Consumer Adoption and Satisfaction with E-Commerce - A Cross-Country Study

Dongwon Lee Department of Management Information Systems The University of Arizona Tucson, AZ 85721 dlee@.bpa.arizona.edu Joongho Ahn College of Business Administration Seoul National University Seoul, Korea jahn@snu.ac.kr

Abstract
The unprecedented growth of Internet technologies has made resources on the World-Wide-Web (WWW) instantly accessible to various user communities. While e-commerce has become as an important issue with the growth of the Internet, there are insufficient empirical research efforts concerning its status in Korea. The United States, in contrast, has made significant efforts in making empirical research regarding this issue. In this paper, we demonstrate not only how these contextual differences influence consumer satisfaction with the purchased products/services, but also what contextual constructs make consumers satisfied or dissatisfied. In addition, we tried to find the difference in the factors of consumer satisfaction between developed countries (e.g. United States) and developing countries (e.g. Korea) with regard to e-commerce. The study findings suggest that contextual problems need to be solved before electronic commerce provides real benefits for consumers and businesses.

I. Introduction
The unprecedented growth of Internet technologies has made resources on the World-Wide-Web (WWW) instantly accessible to various user communities. The business community has utilized this new world with innovative strategies to expand their customer base (e.g. Internet marketing, electronic commerce) [15]. From our daily lives to commercial transactions between businesses, the Internet has profoundly impacted and changed the way we do business. The explosive increase of Internet users has led to dramatic shifts in the methodology of conducting business. Electronic commerce (e-commerce) presents enormous opportunities for consumers and for businesses in the world. For example, virtual companies which implement ecommerce deliver their products to markets through their ability to organize and maintain a business network, while traditional business models stress the ability to manufacture products, and deliver services [24]. In addition, e-commerce makes it possible to trade at low cost across regions and national frontiers. Many small businesses today are using the Internet to attract new customers, build relationships with suppliers, and cut the costs of serving established clients. Therefore, the Internet and e-commerce have the potential to drive world economic growth for many decades. Figure 1 represents the increasing trend of the amount of goods bought via the Internet. A vigorous private sector in developing countries, as in the United States, has the ability to bring the benefits of the information revolution to consumers. Experience in many developing countries demonstrates, however, that without the aid of policy reform and some initial public investment, private sector action alone may not be able to provide these benefits. With the on-going efforts to build a global information infrastructure as well as a nation-wide information infrastructure, Korea is also at the beginning of turbulent shifts to the Information Age. At the end of 1994, however, the Korean government set up a plan to construct a nation-wide information superhighway by the year 2015. This plan can be compared to the NII project in the U.S. and the IT 2000 project in Singapore. After the announcement of this plan, a committee was organized to launch sub-projects that implement the architectural model of the national information infrastructure. These projects provide an alternative source that will increase the number of users connected to the communications network.

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Amount of goods bought via the Internet

Amount (unit: $1 billion) 450 400 350 300 250 200 150 100 50 0 1996 1997 1998 1999 2000 2001 2002 Year Source: International Data Corporation in IBD, 9/16/1998 32.4 2.8 12.4 67.1 133 237 426

Figure 1: The amount of goods bought via the Internet While e-commerce has become an important issue with the growth of the Internet, there are insufficient empirical research efforts concerning its status in Korea. The United States, in contrast, has made significant efforts in making empirical research regarding this issue. We believe that there may be some valid factors to explain the marked differences between the acceptance of e-commerce in developed countries and developing countries. In this study, we demonstrate not only how these contextual differences influence consumer satisfaction with the purchased products/services, but also what contextual constructs make consumers satisfied or dissatisfied. Other variables that have already been theorized to have effects on consumer satisfaction such as brand equity and loyalty are excluded from our empirical test because this study mainly focuses on the relationship between the context of e-commerce and consumer satisfaction.

II. Literature Review

1. Electronic Commerce (E-Commerce)

Electronic commerce (e-commerce) is about doing business electronically. It is based on the electronic processing and transmission of data, including text, sound, and video. It involves both products (e.g. consumer goods, specialized medical equipment) and services (e.g. information services, financial and legal services). Zwass refers to e-commerce as the sharing of business information, maintaining business relationships, and conducting business transactions through telecommunications networks [24]. He suggests a three-layer architectural framework to view e-commerce. The three layers are physical infrastructure, business infrastructure and business applications. In the e-commerce context, these layers are the areas that differ with traditional commerce. Applegate et al. state that e-commerce involves using network communications technology to engage in a wide range of activities up and down the value-added chain both within and outside the organization [3]. Kalakota and Whinston define e-commerce as a modern business methodology associated with the selling and buying of products and services through communications networks [10]. They also point out that the following four different types of information technology are converging to create the discipline of ecommerce: electronic messaging (e.g. e-mail), sharing a business digital library, electronic document interchange (e.g. EDI, EFT), and electronic publishing. In addition, they categorize the e-commerce application services into three parts, which are consumer-to-business, business-to-business, and intra-organizational transactions. Although many researchers offer various definitions of e-commerce, they generally embrace an expanding view of e-commerce as a broad field of means for providing the products and services via telecommunications networks. Since this study focuses on the analysis of customer satisfaction with e-commerce, we define e-commerce as the consumer-to-business transaction for providing the products and services on the Internet. 2. Customer (User) Behavior (Satisfaction)

