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Awareness Of E-Commerce And Its Adoption In South-West, Nigeria
Table of Contents Hide
- CHAPTER ONE INTRODUCTION
- 1.1 BACKGROUND OF THE STUDY
- 1.2 STATEMENT OF THE PROBLEM
- 1.3 PURPOSE OF THE STUDY
- 1.4 OBJECTIVES OF THE STUDY
- 1.4 RESEARCH QUESTIONS
- 1.5 SIGNIFICANCE OF THE STUDY
- 1.6 DELIMITATION OF THE STUDY
- 1.7 LIMITATIONS OF THE STUDY
- 1.8 ASSUMPTIONS OF THE STUDY
- 1.9 DEFINITION OF SIGNIFICANT TERMS OF THE STUDY
- 1.10 ORGANIZATION OF THE STUDY
AWARENESS OF E-COMMERCE AND ITS ADOPTION IN SOUTH-WEST, NIGERIA
In the past few years, significant growth has been realized in the internet based services in the pure internet business as well as the traditional enterprise, which are coming of age and advancing their online presence. This study seeks to investigate the factors influencing the adoption of e-commerce in South western Nigeria. Variables under this study include the perceived benefits, internet service diffusion, access patterns and security and privacy concerns. The study was conceived due to the fact that there was lack of comprehension to the real issues that entail enhanced adoption of electronic commerce in developing nation like Nigeria. There was great concern on the reluctance, and even the sluggish pace that the SMEs have adopted towards the adoption of electronic commerce platforms. This study incorporated the use of an exploratory research design. The target population comprised of entrepreneurs in South western Nigeria. The size sample was 198 entrepreneurs. Questionnaires and oral interviews were used to collect the data required. The collected data was coded and analyzed by use of descriptive statistics. The data was the analyzed using SPSS v.20. The findings established that, the number of small enterprises that had so far adopted some aspects of e-commerce was low. The findings further point to the strong influence of perceived benefits, internet diffusion and security/ privacy concerns on adoption of e-commerce. Internet access patterns influence but not as strongly as the other three attributes. It was evident that ‘cost consciousness’remains a key determinant of decisions made. The entrepreneurs expressed their concerns on inherent risks that could lead to financial, technical or even time losses. It would be advisable for the Government, in partnership with the key players from the private sector, to undertake nationwide campaigns to further raise the levels of awareness, and possibly demystify the integration of e-commerce into normal business routines. Entrepreneurs, and their staff, should also be encouraged to invest in their IT and other technical skills in order to fully take advantage of the ICTs. Similar studies should however be undertaken in less urban areas of Nigeria so as to address this challenge of sluggish e-commerce adoption from both perspectives of an urban, and a rural population.
CHAPTER ONE INTRODUCTION
1.1 BACKGROUND OF THE STUDY
The two most powerful forces affecting the world economy and commerce today are the increasing rate of globalization and advances in information and communication technologies (ICTs). In recent years, the exponential growth in ICTs and the resulting rapid emergence of electronic commerce (E-Commerce) have drastically been reshaping the world of business. Much confusion, however, surrounds the definition of e-commerce; as reckoned by Ihlstrum et al (2003), the confusion stems from whether to define e-commerce as Internet based activities only or as any kind of business exchange on any type of network. On that matter, this study will adopt an all-purpose perspective with regard to e-commerce and attempt to derive the characterization of e-commerce from its two broad components; electronic and commerce.
Electronic is generally presumed to indicate a medium or platform that incorporates the use of Information Communication Technologies (ICTs). Commerce, on the other hand, is largely regarded as the study of how man organizes the distribution and exchange of commodities so as to satisfy his needs in the most efficient manner. Mukiibi (1981) opined that commerce was the chain that links the people who produce goods and services to those whowant the same goods and services. Based on the description of the two components of e-commerce, a simple refinement and consolidation of key terms begets the definition of e-commerce that will be used in this study. E-commerce can hence be regarded as any economic or business activity that uses ICT based applications to enable the buying and selling of goods and services and to facilitate the transaction of business activities between and among businesses, individuals, governments or other organizations. E-commerce involves digitally enabled commercial transactions between and among organizations and individuals.
E-commerce intersects at the business firm boundary at the point where internal business systems link up with suppliers. These e-commerce activities include internet retailing (e-tailing), electronic data interchange (EDI), Internet banking, electronic settlements and browsing and selection of products and services over the net.
