did not have experience in online purchases and over Web recipient security issues ensure security

they were asked about the possibility of their willingness to Information Security Concerns

make online purchases in the near future. About 49.4% are not Figure 2. Mean of Information Security Concerns.
willing to purchase in the near future and about 8.3% are
willing to make online purchases in future. Furthermore, the

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2) Information privacy concerns: Regarding the respondents do not believe this. The remaining 29.4% of the
information misused, about 36.5% of the respondents believe respondents remained neutral on the question. Regarding
that their personal information would not be misused when whether online companies are dependable, about 30.6% of the
transacting with online companies and about 23.5% of the respondents believe that online companies are dependable
respondents do not believe this. The remaining 40.0% of the while about 24.7% of the respondents do not believe this. The
respondents remained neutral on the question. Regarding the remaining 44.7% of the respondents remained indifferent to
control over information, about 42.3% of the respondents the question. Moreover, about 29.4% of the respondents
believe that they have control over how the information they believe that online companies do not have ill intensions about
provide will be used by online companies while about 24.7% any of their consumers while about 31.7% of the respondents
of the respondents do not believe this. The remaining 32.9% of do not believe this. The remaining 38.8% of the respondents
the respondents remained indifferent to the question. remained indifferent to the question. Overall, only 22.4% of
Moreover, about 31.8% of the respondents believe that they the respondents believe that online companies are trustworthy
can later verify the information they provide during a while about 25.9% of the respondents do not believe this, and
transaction with online companies while about 24.7% of the majority (about 51.8%) of the respondents remained neutral on
respondents do not believe this. The remaining 43.5% of the this question.
respondents remained neutral on the question. In addition,
3.25
only 25.9% of the respondents believe that online companies
3.2
will not reveal their sensitive information without their
3.15
consent while about 30.6% of the respondents do not believe
3.1
this, and majority (about 43.5%) of the respondents remained

Mean
3.05
neutral on this question. Regarding the effective mechanism,
3
about 35.3% of the respondents believe that there is an
effective mechanism to address any violation of the sensitive 2.95

information they provide to online companies while about 2.9

20.0% of the respondents do not believe this. The remaining 2.85

Companies will Companies Companies are Do not have ill Companies are
majority (about 44.7%) of the respondents remained act with high
business
standards
have skills and
expertise
dependable intension about
consumers
trustworthy

indifferent to the question. Overall, about 35.3% of the Trustworthiness of Web Vendors

respondents believe that there is an adequate control in place

Figure 4. Mean of Trustworthiness of Web Vendors.
to protect the privacy of personal information within online
companies while about 18.8% of the respondents do not 4) Risk perception: Regarding risk perception, majority
believe this, and majority (about 45.9%) of the respondents (about 48.3%) of the respondents believe that providing credit
remained indifferent to this question. card information over the Web is unsafe while only 18.8% of
3.15
the respondents do not believe this. The remaining 32.9% of
the respondents remained indifferent to the question. In
3.1

addition, majority (about 54.1%) of the respondents believe

3.05
that it would be risky to give personal information to online
companies while about 17.7% of the respondents do not
Mean

believe this. The remaining 28.2% of the respondents

2.95

remained indifferent to the question. Furthermore, majority

2.9
(about 51.7%) of the respondents agree that there would be too
2.85 much uncertainty associated with providing personal
Info would
not be
Control over
how info will
Later verify
info
Companies
will not
Effective
mechanism
Adequate
control to
information to online companies and about 18.8% of the
misused be used reveal info to address ensure
violation privacy
respondents do not agree on this. The remaining 29.4% of the
Information Privacy Concerns
respondents remained neutral on this question.
Figure 3. Mean of Information Privacy Concerns.
3.52

3) Trustworthiness of Web Vendors: Regarding trust 3.5

beliefs of Web vendors, about 36.5% of the respondents

believe that online companies will act with high business
Mean

3.48

standards while about 24.7% of the respondents do not believe

this. The remaining 38.8% of the respondents remained 3.46

indifferent to the question. On the skills and expertise,

3.44

majority (about 48.2%) of the respondents believe that online Credit card info over Web
is unsafe
Risky to give info Uncertainty for providing
info

companies have the skills and expertise to perform Risk Perception

transactions in an expected manner and about 22.3% of the Figure 5. Mean of Risk Perception.