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Oliver and Swan suggest that customer satisfaction arises when the purchasing experience and after-sales service meet his/her expectations and that dissatisfaction is the result of the discordance of expectation [14]. In fact, applying this model to e-commerce directly is somewhat difficult because most goods available through e-commerce, such as books, CDs, flowers, hardware, software, etc., are standardized products. However, the utility of the goods and the expectations are well matched in e-commerce in general. Silk and Kalwani suggest that fairness and ease in the order process are significant factors that affect consumer satisfaction afterwards. If consumers feel they are being treated unfairly and feel uneasy in the order process, they are more likely to be unsatisfied with the products [21]. Consequently, the satisfaction with the order process heavily influences the consumers overall satisfaction. Tanner examines this correlation in industrial customers; that is regarding business-to-business transaction. He suggests that there is significant correlation between satisfaction with goods and satisfaction with the order process [22]. Davis develops and validates new scales for two constructs, perceived usefulness and perceived ease of use, which are hypothesized to be fundamental determinants of user acceptance of information technology [8]. There is a wide variety of ways in which these measures can be applied. These measures may be used by researchers interested in understanding factors that influence the success of information systems. In this research, therefore, the scales can be used to determine problem areas in the acceptance of e-commerce. Customers purchasing via electronic means can benefit mainly from easily accessible information and lower transaction costs. Malone theorizes these effects in the following three ways: electronic communications effect, electronic brokerage effect and electronic integration effect. Electronic communications effect allows more information to be communicated in the same amount of time and decreases the cost of this communication dramatically. Electronic brokerage effect increases the number and quality of alternatives that can be considered and decreases the cost of the entire product selection process. Electronic integration effect saves time and avoids errors by the fact that data need only be entered once [12].

III. Research Questions and Hypotheses

Consumers gain not only a wider choice when they purchase products/services electronically from their own places. In addition, they have access to easier and more comprehensive pre-purchase information as well as potentially lower prices. Drawing from the previous sections, the research focuses on three main issues: 1) What factors encourage or discourage consumers from using electronic purchasing methods? 2) How do perceived risks and conveniences influence customer satisfaction when consumers utilize online purchasing methods through the Internet? 3) What are the differences in the factors of consumer satisfaction between developed countries (e.g. United States) and developing countries (e.g. Korea) with regard to e-commerce? With regard to the research questions, we developed hypotheses to be tested as follows: 1. E-commerce Customer Decision-Making Model

The following hypotheses examine the general demographics, technology demographics, risks, and conveniences related to e-commerce: H-1: The demographic factors, such as gender, age, income, and education level, have an effect on customers buying decisions in e-commerce. H-2: The user environment factors of the Internet, such as the connection speed, years on the Internet, and frequency of Internet use, affect customers buying decisions in e-commerce. H-3: Perceived risks in the context of transaction, such as privacy, security, authentication and nonrepudiation, affect customers buying decisions in e-commerce. H-4: Perceived risks in the product or service itself, such as functional loss, time loss, economic loss, physical loss, and opportunity cost, affect customers buying decisions in e-commerce. H-5: Perceived convenience in the order process affects customers buying decisions in e-commerce. The customer decision-making model for e-commerce is summarized in Figure 2.

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General Demographics

Technology Demographics

Perceived Risks
- Products/Services

E-commerce Adoption

Perceived Risks
- Transactional Context

Perceived Convenience

Figure 2: E-commerce Customer Decision-Making Model 2. E-commerce Customer Satisfaction Model

The following hypotheses examine the relationship among the risks, conveniences, and satisfaction in the ecommerce setting: H-6-1: Perceived risks in the context of transaction, product, or service have negative effects on customer satisfaction. H-6-2: Perceived conveniences in the order process have positive effects on customer satisfaction. The customer satisfaction model for e-commerce is summarized in Figure 3.
Perceived Risks
- Products/Services - Transactional Context

O (-)

O (-)

Customer Satisfaction
O (+)

Perceived Convenience

Figure 3: E-commerce Customer Satisfaction Model

IV. Research Approach

This study was carried out through web-based survey methodology because the subjects of the study are Internet users who have ever experienced the Internet, e.g., WWW, e-mail, etc. The questionnaires were posted on the web using CGI technology. Since the objective of the study is to evaluate the different factors of customer satisfaction, the e-mails for the request of the survey were sent to potential Korean and American respondents via list-server, e.g. EC-Forum, BPA_ALL, and SNU_MIS. 1. Generation of Questionnaires

Questionnaire items are divided into seven categories: general demographics (items 38), technology demographics (items 913), purchasing on the Internet (items 1416), perceived risks with the products/services (items 1721), perceived risks in the context of transaction (items 2226), perceived convenience (items 27 31), and customer satisfaction (items 3236). We referred to the GVU's 10th WWW User Surveys to develop the questions in the first three categories and the SERVQUAL and SERVPERF models [11] to -4-

