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E-commerce in
E-commerce in Hong Kong: an Hong Kong
empirical perspective and analysis
A. Gunasekaran
Department of Management, University of Massachusetts, North Dartmouth, 141
Massachusetts, USA
E.W.T. Ngai
Department of Management and Marketing,
The Hong Kong Polytechnic University, Hong Kong, People’s Republic of China

Abstract
Purpose – The main objective of this study is to develop a framework for: identifying the reasons for
using e-commerce; understanding the implications of e-commerce in companies; and implementing
and applying e-commerce successfully for improved organizational competitiveness and success.
Design/methodology/approach – A structured questionnaire was designed, pre-tested, modified,
and used to capture data on e-commerce in Hong Kong. Based on the feedback from the pilot-test, the
questionnaire was modified and a final questionnaire was developed and mailed to companies in Hong
Kong. In the survey, conducted with Hong Kong companies, the perceived benefits and perceived
barriers of e-commerce implementation are discussed.
Findings – The conceptual model based on the analysis of literature and some reported case
experiences is developed using the current issues that have been highlighted as important e-commerce
success factors of implementation. The major factors that influence the application and
implementation of e-commerce are: perceived usefulness of web; perceived barriers of the internet
for e-commerce; usage of the internet; and perceived benefits of the internet for e-commerce. In addition
to this, country-specific factors such as culture, technology competency, government policy,
educational level, influence the level of application of e-commerce.
Practical implications – The framework is the result of the validation of the theoretical model,
together with the conclusions of the empirical analysis conducted in Hong Kong. The empirical
analysis supported some of the assumptions of the theoretical model, whereas others were not
supported. Based on the feedback received from respondents, the model has been revised to reflect
these practical considerations.
Originality/value – Little research has been done to address the perceived benefits and potential
barriers to e-commerce implementation in Hong Kong. This study is a timely and important one in that
examines the current status of e-commerce implementation in Hong Kong. A generic framework is
presented with the objective of supporting the application and implementation of the internet for
e-commerce.
Keywords Electronic commerce, Hong Kong
Paper type Research paper

1. Introduction
During the past decade, with the emergence of e-commerce and internet technologies,
organizations have changed the ways in which they conduct their business.
Internet Research
Vol. 15 No. 2, 2005
The authors are most grateful to the Editor, Professor David Schwartz, and two anonymous pp. 141-159
q Emerald Group Publishing Limited
referees, for their constructive and helpful comments that helped to improve the presentation of 1066-2243
the paper considerably. DOI 10.1108/10662240510590333
INTR E-commerce promotes open communication and a virtual interactive environment in
15,2 which suppliers and customers can exchange information and products. E-commerce
improves communication among partners along a value chain and offers an integrated
business model by which companies can be responsive and flexible to changing market
and customer requirements. This has become part of daily life, and it is difficult to
imagine an organization without some form of e-commerce application.
142 However, to move forward and achieve improved productivity and quality, it is
necessary to identify the potential areas of application and implementation of
e-commerce. Globalization and information technology (IT) are radically changing the
face of business organizations. IT is being adopted and incorporated into nearly all
organizations, the vast majority of which have invested heavily in IT infrastructure
with a view to ensuring the overall success of their business (Ngai and Wat, 2002).
There is an institutionalized interest in the use of e-commerce as a means of performing
business transactions. For many businesses, it has become a priority (Sharp, 1998).
Farhoomand et al. (2000) conducted a field study of ten companies in Hong Kong and
Finland to identify the major barriers to e-commerce across borders. In addition to
several country-specific barriers to global e-commerce, resistance to change, lack of
education about the potential of global e-commerce, and lack of flexible software were
found to be the key inhibitors.
Based on a survey of small firms in Hong Kong in which factors affecting the
adoption of EDI were examined, Kuan and Chau (2001) have proposed a
perception-based model that incorporates the elements of technology, organization,
and environment. However, this study was mainly focused on small businesses and did
not provide an overall perception of the issues involved in the implementation of
e-commerce in a country.
A range of factors, both internal and external, play a part in an organization’s decision
to implement e-commerce, and few detailed studies are available on the subject.
However, it is apparent that e-commerce plays a major role in improving organizational
competitiveness. In view of the importance of the issues surrounding e-commerce
application and implementation in Hong Kong – a country in which the usage level of
the internet is high, and in which e-commerce is perceived to be very useful – this paper
presents a study of the application and implementation of e-commerce in that country.
The study used a standard questionnaire tailored to the purpose of conducting an
empirical study of this important subject in the twenty-first century. The research
framework included: a literature survey; the development of a theoretical framework for
the study; an empirical analysis to validate this framework; and the development of a
generic model for the successful application and implementation of e-commerce.
The organization of the paper is as follows. Section 2 deals with the applications and
implementation of e-commerce. Section 3 presents a theoretical framework for these
applications and implementation. Section 4 deals with the research framework, including
research questions and research methodology. Results and discussions of the empirical
analysis are presented in Section 5. Section 6 presents a generic framework for the
applications and implementation of e-commerce. Finally, Section 7 concludes the paper.