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5) Institutional trust: Regarding institutional trust, about TABLE I. RELIABILITY ANALYSIS RESULTS
55.3% of the respondents would trust to open financial Items in the scale Means and SD Alpha
account with a Bank, while about 17.6% do not agree on this
Information Security Concerns 13.39 (3.03) 0.725
and the remaining (about 27.1%) of respondents are not sure
Information Privacy Concerns 18.35 (3.12) 0.636
about this. Moreover, about 40.0% of the respondents would
Trust Beliefs of Web Vendors 15.07 (2.91) 0.660
trust to open financial account with a major credit card
Risk Perception 10.42 (2.20) 0.642
company and only 8.2% of the respondents do not agree on
this. The remaining majority (about 51.8%) of the respondents Economic Incentive 6.05 (1.37) 0.660
remained neutral on this question. Institutional Trust 6.99 (1.63) 0.779
Consumers’ Trust 7.61 (1.66) 0.707
6) Economic incentive: Regarding economic incentive,
about 24.7% of the respondents agree that providing credit
card information over the Web would not matter much if the C. Factor Analysis
prices were considerably lower while about 38.8% of the Factor analysis (factor extraction as well as varimax factor
respondents do not believe this. The remaining 36.5% of the rotation) was conducted to identify the underlying factors
respondents remained indifferent to the question. Furthermore, affecting consumers’ trust in e-commerce transactions.
about 28.3% of the respondents agree that providing credit Considering all the 25 items on security and privacy of
consumer’s personal information, trust and reliability of web
card information over the Web would not matter much if the
vendors, consumer’s perceived risk, economics incentive, and
products/services were of a higher quality and about 29.4% of institutional trust were analyzed using principal component
the respondents do not agree on this. The remaining majority analysis. “Total Variance Explained” shows the extent to
(about 42.4%) of the respondents remained neutral on this which total variance of the observed variables is explained by
question. each of the principal components. Initial factor extraction
revealed seven components with an absolute magnitude of
7) Consumers’ trust: On the use of more complex and
eigenvalue greater than 1.0. All the seven principal
advanced method, the majority (about 64.7%) of the components together accounted for 63.596% of the total
respondents agree that their confidence to purchase online will variance in the original 25 items. The results of factor analysis
be increased when more complex and advanced method is are shown in Table 2.
used to address concerns on their security and privacy while
only 9.5% do not agree on this and 25.9% of the respondents TABLE II. RESULTS OF FACTOR EXTRACTION AND FACTOR LOADING
remained neutral on this question. On providing all necessary
guarantees to increase consumers’ confidence to adopt e- Items F1 F2 F3 F4 F5 F6 F7
SE 0.749
commerce, the majority (about 58.8%) of the respondents EM 0.745
agree that their confidence to adopt e-commerce will increase LVI 0.694
when online vendors provide all necessary guarantees to BS 0.536
ES 0.538
ensure security and privacy of their personal information, NHP 0.735
while only 8.2% do not agree on this and the remaining (about INA 0.687
32.9%) of respondents are not sure about this. NII 0.660
IR 0.534
DP 0.669
B. Reliability Analysis NRI 0.629
Reliability analysis was performed to assess the reliability EP 0.569
of the scale used to measure the variables of interest. COI 0.527
RGI -0.780
Reliability assessment of the entire scale was first computed CCU -0.652
followed by the assessments of individual items supposed to UC -0.619
measure the research constructs. The overall reliability TC 0.861
assessment of the entire scale was observed to be good with a TB 0.792
Cronbach’s alpha of 0.820. A second test was conducted to NG 0.690
assess the degree to which the items on the scale measure the AM 0.548
HQ 0.873
hypothesized research constructs. A total of twenty five items LP 0.514
measuring six constructs and one dependent variable (five Skills and expertise (SE) Effective mechanism (EM)
items measuring Information Security Concerns, six items Later verify Info (LVI)
Ensure security (ES)
Business standards (BS)
Not hesitate to purchase (NHP)
measuring Information Privacy Concerns, five items Info not altered (INA) No ill intension (NII)
Intended recipient (IR) Dependable (DP)
measuring Trust Beliefs of Web Vendors, three items Not reveal Info (NRI) Ensure Privacy (EP)
measuring Risk Perception, two items measuring Economic Control over Info (COI) Risky to give Info (RGI)
Credit card unsafe (CCU) Uncertainty (UC)
Incentive, two items measuring Institutional Trust, and two Trust with company (TC) Trust with bank (TB)
items measuring Consumers’ Trust in e-commerce Necessary guaranties (NG) Advance Method (AM)
Higher quality (HQ) Low price (LP)
transactions) were assessed for reliability (See Table 1).