develop the questions in the remaining categories. The respondents were requested to answer the questions covered in customer satisfaction category only if they have purchased a product/service over the Internet in the past. 1) General Demographics Demographic variables include country, gender, age, education level, full time position, and household income. 2) Technology Demographics The connection speed, primary place accessing the Internet, years on the Internet, and frequency of Internet use are investigated. 3) Purchasing on the Internet Experience visiting on-line shopping malls, the amount spent on on-line purchases during the past year, and the frequency of on-line purchase during the past year are included in this category. 4) Perceived Risks with the Products/Services SERVQUAL/SERVPREF models are widely employed as diagnostic tools for discovering areas of service quality strengths and weaknesses. Their five dimensions include the following: (1) Tangibles: The appearance of physical facilities, equipment, personnel, and communication materials; (2) Reliability: The ability to perform a promised service reliably and accurately; (3) Responsiveness: The willingness to assist customers and to provide prompt service; (4) Assurance: The knowledge and courtesy of employees and their ability to convey trust and confidence; (5) Empathy: The caring attitude which provides individualized attention to customers [11]. We referred to the SERVQUAL and SERVPERF models to develop five questions regarding functional loss, time loss, economic loss, physical harm, and opportunity cost. For the business application layer that Zwass mentions [24], the variables to be measured are related to the products and services themselves. 5) Perceived Risk in the Context of Transaction It is important that consumers feel confidence in the e-commerce process itself. Therefore, trust in the context of transaction can be improved by increasing the transparency of the transaction process (for example, fully disclosing the identity, origin, and liability of the supplier), keeping to a minimum the personal data required from the consumer, and by making clear the legal status of any information provided. All of the possible risks that customers can face when exposed to electronic means of doing commerce are included in this category. At present, low asset specificity and ease of description characterize products sold in the electronic market. At this early stage of e-commerce in Korea, it is expected that contextual variables will explain more about purchase behavior and consumer satisfaction than product attributes will. Since this study focuses on the e-commerce context, variables measured are related to each of the three layers that Zwass mentions [24]. With respect to the physical infrastructure, the items measured are accessibility and the speed of the connection. For the business infrastructure layer, the variables are privacy, security, authentication and non-repudiation. 6) Perceived Convenience The most important reason, according to consumers, for making an on-line purchase on the Internet is convenience. For instance, consumers can access thousands of websites and purchase anything from groceries to books and insurance policies without traveling to a store site or adjusting his schedules around the stores hours. Recognizing that customers may want products/services delivered as soon as possible, many ecommerce sites offer next day or second-day delivery. Furthermore, e-commerce customers can view pictures of different product/service models and read extensive information detailing their features and performance. In contrast, prior to the emergence of the Internet, information was time-consuming and difficult. Perceived convenience is measured by ease of search, variety of products/services, sufficiency of information, ease of ordering, and lower purchasing costs. These variables are classified in the convenience category while searching for products/services and convenience when ordering products/services. Here we do not include post-purchase convenience, which can result from the ownership and retirement processes of the customer service life cycle (CSLC), because we implicitly define e-commerce as a purchase process. 7) Customer Satisfaction When on-line shopping on the Internet provides customers with competitive prices, fast delivery, assurance of the quality and fit of a product, and a simple process for returning defective or unwanted products/services, consumers will gain confidence in and be more satisfied with e-commerce transactions. Therefore, customer satisfaction is measured by the perceived satisfaction with the products/services provided. Variables measured are better price, the quality of products/services, speed of delivery, the fit of delivered items, and dissatisfaction management.

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Requirements

Acquisition

CSLC
Retirement Ownership
Source: Ives & Learmonth (http://cos.smu.edu/mis/talks/www/cslc/cslc1.html)

Figure 4: Customer Service Life Cycle 2. Data Analyses

The survey elicited a total of 133 responses. Among the responses, two were received from countries outside of this study. Therefore, they were excluded from the analysis. The questionnaire responses were used for analysis regardless of whether or not the respondent has e-commerce purchasing experience. 1) General Demographics As shown in Table 1, Korean respondents are much less gender-balanced than the U.S. respondents. The result of the U.S. dataset (70:30) is quite similar to that of the GVU's 10th WWW User Surveys (66.4:33.6) [28]. The ages of the overall majority of respondents are between 16 and 35. All the respondents are highly educated with at least some college experience, which is also similar to the result of the GVU's 10th WWW User Surveys (87.8%). The striking demographic factor difference between the two countries is household income. Almost 60 % of the respondents in Korea earn less than $20,000 per year, while all but 70% of respondents in the United States earn more than $20,000 per year. We can intuitively guess that the difference in household income factor may affect customers buying decisions between the two countries. We analyze the relationship between all the demographic variables and on-line purchasing decisions in both countries in the following section.
Gender
M Korea USA Total 59 92% 47 70% 106 81% F 5 8% 20 30% 25 19% 16-25 30 47% 9 13% 29 30% 26-35 31 48% 45 67% 76 58%

Age
36-45 2 3% 6 9% 8 6% 46-55 1 2% 6 9% 7 5% 560 0% 1 2% 1 1% Some College 34 53% 2 3% 36 28%

Education Level
College Grad. 15 23% 24 36% 39 30% Master 15 23% 31 46% 46 35% Ph.D. 0 0% 10 15% 10 7%

Table 1: General Demographics

Primary Place
Home Korea USA Total 13 20% 25 37% 38 29% School 35 55% 21 31% 56 43% Work 16 25% 21 32% 37 28% 2-5 M 5 8% 1 1% 6 5%

Years on the Internet

6-11M 6 9% 0 0% 6 5% 1-2 Yrs 18 28% 6 9% 24 18% 2 Yrs35 55% 60 90% 95 72% 0-1 8 13% 2 3% 10 8%

Frequencies (hours/week)
2-5 22 34% 9 13% 31 24% 6-10 12 19% 17 25% 29 22% 10-20 8 13% 15 22% 23 18% 2014 22% 24 36% 38 29%

Table 2: Technology Demographics 2) Technology Demographics Regarding connection speed, approximately 70% of the respondents from both countries have high connection speed equal to or faster than 56 kb/sec. The respondents from Korea access the Internet primarily at school whereas those from the Untied States access the Internet almost equally at home, school, and work. -6-

As shown in Table 2, the U.S. respondents experience and frequency using the Internet are far greater than those of Korean respondents. 3) Purchasing on the Internet As for experience shopping via the Internet, 67% of Korean respondents and 84% of the U.S. respondents have visited a virtual shopping mall at least once. As expected from the difference in the household income, the total amount and the frequency of the U.S. respondents are much greater than those of Korean respondents as shown in Table 3.
The Amount Spent on On-Line Purchase ($)
0 Korea USA Total 39 61% 13 19% 52 40% 1-50 7 11% 7 10% 14 10% 50-99 8 12% 9 13% 17 13% 100-199 200-499 500-999 1 2% 5 8% 6 4.5% 6 9% 12 18% 18 14% 1 2% 5 8% 6 4.5% 10002 3% 16 24% 18 14% 0 39 61% 11 16% 50 38%