2. Applications and implementation of e-commerce

The internet represents a technological innovation that has transformed the way in
that we live and work. Telecommunication organizations and governments are making
huge investments in developing the network infrastructure, and many programs have E-commerce in
been developed to enable the exchange of e-communication, databases, and commercial Hong Kong
transactions via the world wide web (WWW) (Tan and Teo, 1998).
Applegate et al. (1996) have discussed the implications of e-commerce on
organizational performance and research agenda. E-commerce involves more than just
buying and selling and encompasses the range of pre-sale efforts. As well as a host of
ancillary activities, these include new approaches to market research, generation of 143
qualified sales leads, advertising, product purchasing and distribution, customer
support, recruiting, public relations, business operations, production management,
knowledge distribution, and financial transactions. These activities affect strategic
planning, entrepreneurial opportunities, organizational design and performance,
business law, and taxation policies (Applegate et al., 1996). Lee et al. (1998) presented
the results of an empirical study that used structured interviews with 110 companies in
South Korea. As noted above, the results supported the hypothesis that electronic data
interchange (EDI) controls affect EDI implementation. Moreover, economic and
cultural environments can affect the causal relationship between controls and
implementation.
The argument in favor of moving to e-commerce is a belief that electronic markets
have the potential to be more efficient in developing new information-based goods and
services, and in finding global customers and trading partners with whom to conduct
business. E-commerce, via the internet or the next generation of internet protocol, will
change business institutions, operations, and products and services, as we know them
today, just as the telephone, television, fax, and e-mail have changed the way
businesses and consumers communicate. E-commerce brings the benefits of product
promotion, cost saving, timely information, shortened remittance time, information
consistency, better customer service, and better customer relationships, customization
of products, competitive advantages, and convenience of doing business (Wen et al.,
2001).
Hoffman et al. (1995) proposed a structural framework for examining the explosion
in commercial activity on the web. They classified current commercial web site designs
as: online storefront; internet presence; content; mall; incentive site; and search agent.
Kalakota and Whinston (1996) classified activities on such sites as advertising, sales,
and customer-oriented e-commerce activities. Premkumar et al. (1994) examined the
impact of seven characteristics of EDI on organizational adoption and usage of the
technology. The characteristics they examined were: the relative advantage of EDI vs.
manual systems; technological complexity; technical compatibility with other systems
within the organization; organizational compatibility in using EDI as a business tool;
communicability of the relative merits of the technology to trading partners; the cost of
adopting and using EDI; and elapsed time since adoption.
Companies are increasingly setting up their own corporate local area networks
(LANs) by intranet, and, by applying extranet and internet, can remove physical
barriers to commerce almost immediately, giving even the smallest business access to
untapped markets around the world (Poon and Swatman, 1998). At the same time,
consumers can conduct business and make purchases from companies previously
unavailable to them (Wen et al., 2001). Tan and Teo (1998) demonstrated that the
reasons for internet adopters creating web sites were: convenient access to worldwide
information; establishing a global presence; extending global market reach; creating
INTR new business opportunities; improving customer service; direct selling of products;
15,2 and lowering of operational costs. Clark and Stoddard (1996) examined the benefits of
combining EDI implementation with business process reengineering. They argued that
the benefits of simultaneously engaging in technological innovation and process
innovation are much greater than the sum of the benefits achievable from innovation
on each dimension separately.
144 From the seller’s perspective, Angehrn (1997) proposed a database theory model for
analyzing and classifying e-commerce strategies. The model describes four virtual
business spaces:
(1) virtual information space;
(2) virtual communication space;
(3) virtual distribution space; and
(4) virtual transaction space.
Based on the model, the authors suggested four e-commerce strategies that are further
refined by the level of sophistication and customization of the web site design. Wen
et al. (2001) presented emerging models of e-commerce web site design, divided into
two primary classifications of strategy:
(1) information and communication design strategy (comprised of a
brand-awareness and image-building model, a cost-saving model, a
promotion model, and an info-mediary model); and
(2) on-line/transactional design strategy (comprised of brokerage model, retail
model, mall model, advertising model, subscription model, community
model, manufacturer’s model, and customization model).
However, there is no model that includes a range of factors that would help to make a
decision on the implementation of e-commerce in a country. The following section
presents a theoretical framework for the implementation of e-commerce.
The level of application and implementation of e-commerce thus depends upon the
perceived benefits of the internet for companies. Iacovou et al. (1995) identified
perceived benefits as one of the critical factors for EDI adoption among small
businesses. In addition, perceived benefit has often been cited in research studies as a
factor that influences the adoption of the internet for e-commerce (Beatty et al., 2001;
Poon and Swatman, 1999; Scupola, 2001). A summary of the analysis of selected
research in this area, namely the adoption of IT across countries has been presented
with the objective of identifying critical issues for the adoption of e-commerce in Hong
Kong. We developed a conceptual model for the implementation of e-commerce in Hong
Kong considering the limitations of the studies reported and the opportunities for
further research in Table I.