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Most items loaded onto the extracted factors except from We also found that the increase in economic incentives
the some items that were conceptualized to measure the does not reduce a consumers’ perceived risk in online
information security concerns, information privacy concerns transaction. The relationship is observed to be with p = 0.484.
and trust beliefs of web vendors. Item on adequate control to Therefore, we reject the research hypothesis.
ensure security fairly loaded onto the factor of trust beliefs of
web vendors, while the item on companies do not have ill H7: A consumer’s trust in online transaction is negatively
intention about consumers slightly loaded onto the information associated with perceived risk in online transaction.
security concerns factor. However, items on later verify info The results of the study show that a consumer’s trust in
and effective mechanism to address violation of the online transaction is negatively associated with perceived risk
information privacy concerns factor fairly loaded onto factor in online transaction. (r = 0.388). The relationship is observed
one (trust beliefs of web vendors). Also item on companies are to be statistically significant with significance level less than
dependable of the trust beliefs of web vendors factor loaded 0.01 (p = 0.000). Therefore, we accept the research hypothesis.
onto factor three. The tree items, namely, feel safe providing
information over Web, information would not be misused, and V. MANAGERIAL IMPLICATIONS
companies are trustworthy had factor loading lower than 0.50.
The present study confirms that while consumers’
perceived security directly acts upon trust in electronic
D. Hypothesis Testing
commerce transactions, consumers’ perceived privacy’s effect
Pearson correlation coefficients were computed in order to on trust is mediated by perceived security. Those
test the relationships between each factor and consumers’ trust organizations that are involved in e-commerce as well as will
in e-commerce transactions. be involved in e-commerce are expected that to act with high
H1: A consumer’s perceived security of online transaction business standards and to have the skills and expertise to
positively contributes to his/her trust in online transaction. perform transactions in an expected manner. In addition,
organizations should implement effective mechanism to
The correlation coefficient between consumers’ attitude address any violation of the consumers’ sensitive data by
towards secured online transaction and their confidence to placing adequate control to ensure security of personal data.
adopt e-commerce was found to be with p = 0.545. Therefore,
the research hypothesis is not accepted. Despite the fact that all Web vendors today employ both
the fair information practices and security information
H2: A consumer’s perceived privacy of online transaction practices in their online transactions, consumers do not fully
positively contributes to his/her trust in online transaction. understand as to how the actions undertaken by Web vendors
ease their risk. This may be due to a significant difference in
The results of the study show that perceived privacy the public perceptions and expert assessment of technology
negatively affects the consumer’s confidence to adopt e- related risks. In order to enhance Web vendors’ reputation,
commerce. The relationship is observed to be r=0.002 with p = organizations should offer education and awareness programs
0.986. Therefore, we reject the research hypothesis. on the efficiency of the protection mechanisms for sharing
H3: The influence of a consumer’s perceived privacy of consumers’ personal data online.
online transaction on trust is mediated by perceived security.
The results of the study show that consumer’s perceived VI. LIMITATIONS OF THE STUDY
privacy of online transaction on trust is mediated by perceived The study has several limitations that affect the reliability
security (r = 0.424). The relationship is observed to be and validity of the findings. The study did not take into
statistically significant with significance level less than 0.01 (p account gender biases, cultural biases, income and other
= 0.000). Therefore, we accept the research hypothesis. demographic variables with the research hypotheses. Further,
only selected respondents participated in the study and
H4: A consumer’s trust in online transaction is positively
therefore a self-selection bias might have affected the findings
related with the trustworthiness of Web vendor.
of this study and it may also limit the generalizability of the
The correlation coefficient between the trustworthiness of findings. Since sampling was based on convenience sample of
Web vendor and consumers’ confidence to adopt e-commerce students, there are chances that the responses provided might
was found to be 0.218 with p = 0.045. Therefore, the research not be the true reflection of the population in general and the
hypothesis is accepted. findings may not represent Malaysian consumers as a whole;
therefore, any generalization of the findings may not be 100%
H5: The increase in institutional trust reduces consumers’ reliable. The model may have excluded other possible factors
perceived risk in online transaction. influencing the consumers’ trust in e-commerce transactions
We found that the increase in institutional trust does not (i.e., the study did not consider other beliefs, such as perceived
reduce a consumers’ perceived risk in online transaction. The usefulness and perceived ease of use).
relationship is observed to be r = 0.148 with p = 0.176. Future studies can also link other demographic variables of
Therefore, we reject the research hypothesis. consumers as well as Web vendors’ reputation, site’s
H6: The increase in economic incentives reduces usefulness and ease of use. These dimensions may provide
consumers’ perceived risk in online transaction. interesting recommendations on the difference in the
consumers’ trust building mechanisms to be adopted. Further,