The Frequency of On-Line Purchase

1-2 14 22% 15 23% 29 22% 3-5 10 15% 19 28% 29 22% 6-9 1 2% 4 6% 5 4% 10-20 0 0% 12 18% 12 9% 210 0% 6 9% 6 5%

Table 3: Purchasing on the Internet 4) Perceived Risks with the Products/Services As shown in Table 4, each value of the perceived risks in e-commerce for the Korean dataset is much higher than the median. In contrast, the U.S. respondents seldom feel at risk to the functional loss, physical harm, and opportunity cost.
Functional Loss
Korea USA Total 4.28 3.28 3.77 1.44 1.69 1.64 N 64 67 131 4.86 4.66 4.76

Time Loss
1.33 1.70 1.53 N 64 67 131

Economic Loss
4.28 4.91 4.60 1.33 1.79 1.83 N 64 67 131

Physical Harm
4.33 3.00 3.65 1.50 1.78 1.77 N 64 67 131

Opportunity Cost
4.77 3.66 4.20 1.39 1.53 1.56 N 64 67 131

Table 4: Perceived Risks with the Products/Services 5) Perceived Risk in the Context of Transaction As represented in Table 5, each value of the perceived risks in e-commerce, except accessibility, for the Korean dataset is much higher than the median. Comparing the two datasets, we can conclude that the Korean respondents perceive more risks in the context of transaction in e-commerce than the U.S. respondents. In addition, due to the difference of physical infrastructure in both countries, the U.S. respondents feel far less risk in accessibility, connection speed, and authentication than Korean respondents.

Accessibility
Korea USA Total 3.70 1.97 2.82 1.70 1.34 1.75 N 64 67 131

Connection Speed
4.31 3.54 3.92 1.69 2.07 1.93 N 64 67 131 5.28 4.97 5.12

Privacy
1.47 1.75 1.62 N 64 67 131

Non-repudiation
4.80 3.82 4.30 1.49 1.80 1.72 N 64 67 131

Authentication
4.66 3.67 4.15 1.64 2.01 1.90 N 64 67 131

Table 5: Perceived Risk in the Context of Transaction 6) Perceived Convenience As shown in Table 6, each value of the perceived convenience in e-commerce for both datasets is high enough to be significant. Comparing the two datasets, we can conclude that the U.S. respondents feel more convenience shopping on-line than Korean respondents.

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Easy to Search
N

Product Variety
N

Info. Sufficiency
N

Ease of Ordering
N

Lower Purchasing costs

N

Korea USA Total

4.19 5.07 4.64

1.50 1.44 1.53

64 67 131

4.33 5.58 4.97

1.74 1.29 1.65

64 67 131

4.31 5.04 4.69

1.45 1.30 1.41

64 67 131

5.28 6.19 5.75

1.30 0.93 1.21

64 67 131

4.84 5.39 5.12

1.28 1.41 1.37

64 67 131

Table 6: Perceived Convenience 7) Customer Satisfaction Table 7 shows the perceived level of customer satisfaction in e-commerce. Each value of customer satisfaction scale is high enough to be significant. When comparing the two datasets, the U.S. respondents seem to derive more customer satisfaction from on-line transaction than the Korean respondents. We believe that the underlying cause in the difference of attitudes between the U.S. respondents and the Korean respondents has to do with e-commerce infrastructures. Korean e-commerce market is very immature and only at the beginning stage. In contrast, the U.S. e-commerce environment has had several years to develop and gain the acceptance of millions of consumers.
Cheap Price
Korea USA Total 4.19 5.03 4.72 1.39 1.54 1.53 N 36 59 95 4.63 5.56 5.21

Satisfactory Quality
1.03 1.12 1.17 N 35 59 94

Satisfactory Delivery Time

3.83 5.19 4.67 1.16 1.47 1.50 N 36 59 95

Satisfactory Item Condition

4.63 5.66 5.28 1.03 1.03 1.14 N 35 59 94

Quick Response to Complaints

4.12 4.46 4.33 1.22 1.49 1.40 N 33 57 90

Table 7: Customer Satisfaction 3. Validating the Instrument

Category / Item
Perceived Risks with Products/Services !" Functional Loss (RP1) !" Time Loss (RP2) !" Economic Loss (RP3) !" Physical Harm (RP4) !" Opportunity Cost (RP5) Perceived Risks in the Context !" Accessibility (RC1) !" Connection Speed (RC2) !" Privacy (RC3) !" The identity of the Supplier (RC4) !" Authentication/Security (RC5) Perceived Convenience !" Ease of Search (PC1) !" Variety of Products/Services (PC2) !" Sufficiency of Information (PC3) !" Ease of Ordering (PC4) !" Lower Purchasing Costs (PC5) Customer Satisfaction

Korea (N=64)
0.6266 0.4995 0.5391 0.6024 0.5475 0.6229 0.6488 0.6401 0.6012 0.5610 0.5381 0.6004 0.6747 0.5982 0.5856 0.6093 0.6655 0.6697 0.7280

USA (N=67)
0.6884 0.5562 0.5626 0.7105 0.6659 0.6583 0.6705 0.6581 0.7049 0.5714 0.5858 0.5318 0.6649 0.5292 0.5649 0.6245 0.5811 0.6745 0.7596