Forrester Research (2000) estimated that by the end of year 2004, the value of global e-commerce would breach the US $6.8 trillion mark. Of these e-commerce revenues, US based businesses would contribute an overwhelming US $2.7 Trillion and, Asia Pacific region would contribution as much as US $992 Billion. In Australia, where most of the e-commerce studies have been undertaken due to its pervasive internet usage (ranked at second after Finland in the OECD regions), eTForecast (2000) reported that an estimated 1.4 billion electronic transactions were carried out by the end of 1997. It would be noted, as pointed out by Steven J. Kafka of Forrester Research those businesses in the US and other advanced economies are universally preparing to transact their business of buying and selling on-line
Gregory, J. F. (2012) opined that a positive growth of the Atlantic Canadian economy, despite its low population base and distance from highly populated urban areas, is next to impossible without growth at the small and medium enterprise (SMEs) level, where, like in many other parts of the world, these smaller enterprises make up over 90% of all businesses. As a result, researchers worldwide have been tracking the performance of these organizations looking for ways to encourage their growth and thereby stimulate local economies. Much of the recent focus of this research, as Porter, M. E. (2001) would put it, has been on the adoption of Information and Communication Technologies (ICTs) for SMEs as they have been shown to improve operational efficiencies and enhance market reach among other benefits,
To fully fathom the operations of e-commerce, it would be prudent to appreciate its advent and the consequent three-stage metamorphosis over a particular period of time. These stages were informed by Pearson scholarly articles available at(www2.sta.uwi.edu/
…/questions.pdf). The three stages in the evolution of e-commerce are innovation, consolidation, and reinvention.
During the Innovation stage, e-commerce was primarily technology-driven. Innovation took place between the periods of 1995 to mid-2000 and was characterized by excitement and idealistic visions of markets in which quality information was equally available to both buyers and merchants. Startups during the Innovation stage were financed by venture capitalists and, for the most part, e-commerce during this period was largely ungoverned. This phase was characterized by an emphasis on deconstructing traditional distribution channels and dis-intermediating (the removal of middlemen) of existing channels. These early years of
e-commerce saw an infusion of pure online businesses that thought they could achieve unassailable first mover advantages. However, e-commerce did not fulfill these visions during its early years despite firms placing an emphasis on revenue growth, and quickly achieving high market visibility.
After 2000, e-commerce entered its second stage of development: the consolidation stage. In this stage, more traditional firms began to create their online presence via use of the Web to enhance their existing businesses whereas less emphasis was now placed on creating new brands. In the Consolidation stage, there was a rise in the amount of regulation and governmental controls by governments worldwide. Whereas the early years of e-commerce were dominated by the first movers, the Consolidation stage of e-commerce was characterized by the well-endowed and experienced Fortune 500 and other traditional firms. Startups in the Consolidation stage were primarily financed by traditional methods. During the same period, the role of intermediaries strengthened as successful firms adopted a mixed “bricks-and-clicks” strategy which in essence combined the traditional sales channels such as physical stores and printed catalogs with online consumerengagements.
In 2006, though, e-commerce entered its current phase, the reinvention stage, as social networking and Web 2.0 applications (a set of new, advanced applications that have evolved along with the Web’s ability to support larger audiences and more integrated content) reinvigorated e-commerce and encouraged the development of new business models. Today’s e-commerce, while still business-driven, is also audience, customer, and community-driven where audience and social network growth are being emphasized. Today, startups are once again being financed by venture capitalists, albeit with smaller investments. There is a proliferation of small online intermediaries that are renting the business processes of larger firms. There is also the return of pure online strategies in new markets, as well as a continued extension of the “bricks-and-clicks” strategy in traditional retail markets. The concept of first-mover advantages are returning in new markets as traditional Web players catch up. All these activities in the cyberspace have invited extensive government regulation and surveillance to ensure fair play, consumer protection and strict adherence to best business practices.
However it is not all doom and gloom as there are certain pertinent issues that will help define the future of e-commerce over the next few years including: 1.) the continued
Proliferation of ICTs and e-commerce applications through all commercial activity; this then dictates that overall revenues will continue to rise rapidly; and the numbers of both visitors and products and services sold will continue to grow. Prices will rise to cover the real costs of doing business on the Web and to pay investors a reasonable rate of return on their capital. 2.) Continued ease of entry onto the electronic commerce trading platforms with steadily increase competition and erode the first mover advantages. Consequently, e-commerce margins and profits will rise to the level of traditional retailers as the revenues from sales and cost of goods sold via e-commerce platforms approaches equality to that of traditional firms. 3.) Continued aggression by the top e-commerce sites will increasingly obtain very well-known brands from strong, older traditional firms. This will be in an effort by the said firms to acquire a larger
footprint into the traditional market place and also in the rapidly expanding market space.
In a nutshell, the number of successful purely online companies will further decline whilst the most successful e-commerce firms will accommodate use of both traditional marketing channels such as physical stores, printed catalogs, and e-commerce Web sites.
