The determinants of individuals’ perceived e-security: Evidence from Malaysia

Abstract

Despite the critical role of individuals’ perceived security in an online environment, previous research has not attempted to comprehensively study the influences and interrelations between the determinants of online individuals’ perceived security. This research employs five theories to examine the interrelations that might exist between the antecedents of individuals’ perceived security in online environment in Malaysia. It is the first attempt to empirically examine the interrelations of the confidentiality related factors identified in the literature which is a significant original contribution. A questionnaire was the primary research methodology and structural equation modeling was employed to test the hypotheses. The findings suggest that individuals’ perceptions about security are significantly influenced by their perceived technical protection while technical protection was found to be influenced by website design features. Moreover, it was found that individuals’ perceptions toward internally provided assurances are highly influenced by externally provided assurances. However, the results found no significant relations between internally and externally provided assurances about a website's security. The findings imply that e-retailers should launch well-designed websites and communicate the technical protection capabilities of their websites to address individuals’ security concerns. The results also suggest that e-traders should consider the factors influencing individuals’ security perceptions when designing/developing their websites.

Introduction

The development of the internet and particularly e-commerce has created a revolution in peoples’ lifestyle and standard of living. Moreover, e-commerce has also brought about many advantages for SMEs (Abbasi et al., 2010, Koiso-Kanttila, 2005, Ozer, 2002). At present, most businesses have their own website to perform at least a part of its marketing activities (Kamarulzaman, Madun, & Azmi, 2010). However, despite the benefits and advantages of e-commerce solutions, many issues have been cited as the barriers challenging the global diffusion of e-commerce. Jarvenpaa, Tractinsky, and Vitale (2000) believe that while in the early stages of internet application, users’ concerns were more about the performance of technologies and how firms have implemented their technologies and later, security has become a greater concern. The issue of security in the online environment is cited by many others as a critical factor (Berthon et al., 2008, Chang and Chen, 2008, Chang and Chen, 2009, Peikari, 2010c, Peterson et al., 2007).

Security features of a website have been cited as one of the determining factors of website success (Greunen, Herselman, & Niekerk, 2010), individuals’ online trust (Berthon et al., 2008, Chang and Chen, 2009, Chen and Barnes, 2007, Flavian and Guinaliu, 2006, Furnell et al., 2000, Kim et al., 2010, Mahmood, 2006, Miyazaki and Fernandez, 2000, Ribbink et al., 2004, Roca et al., 2009), customers’ online purchase intention (Delafrooz et al., 2011, Peikari, 2010a, Salisbury et al., 2001), perceived value (Kurt & Hacioglu, 2010) online satisfaction (Chang and Chen, 2009, Lee and Lin, 2005, Ribbink et al., 2004) and online loyalty (Flavian and Guinaliu, 2006, Liu and Hung, 2010). Therefore, individuals’ perceptions of the security features of a website play a critical role in their online behavior and purchase decision making process. Considering the critical role of factors such as customer satisfaction and loyalty in the financial performance of organizations (Ahmed et al., 2010), online security is a critical factor for online retailers.

Although the antecedents of online security have been studied by the scholars in the field of computer science and engineering, their approach is from the technical and engineering perspective and not from the social science and Management, which refer to security from the subjective perspective. Studying the antecedents of online security from the subjective perspective is important because the antecedents of security are difference in subjective and objective perspective (Chellappa and Pavlou, 2002, Kim et al., 2010, Linck et al., 2006, Peikari, 2010b, Peikari, 2010c) and the findings of each approach cannot be applied to the approach. Therefore, it is needed to study the antecedents of online security from the managerial and social science perspectives, using the subjective approach.

Despite the importance of the issue, the studies investigating the security perceptions of individuals from the subjective perspective are limited in their understanding of the determinants of perceived online security. More specifically, the interrelations between different antecedents and determinants of security have not been fully investigated and understood by researchers. In other words, previous studies have not fully addressed how to influence individual security perceptions in the online environment and only a few attempts have been made to study the antecedent factors of individuals’ perceived security (Chang and Chen, 2009, Chellappa and Pavlou, 2002, Kim et al., 2010). However, these studies had a limited approach and scope. They have not investigated the interrelations that may exist among these factors and have only studied their direct influence on perceived security. Therefore, there is a need to investigate the factors influencing individuals’ perceived security and their interrelations more deeply.

This research intends to address the interrelations between the determinants of individuals’ perceived security of websites in the B2C context. The findings of this study will contribute in the academic world by improving the current models and understanding of the interrelations that exist between such factors and overall security features, which enriches the existing knowledge and theories regarding the determinant factors of individuals’ perceived security and their interrelations. The findings also help e-retailers and practitioners to gain a better understanding of the security antecedents which in turn enables them to have more efficient and effective e-commerce strategies and design to address and improve their individuals’ security perceptions.

Another issue is that cultural differences of different nations have been found as one of the factors significantly differentiating their perceptions toward online risk and security (Cheskin Research Group, 2000, Cyr, 2008, Cyr et al., 2005, Peikari, 2010a, Talukder and Yeow, 2006). Since the majority of the research available on e-commerce has been conducted in the US: a country with high level of individualism and uncertainty avoidance, the findings of such research therefore cannot be generalized to other countries with different cultures (Alam & Yasin, 2010b). This calls for more research about individuals’ perceptions of online issues in developing countries (Abbasi, 2007, Peikari, 2010a). Furthermore, the adoption of online transactions by citizens and businesses is in its early stages in Malaysia (Alam and Yasin, 2010a, Delafrooz et al., 2011). Since customers in countries where the utilization of online shopping is in its early stages have higher levels of security concerns (Alam and Yasin, 2010a, Hwang et al., 2006), it is therefore needed to conduct context-based research about the factors influencing customers’ perceptions toward online security and its determinants in Malaysia. This brings about differences with many of the past studies in this field, which have collected data from other countries. First, Malaysia represents an Asian country with its unique culture of collectivism and uncertainty avoidance (Hofstede, 1984, Hofstede, 2001) which has made them skeptical in revealing sensitive information in the online environment (Alam and Yasin, 2010a, Peikari, 2010a). This is because the nations – like Malaysians – with high collectivism and uncertainty avoidance characteristics have more caution and less risk propensity in their social and business interactions (Bellman et al., 2004, Cyr et al., 2005). This makes the findings of this research different from those conducted in the Western countries such as the US and UK where the people have a lower level of collectivism and uncertainty avoidance.

Secondly, although the Malaysian government urges Malaysians to do many of their transactions online (Lim, Yap, & Lee, 2011), Malaysians are in the early stage of the adoption of online shopping. This has made their perceptions different with those of the nations with more online experience (Alam & Yasin, 2010a). Thirdly, there is no study available about the factors influencing customers’ perceptions of online security in Malaysia. This justifies the need to conduct this research in the context of Malaysia. The findings may help companies willing to enter the Malaysian markets for e-commerce. The findings can provide useful insights for the policy makers and business managers to effectively and efficiently address Malaysian concerns about online security. Moreover, the findings will improve our knowledge of the global diffusion of e-commerce in the developing countries in general and in Malaysia with its unique features specifically.