Total (N=131)
0.6664 0.5142 0.5562 0.7085 0.5994 0.6229 0.7052 0.6783 0.7025 0.6443 0.6166 0.6169 0.7253 0.6460 0.6418 0.6835 0.6832 0.7316 0.7916

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!" Price (CS1) !" Quality (CS2) !" Speed of Delivery (CS3) !" Delivery Item Condition (CS4) !" Dissatisfaction Management (CS5)

0.6957 0.6901 0.7293 0.5893 0.6344

0.7637 0.6624 0.6586 0.6757 0.7035

0.7828 0.7184 0.7242 0.7009 0.7575

Table 8: Cronbach Alpha for the scales 1) Reliability Reliability refers to the accuracy, consistency, predictability or precision of a measuring instrument in terms of its stability over the time and error of measurement. The principal criteria of test reliability in current usage include test-retest reliability and internal consistency [7, 16, 18]. Test-retest reliability illustrates the temporal stability of a test from one measurement session to another. Internal consistency reliability (also called reliability of components) looks at the extent to which the items used to assess a construct reflect a true common score for the construct [6]. In this study, the internal consistency reliability is measured by applying the Cronbach alpha test to the individual scales and to the overall measure. In the research of social science, we can generally conclude that an analysis is highly reliable if the value of the alpha is greater than 0.8, and furthermore, that we can accept the data for the analysis as satisfactory if the value is greater than 0.6 [7]. The Cronbach alpha values of all four scales, as shown in Table 8, were found to be above 0.6. Thus, we conclude that the scales can be applied for the analysis with acceptable reliability.

Factor Loadings Perceived Risk with Perceived Risk in Products the Context
Korea Functional Loss Time Loss Economic Loss Physical Harm Opportunity Cost Accessibility Connection Speed Privacy The identity of the Supplier Authentication/Security Ease of Search Variety of Products/Services Sufficiency of Information Ease of Ordering Lower Purchasing Costs Price Quality Speed of Delivery Delivery Item Condition Dissatisfaction Management 0.757 0.691 0.584 0.645 0.477 USA 0.811 0.801 0.489 0.620 0.602 0.502 0.594 0.729 0.757 0.628 0.487 0.414 0.758 0.758 0.821 0.729 0.757 0.711 0.551 0.535 0.764 0.771 0.558 0.728 0.413 .612 .726 .453 .889 .754 0.541 0.808 0.761 0.787 0.663 Korea USA

Perceived Convenience
Korea USA

Customer Satisfaction
Korea USA

Table 9: Factor Analysis for Construct Validation 2) Construct Validity Construct validity refers to the degree to which the test or questionnaire score is a measure of the psychological characteristic of interest [6, 7, 18]. That is, construct validity is an attempt to understand what property or properties can account for the variance of the instrument. The most powerful approach to construct -9-

validation uses factor analysis, which is a method to determine the number and nature of the underlying variables (factors) among larger numbers of measures (scales) [16]. The factor loadings indicate the extent to which each scale is associated with an underlying factor. Implementing the dataset of 131 responses, the data was examined using principal components analysis as the extraction technique and Varimax as the method of rotation. The factor analysis conducted in this study found a 4-factor structure with 20 scales loading at the 0.50 level. Table 9 represents the factor loadings. The first factor draws from scales related to the perceived risks with the products/services. The second factor contains scales related to the perceived risks in the context of transaction. The third factor represents scales related to the perceived convenience. The last factor shows scales related to the customer satisfaction. 3. Results of Testing Hypotheses

1) Customer Decision-Making Model for E-Commerce In order to examine what factors encourage or discourage consumers from purchasing on-line via the Internet, we divided the respondents into two groups: those who have purchased products/services via electronic methods and those who have never purchased products/services via electronic methods. General Demographics vs. E-Commerce To examine the relationship between general demographics and e-commerce, we performed chi-square tests and t-tests as shown in Table 10 and Table 11. Among the general demographic variables, education level, full-time position, and age seem to affect consumers purchasing decisions in e-commerce for the Korean dataset, while no demographic variables deem to affect the decisions in the U.S. dataset. Again, we would suggest that the results are in direct relationship to the maturity level of the respective e-commerce environments being examined.
Gender
Pearson Korea USA Total 0.828 0.267 0.498
2

Education Level
Asy. Sig. 0.363 0.606 0.480 Pearson 18.637 3.075 38.102
2

Full-time Position
Pearson 23.187 8.392 31.127
2

Primary Place
Pearson 2 9.321 2.233 6.579 df 2 2 2 Asy. Sig. 0.009 0.327 0.037

df 1 1 1

df 2 3 3

Asy. Sig. 0.000 0.380 0.000

df 10 9 13

Asy. Sig. 0.010 0.495 0.003

Table 10: Chi-Square Test (General & Technology Demographics)

Age
t Korea USA Total 2.59 -0.80 2.94 df 62 65 129 Sig. 0.01 0.43 0.00 t 1.31 1.28 4.07

Income
df 62 65 129 Sig. 0.20 t 1.65

Speed
df 62 65 83 Sig. 0.10 t 2.13

Years
df 62 65 82 Sig. t

Frequency
df 42 65 Sig. 0.00 0.68 0.00 t 4.16 0.06 4.56 0.04 -6.07 0.73 -0.42

Hours
df 62 65 129 Sig. 0.00 0.95 0.00

0.21 -1.76 0.00 -0.17

0.08 -0.34 0.87 3.45

0.00 -6.42 129

Table 11: Independent Samples T-Test (General & Technology Demographics) Technology Demographics vs. E-Commerce In order to examine the relationship between technology demographics and e-commerce, we performed chisquare tests and t-tests as shown in Table 10 and Table 11. Among the technology demographic variables, primary place using the Internet, years on the Internet, and frequency of Internet use appear to affect consumers purchasing decisions in e-commerce for the Korean dataset, while only the connection speed appears to affect similar decisions in the U.S. dataset. Perceived Risks with the Products/Services vs. E-Commerce In order to explore the relationship between perceived risks with the products/services and e-commerce, we conducted t-tests as shown in Table 12. Among the variables of the perceived risks with the products/services, only the possibility of time loss seems to influence consumers purchasing decisions in ecommerce for the Korean dataset, while the possibility of functional loss and time loss seem to influence the decisions in the U.S. dataset.
Functional Loss
Korea t -1.52 df 41 Sig. 0.136