1.2 STATEMENT OF THE PROBLEM
ICT is a general purpose technology since it has a wide scope of improvement and elaboration, applicability across a broad range of uses and strong complementarities with existing and potential new technologies; and as such has a pervasive impact on the economy that cannot be undermined for any longer. The pervasive nature of ICT ensures its investment as a capital input in production contributes to overall capital deepening in other sectors thus helping in generating employment and improving labour productivity.
According to Rogers (1995), the adoption of e-commerce or any other new technological product is a decision process that moves through different stages over a period of time. In the case of SMEs, Kendall et al (2001) reasoned that diffusion was the process by which an innovation such as e-commerce is communicated through certain channels over time among members of a social system. E-commerce is considered to provide substantial benefits to businesses, including SMEs, largely via improved efficiencies and increased revenues, as well as
the creation of new opportunities for business and consequent employment.
However, even in the fairly economically advanced nations in Europe, the Americas and parts of Eastern Asia, a majority of SMEs have access to internet services but do not necessarily
incorporate e-commerce applications into their business activities. As indicated by Lawson R., Carole A.,Cooper J. and Burgeis L. (and cited in the Journal of small Business and Enterprise Development, 2003), internet access does not necessarily equate to e-commerce practices. According to the Australian Industry Group (AIG, 1999), 78 percent of its members had an internet connection but only a mere 23 percent admitted to having incorporated some aspects of e-commerce in their business such as official web page. On the other hand, in the Americas, US SMEs registered as high as 80 percent internet connectivity (Hobley, 2001) but only 32 percent
had an e-commerce ready official web page (Caswell, 2000).
According to the OECD, leading the pack in overall internet usage is Finland, closely followed in second and third place by the USA and Australia in that order. This, then, begs the question of where developing nations like Nigeria stand as far as the adoption and subsequent utilization of e-commerce is concerned. Wanjau K., Ayodo E. and Macharia N. R. (2012) opined that despite the great opportunities envisaged from the adoption of e-commerce by SMEs, general ICTs usage patterns continue to show slow progression particularly in commerce-oriented activities. Macharia J. (2009) further indicated that there was limited systematic research into the challenges small and medium enterprises faced in their adoption of e-commerce in developing nations and in particular SMEs in Nigeria, thus curtailing the generation of informed solutions to address such challenges. This study, therefore, seeks to interrogate the factors affecting the adoption of e-commerce in South western Nigeria.
1.3 PURPOSE OF THE STUDY
The purpose of this study was to review the development of e-commerce from a global, regional, national and local (Nakuru County) perspective, and establish the factors inhibiting the adoption of e-commerce in South western Nigeria.
1.4 OBJECTIVES OF THE STUDY
The study was guided by the following four objectives:
- To examine the influence of perceived benefits on the adoption of e- commerce among the entrepreneurs in South western Nigeria.
- To analyze the influence of internet service diffusion on adoption of e-commerce among entrepreneurs in South western Nigeria.
- To examine the influence of internet access patterns on the adoption e-commerce among the entrepreneurs in South western Nigeria
- To identify the influence of security readiness in the adoption of e-commerce in South western Nigeria.
1.4 RESEARCH QUESTIONS
The following four research questions crafted from the stated objectives guided the study:
- What are the perceived benefits influencing the adoption of e-commerce among the youth entrepreneur in South western Nigeria?
among the entrepreneurs in South western Nigeria?
among the entrepreneurs in South western Nigeria?
- To what extent has security readiness influenced the adoption of e-commerce among entrepreneurs in South western Nigeria
1.5 SIGNIFICANCE OF THE STUDY
Economic growth and consequent creation of employment opportunities particularly amongst the youth cannot be sustained with capital accumulation alone, as the contributions of capital, without technological advancement, will be subject to diminishing returns
The Nigerian ICT sector, today, is well-seasoned for investment owing to the three sub marine fiber optic cables, a 5000km national backbone fiber, 62 licensed BPOs, 73 licensed ISPs, massive investments from within and abroad in form of FDIs, and a significantly youthful tech savvy population; clearly, Nigeria has realized a much wider penetration of ICT but there is theurgentneedforadoptionofe-commercethanthepresentsituationifitistohavea
comparative advantage in the production and exportation of ICT based products and services.
Previous studies have indicated the significant benefits to enjoyed by SMEs, most of which are ran by the youthful populace, that adopt and use e-commerce in their organizations. But to the contrary, the well-educated tech savvy youths mostly found in urban areas continue to
bear the brunt of high unemployment in Nigeria.
In recent years, broad band’s positive impact on economic development and social networks have become evident to leaders in both the public and private sectors; this essential technology facilitates pivotal socio-economic elements such as education, health, trade, and innovation across various industries. Broadband penetration has transformed interaction among businesses, consumers, and governments and as such, it should be in forefront of strategies to arrest the runaway unemployment among the youth.