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Vol. 4, No. 1 & 2, 2009
future studies can also differentiate between the perceptions of [5] Salam, A.F., Rao, H.R. and Pegels, C.C., “Consumer-perceived risk in e-
consumers who have not transacted online with the commerce transactions”, Communications of the ACM, vol. 46, no. 12,
pp. 325-331, 2003.
perceptions of consumers who have transacted online.
[6] Ahmed, M., Hussein, R., Minakhatun, R. and Islam, R., “Building
consumers’ confidence in adopting e-commerce: a Malaysian case,” Int.
VII. CONCLUSIONS J. Business and Systems Research, vol. 1, no. 2, pp.236–255, 2007.
[7] Dauda, Y., Santhapparaj, AS., Asirvatham, D. and Raman, M., “The
This study concludes that while trustworthiness of Web Impact of E-Commerce Security, and National Environment on
vendors is a critical factor in explaining consumers’ trust to Consumer adoption of Internet Banking in Malaysia and Singapore,”
adopt e-commerce, it is important to pay attention to the Journal of Internet Banking and Commerce, vol. 12, no. 2, Aug 2007.
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REFERENCES AUTHORS PROFILE

[1] Krishnan, G., “Internet marketing exposure in Malaysia,” Yi Yi Thaw ([email protected]) is a PhD student at the
http://www.gobalakrishnan.com/2006/12/malaysia-internet-marketing/, Department of Computer and Information Sciences, Universiti Teknologi
2006. PETRONAS, 31750, Tronoh, Perak, Malaysia.
[2] Ahuja, M., Gupta, B. and Raman, P., “An Empirical investigation of Dr. Ahmad Kamil Mahmood ([email protected]) is an Associate
online consumer purchasing behavior,” Communications of the ACM, Professor at the Department of Computer and Information Sciences, Universiti
vol. 46, no. 12, pp. 145-151, 2003. Teknologi PETRONAS, 31750, Tronoh, Perak, Malaysia.
[3] Basu, A. and Muylle, S., “Authentication in e-commerce,” Dr. P.Dhanapal Durai Dominic ([email protected]) is a Senior
Communications of the ACM, vol. 46, no. 12, pp. 159-166, 2003. Lecturer at the Department of Computer and Information Sciences, Universiti
Teknologi PETRONAS, 31750, Tronoh, Perak, Malaysia.
[4] Bingi, P., Mir, A. and Khamalah, J., “The challenges facing global e-
commerce,” Information System Management, vol. 17, no. 4, pp.26-34,
2000.

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