Time Loss
t -1.86 df 62 Sig. 0.068

Economic Loss
t -0.98 df 62 Sig. 0.329

Physical Harm
t -1.41 df 62 Sig. 0.163

Opportunity Cost
t 0.525 df 62 Sig. 0.602

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USA Total

-2.19 -0.42

65 119

0.032 0.000

-3.96 -3.32

28 127

0.000 0.001

-0.36 0.015

65 129

0.718 0.988

-1.12 -3.56

65 129

0.268 0.001

-0.23 -1.63

22 129

0.823 0.105

Table 12: Independent Samples T-Test (Perceived Risks with the Products/Services) Perceived Risk in the Context of Transaction vs. E-Commerce In order to analyze the relationship between the perceived risk in the context of transaction and e-commerce, we conducted t-tests as shown in Table 13. Among the variables of the perceived risk in the context of transaction, both the possibility of non-repudiation and false authentication seem to affect consumers purchasing decisions in e-commerce for the U.S. dataset, while no variables affect the decisions in the Korean dataset.
Accessibility
Korea USA Total t -0.69 -1.32 -3.80 df 62 65 129 Sig. 0.494 0.191 0.000

Connection Speed
t 0.307 0.620 -0.51 df 40 65 122 Sig. 0.760 0.537 0.608 t 0.340 -1.39 -1.10

Privacy
df 62 65 129 Sig. 0.735 0.169 0.274

Non-repudiation
t -0.80 -3.31 -3.89 df 43 18 125

Authentication
df 62 65 118 Sig. 0.927 0.001 0.001

Sig. t 0.428 0.092 0.004 -3.477 0.000 -3.42

Table 13: Independent Samples T-Test (Perceived Risk in the Context of Transaction) Perceived Convenience vs. E-Commerce In order to explore the relationship between the perceived convenience and e-commerce, we performed ttests as shown in Table 14. Among the variables of perceived convenience, only ease of ordering appears to affect consumers buying decisions in e-commerce for both datasets.
Ease of Search
Korea USA Total t 0.380 1.151 2.410 df 46 65 129 Sig. 0.706 0.254 0.017

Product Variety
t -0.72 0.959 2.044 df 42 11 129 Sig. 0.473 0.358 0.043

Info. Sufficiency
t 1.098 1.053 2.923 df 62 12 129 Sig. 0.276 0.314 0.004

Ease of Ordering
t 1.795 2.254 4.354 df 62 65 91 Sig. 0.078 0.028 0.000

Reduced Order Cost

t 0.380 0.062 1.331 df 62 65 129 Sig. 0.705 0.951 0.186

Table 14: Independent Samples T-Test (Perceived Convenience) 2) Customer Satisfaction Model for E-Commerce In order to examine the relationship among the risks, the conveniences, and satisfaction in the e-commerce setting, we created new variables that are the mean of each category. Before applying these variables, we performed Pearson Correlation analyses to check the validity of the variables. All the mean values of the categories are highly correlated to each variable in the categories because each correlation, as shown in Table 15, is demonstrating significance at the 0.01 level. Therefore, we can apply each mean value to the representative value of each category.
KOREA
AVG_RP AVG_RC AVG_CV AVG_CS RP1 RP2 RP3 RP4 RP5 RC1 RC2 RC3 RC4 RC5 CV1 CV2 CV3 CV4 CV5 CS1 CS2 CS3 CS4 .710 .645 .645 .651 .508 .580 .637 .670 .706 .630 .714 .759 .692 .569 .555 .699 .623 .557 .820 .751 RP1 RP2 RP3 RP4 RP5 RC1 RC2 RC3 RC4 RC5 CV1 CV2 CV3 CV4 CV5 CS1 CS2 CS3 CS4 CS5 .782 .774 .549 .626 .602 .512 .560 .718 .700 .783 .756 .694 .605 .644 .557 .632 .756 .779 .729 .706 CS5

USA
AVG_RP AVG_RC AVG_CV AVG_CS

Table 15: Pearson Correlations Between Mean and Each variable In order to analyze the relationship between each mean value, we performed Pearson correlations analyses as shown in Table 16. In the Korean dataset, perceived risk with products/services is negatively related to perceived convenience, and perceived convenience is positively related to the customer satisfaction. In contrast, all the variables in the U.S. dataset have significant relationship as we assumed in the hypotheses.

KOREA
AVG_RP AVG_RC Pearson Corr Sig. (2-tailed) Pearson Corr

AVG_RP 1.000 .

AVG_RC .353** .004 1.000

AVG_CV -.157 .217 .215

AVG_CS -.248 .171 -.018

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AVG_CV AVG_CS

Sig. (2-tailed) Pearson Corr Sig. (2-tailed) Pearson Corr Sig. (2-tailed) AVG_RP Pearson Corr Sig. (2-tailed) Pearson Corr Sig. (2-tailed) Pearson Corr Sig. (2-tailed) Pearson Corr Sig. (2-tailed) 1.000 . .441** .000 -.424** .000 -.616** .000 AVG_RC

.088 1.000 .