1.6 DELIMITATION OF THE STUDY
This study specifically focuses on the factors affecting the adoption and usage of e-commerce by the entrepreneurs in South western Nigeria as It is argued by Crawford (1998) that participation in e-commerce is important, not just from the perspective of commercial transactions but rather in the way it encourages transformation of internal systems and the subsequent efficiencies in terms of cost, responsiveness to customers, customization of offerings and the potential emergence of new products and services. This study will be conducted within the borders of Nakuru County. However, such data collected outside of the county but deemed pertinent for statistical analysis and comparisons shall be considered to be indispensable. The collection of data shall span from the late 1990s to the most recent of data available.
1.7 LIMITATIONS OF THE STUDY
The ‘social fabric’ in Nigeria is sown with suspicion and mistrust particularly in the areas concerning personal declarations. This might get in the way of collection of such data that is deemed dear to the respondent e.g. whether he/she owns a mobile phone, Personal Computer, ICT literacy and e-commerce awareness levels etc. However, in light of Bassey (1999, 73-74), this problem can be steered clear of by the assurance to the respective respondents that such information will be treated with utmost level of respect, professionalism and confidentiality.
The collection of primary data will be achieved by means of face-to-face interviews, focus group discussions and administering well written structured questionnaires. These data collection techniques may be very expensive and time consuming; this might not augur well with the fact that the time period for collecting, validating and analyzing the enormous amounts of data might not be adequate enough. However, with proper planning and self-organization, the seemingly herculean task insurmountable.
1.8 ASSUMPTIONS OF THE STUDY
The fundamental assumption entertained in order to enable the undertaking of this study is that the sample unit under focus is a true representation of the population, and that the responses collected back from them provided the necessary data for a conclusive and informed outcome.
The study also assumes that the entrepreneurs in question shall be responsive and honest in their correspondence to ensure the true picture is captured.
1.9 DEFINITION OF SIGNIFICANT TERMS OF THE STUDY
E-commerce – this is the transaction of commercial activities, amongst individuals, businesses and governments, on the new platforms offered by the ever increasing new information communication technologies (internet, web 2.0, mobile money transfers etc.)
Entrepreneurs– these are businesspersons who are running/ managing duly registered business enterprises (mostly small and mediumenterprises)
Adoption– this is the incorporation, integration and consequent assimilation of new technologies and innovations, including e commerce, into the daily operations of abusiness
Perceived benefits – these are the presumed or anticipated net gains (or losses) to be realized by the individual or enterprise that adopts and consequently utilizes new technologies, and more particularly e-commerce. These net gains could be addressed in monetary terms (the financial impacts to individuals/ enterprises) or non-monetary terms (the general well-being of
Internet diffusion – this is the supply side of internet services that involves the infrastructural amenities laid down by the government and other service providers, and the dissemination of such information that brings internet services closer to the general public
Internet access patterns – this is the demand side of internet services that entails the physical and mental readiness of consumers to adopt and utilize internet services among other
Security readiness and concerns – these are the mechanisms put in place and the measures undertaken to prevent a breach or compromise of the e-commerce platforms and installations. Security is all about actions and controls, and the assurance that the desired actions and controls are in place at any given time including system authentication, confidentiality of personal data and so on.
1.10 ORGANIZATION OF THE STUDY
This study is captured in five chapter segments. Also an appendices section carrying a list of all the relevant tables and figures is attached. Chapter one covers the background of the study presenting what is in knowledge as far as ICTs and electronic commerce is concerned. It also highlights the various contradictory empirical studies that are critical in identifying the knowledge gap. Also included in this chapter is the statement of the problem, the research objectives, questions guiding the study, the justification of undertaking the study as well as its scope.
Chapter two captures the rich literature present in the vast resources of both print and electronic media. Whereas the value of the different theories advanced to identify factors affecting the adoption of electronic commerce cannot be understated, this study has delved into three prominent theories: the Theory of Reasoned Action, the Innovations Diffusion Theory and the Technology Acceptance Model. These models were highly informative of the conceptual
framework that comes at the end of this chapter.
Chapter three expounds on the research methodology by identifying the research design, the population of the study and the sampling techniques. This segment also highlights the instruments of research, their validity and reliability and a brief discussion of the operational
variables and methods of data analysis closes the chapter.
Chapter four contains the presentation and interpretation of the findings arising from the
analysis of data collected using the techniques spelled out in the previous chapter three.
Chapter five being the final submission in this study contains the summary of findings, discussions, the resultant conclusion and recommendations arising from the research. It also contains the suggestions for further studies as well as contributions of this study to the body of knowledge