.924 .759** .000 1.000 . AVG_CS

USA
AVG_RP AVG_RC AVG_CV AVG_CS

AVG_CV

1.000 . -.358** .003 -.481** .000

1.000 . .670** .000

1.000 .

** Correlation is significant at the 0.01 level (2-tailed).

Table 16: Pearson Correlations Between each variable Finally, we performed forward stepwise regression analysis with a minimum F-to-enter of 2.07 in order to determine how perceived risks and convenience influence customer satisfaction. The results of the regression are shown in Table 17 and Table 18. Since R2s of both datasets are high at 0.637 (Korea) and 0.604 (USA) respectively, and there are no collinearity problems between the variables, we can conclude that the relationships between the factors are explained significantly. After examining the coefficients in Table 17, only perceived convenience has positive effect on customer satisfaction in the significance level of 0.05. Moreover, if we apply the model into the significance level of 0.10, we may also include the perceived risks with products/services as a significant factor in customer satisfaction. Thus, the regression equation of the Korean dataset is derived in the significance level of 0.10 as follows: CS (Customer Satisfaction) = 1.647 + 0.633 * CV (Perceived Convenience) 0.214 * RP (Perceived Risks with products/services) As shown in the coefficients table located in Table 18, perceived convenience has positive effect and perceived risks with products/services has negative effect on customer satisfaction in the significance level of 0.05. If we apply the model into the significance level of 0.10, we may also include the perceived risks in the context of transaction as a significant factor on the customer satisfaction. Thus, we can derive the regression equation of the U.S. dataset in the significance level of 0.10 as follows: CS (Customer Satisfaction) = 3.578 + 0.583 * CV (Perceived Convenience) 0.286 * RP (Perceived Risks with products/services) 0.146 * RC (Perceived Risks in the Context of Transaction)

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Variables Entered/Removed Model Variables Entered Variables Removed 1 . AVG_CV 2 . AVG_RP 3 . AVG_RC a Dependent Variable: AVG_CS

Method Forward (Criterion: F-to-enter >= 2.070) Forward (Criterion: F-to-enter >= 2.070) Forward (Criterion: F-to-enter >= 2.070)

Model Summary Model R R2 Adjusted R2 Std. Error of the Estimate 1 .759a .576 .562 .5391 2 .779b .607 .580 .5279 3 .798c .637 .598 .5164 a Predictors: (Constant), AVG_CV b Predictors: (Constant), AVG_CV, AVG_RP c Predictors: (Constant), AVG_CV, AVG_RP, AVG_RC ANOVA d Model Sum of Squares df Mean Square 1 Regression 11.849 1 11.849 Residual 8.720 30 .291 Total 20.569 31 2 Regression 12.487 2 6.244 Residual 8.082 29 .279 Total 20.569 31 3 Regression 13.101 3 4.367 Residual 7.468 28 .267 Total 20.569 31 a Predictors: (Constant), AVG_CV b Predictors: (Constant), AVG_CV, AVG_RP c Predictors: (Constant), AVG_CV, AVG_RP, AVG_RC d Dependent Variable: AVG_CS Coefficients
a

F 40.767

Sig. .000a

22.405

.000b

16.375

.000c

Unstandardized Standardized t Coefficients Coefficients Model B Std. Error Beta 1 (Constant) 1.378 .457 3.016 AVG_CV .622 .097 .759 6.385 2 (Constant) 2.205 .706 3.123 AVG_CV .608 .096 .742 6.345 AVG_RP -.176 .116 -.177 -1.513 3 (Constant) 1.647 .782 2.106 AVG_CV .633 .095 .773 6.652 AVG_RP -.214 .116 -.216 -1.839 AVG_RC .138 .091 .180 1.517 a Dependent Variable: AVG_CS

Sig.

Collinearity Statistics Tolerance 1.000 .991 .991 .960 .944 .918

VIF 1.000 1.009 1.009 1.041 1.059 1.090

.005 .000 .004 .000 .141 .044 .000 .076 .140

Table 17: Forward Stepwise Regression (KOREA)

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Variables Entered/Removed Model Variables Entered Variables Removed Method 1 . AVG_PC Forward (Criterion: F-to-enter >= 2.070) 2 . AVG_PRP Forward (Criterion: F-to-enter >= 2.070) 3 . AVG_PRC Forward (Criterion: F-to-enter >= 2.070) a Dependent Variable: AVG_CS Model Summary Adjusted R2 Std. Error of the Estimate Model R R 1 .670a .449 .440 .7213 2 .761b .580 .565 .6357 .777c 3 .604 .583 .6224 a Predictors: (Constant), AVG_CV b Predictors: (Constant), AVG_CV, AVG_RP c Predictors: (Constant), AVG_CV, AVG_RP, AVG_RC
2

ANOVA d Model 1 Sum of Squares df Mean Square Regression 24.204 1 24.204 Residual 29.657 57 .520 Total 53.860 58 2 Regression 31.232 2 15.616 Residual 22.628 56 .404 Total 53.860 58 3 Regression 32.552 3 10.851 Residual 21.308 55 .387 Total 53.860 58 a Predictors: (Constant), AVG_CV b Predictors: (Constant), AVG_CV, AVG_RP c Predictors: (Constant), AVG_CV, AVG_RP, AVG_RC d Dependent Variable: AVG_CS Coefficients a Standardized Coefficients Std. Beta Error .689 .124 .670 .852 .121 .497 .081 -.401 .886 .121 .463 .084 -.340 .079 -.177 F 46.519 Sig. .000a

38.646

.000b

28.008

.000c

Model 1

Unstandardized Coefficients B

Sig.

Collinearity Statistics Tolerance

VIF

(Constant) .536 AVG_CV .845 2 (Constant) 3.027 AVG_CV .627 AVG_RP -.337 3 (Constant) 3.578 AVG_CV .583 AVG_RP -.286 AVG_RC -.146 a Dependent Variable: AVG_CS

.778 6.821 3.554 5.172 -4.171 4.039 4.825 -3.405 -1.846

.440 .000 .001 .000 .000 .000 .000 .001 .070

1.000 .813 .813 .782 .723 .785

1.000 1.231 1.231 1.278 1.383 1.274

Table 18: Forward Stepwise Regression (USA)

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3) Summary of the results After analyzing the Korean dataset, it is evident that, although time and ease of ordering variables affect the Korean customer decision-making model, general demographic and technology demographic variables mainly affect customers decision. The U.S. customer decision-making model, on the other hand, is influenced more by perceived risks and the potential for added convenience. The results of customer decisionmaking model are shown in Figure 5.
General Demographics
- Education, Job, Age (KR)

Technology Demographics
- Place, Years, Frequency, Hours (KR) - Connection speed (USA)

Perceived Risks
(Products/Services) - Time (KR) - Function, Time (USA)

E-commerce Adoption

Perceived Risks
(Transactional Context) - Non-repudiation, Authentication (USA)

Perceived Convenience
- Ease of Ordering (KR, USA)

Figure 5: Results of Customer Decision-Making Model Figure 6 illustrates the significance of the relationships among perceived risks, perceived convenience, and customer satisfaction. For the Korean dataset, perceived risks and perceived convenience are not correlated, whereas the U.S. dataset demonstrates a significant negative relationship between the two. In terms of the relationship between perceived convenience and customer satisfaction, perceived convenience has a significant positive effect on customer satisfaction in both datasets. The relationship between perceived risks and customer satisfaction, however, is more complicated. The Korean dataset exhibits a negative effect of perceived risks in products/services on customer satisfaction, yet there is no relationship between perceived risks in the context of transaction and customer satisfaction. The U.S. dataset, in contrast, shows a significant negative effect of both of the perceived risks on customer satisfaction.

Perceived Risks
- Products/Services - Transactional Context (-) O (-)

O (-)

Customer Satisfaction
O (+)

O (+)

Perceived Convenience

USA Korea

Figure 6: Results of Customer Satisfaction Model The results of this study suggest that a maturity level of e-commerce environment has an effect on the overall customer models for that environment. For example, the Internet and e-commerce environment in Korea is growing, yet still immature. Thus, the Korean customer models are affected by an inexperienced used base as well as a still developing technology infrastructure. The United States, in contrast, has a strong infrastructure and an experienced user base, and thus its customer models are less affected by general demo-

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graphic and technology demographic variables than the Korean model. The U.S. customer models are, however, affected more by variables such as perceived risks and perceived convenience than the Korean models. Therefore, the difference between these two countries customer models will gradually decrease as the Internet and e-commerce infrastructure and user base in Korea grow and develop.

V. Conclusion
Although e-commerce provides many competitive advantage factors to business, consumers may face some risks when they do business electronically. First, the network connections that customers use for commercial transactions should be sufficiently fast and responsive in order to offer Internet access without any inconvenience. Although construction efforts of network infrastructures, similar to NII (National Information Infrastructure) projects in the United States, have begun in Korea, the physical infrastructure (e.g. networks, hardware and software) that provides the foundation for e-commerce is still immature and thus insufficient for commercial services. Second, consumers may face problems regarding privacy, security, authentication, non-repudiation, and so on. Unlike the United States, Information industries in Korea have focused their efforts on systems development, while paying little attention to related commercial problems. However, consumers in Korea have not shown much concern for these issues. While it is true that there are some differences between cultures, it is expected that these issues will eventually have negative effects on consumer satisfaction in Korea. Finally, the average customer may feel uncomfortable exploring products/services provided through ecommerce, which is not, however, much different from the case of traditional commerce. For example, the average customer in a traditional commerce setting may feel apprehension when buying a product due to unfamiliarity with the seller, high-pressure sales people, or questionable after-sales service options. These same issues are also experienced in electronic commerce settings. We still believe that perceived convenience, perceived contextual risk and perceived product/service risk are significantly correlated to consumer satisfaction. It can be said that all the constructs suggested in this study have some relation with consumer satisfaction. High correlation between perceived convenience and consumer satisfaction is thought to be due to the characteristics of the products/services sold on the Internet. Low price, low asset specificity, and ease of description (standardization) characterize the products/services correctly sold over the Internet, and these can draw consumers to purchase. In the future research, this will be validated by the responses to the questions regarding total amount of money spent in a year making electronic purchases. It is evident from this study that to convert Internet users into real buyers, perceived convenience must be enhanced and the perceived contextual risk relating to e-commerce reduced. It appears that all the contextual problems will need to be solved before e-commerce can provide the anticipated level of benefits for both consumers and businesses In this exploratory study, some variables were deliberately left out in order to examine the impact of the e-commerce context on customer satisfaction. It is suggested that additional applicable variables be included in further inquiries. Although this research has shown that the e-commerce context influences consumers attitudes, the model suggested could be further refined with the addition of relevant variables. In addition, our research was affected by sampling limitations and challenges. First, economic constraints prevented us from gathering enough responses for a more in-depth analysis. Furthermore, our sampling pool was restricted to mainly academic circles due to limited funding as well as vast geographic distances. Finally, the Korean responses to our survey demonstrated a significant gender bias in favor of males as compared to response from the U.S. and the GVUs 10th WWW user surveys. In our future research, theses limitations will need to be resolved in order to more accurately analyze the state of E-commerce.

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