3. A theoretical framework for the implementation of e-commerce

Based on the research aims and objectives, and the literature survey on the application
and implementation of e-commerce, a theoretical framework for the application and
implementation of e-commerce is developed in this section. The model presented here is
developed using the current issues that have been highlighted as important
e-commerce implementation success factors. The following are the major dimensions
Study Contributions Limitations Opportunities

Farhoomand et al. Several country-specific barriers (lack of Research is confined to only Higher sample size for empirical study and
(2000) education, resistance to change and lack of flexible ten companies in Hong Kong analysis
software) and Finland
Kuan and Chau EDI adoption in small businesses using a Limited EDI adoption, small Expand the study to include e-commerce and that
(2001) perception-based technology-organization- businesses, lack of analysis too a perception-based adoption model
environment framework. Large scale empirical from the barriers
study and has tested six factors regarding the perspectives. Not related to
factors affecting the adoption decision in Hong e-commerce
Kong
Lee et al. (1998) Studies the effect of EDI controls on EDI Limited to EDI controls and a Expanding the scope to include economic,
implementation. Large scale survey in Korea bit on economic and cultural technological and social aspects on e-commerce
environments implementation
Wen et al. (2001) Studies the implications of adoption of web on Limited to conceptual models Need for empirical analysis to test the eight
innovative ways of doing business and frameworks. Lack of models of e-commerce: brokerage, retail, mall,
empirical analysis advertising, subscription, community,
manufacturer and customization model
Premkumar et al. This study examined the relationship between Limited to EDI and the US The concept of diffusion and innovation can be
(1994) seven major innovation characteristics – relative companies extended to the implementation success of
advantage, complexity, technical capability, e-commerce in other countries including Hong
organizational compatibility, cost, and elapsed Kong
time – and four diffusion variables – adaptation,
internal diffusion, external diffusion, and
implementation success of EDI
Beatty et al. This study examines the organizational and This particular research The factors and the methodology employed could
(2001) market-place factors that influence organizations focuses on web site adoption, be used for e-commerce adoption
to establish a presence on the web and presents but not on e-commerce
results from a survey of 286 medium-to-large US adoption. However, web-site
firms that have adopted corporate Web sites adoption is the first and
foremost important step for
e-commerce adoption
(continued)

previous research
Hong Kong

e-commerce from
Benefits and barriers for
145

Table I.
E-commerce in
 15,2

146
INTR

Table I.
Study Contributions Limitations Opportunities

Iacovou et al. They studied the impact of the three factors: The model has been tested The model can be further modified and tested with
(1995) perceived benefits of EDI; organizational with only small companies, larger scale industries
readiness; and external pressure on the adoption but interesting findings were
behavior of small firms reported
Riemenschneider This research assesses the behavior of business This study indicates the This paper reports only the preliminary findings
and McKinney executives in the decision-making process of small and very small firms on decision makers’ influence on the adoption of
(1999) adopting web-based electronic commerce have not been as quick to e-commerce
adopt this technology for
conducting business
Poon and This paper reports a qualitative study into why The sample size is 23 for The study offers a great scope for expanding this
Swatman (1999) small businesses are online. Tangible benefits of multiple case studies. Lack of study to large scale companies and multiple case
using the internet in small business play a major quantitative evidence, the study methodology seems to have resulted in a
role in the successful adoption of e-commerce results is the interpretations better outcome than macro study based on a large
of the authors and biased sample size
sample of companies
Scupola (2001) This study investigates the environmental, Applicable to small This study could be expanded to large scale
organizational, and technological drivers of companies. The main companies and geographically wider areas
internet commerce adoption and implementation limitations of this study covered in the survey
in small businesses consist in the limited
geographical area where it
has been conducted and the
smaller number of companies
interviewed
Tan and Teo This study examines the factors influencing the This study focuses on the Further longitudinal and cross-cultural studies are
(1998) adoption and non-adoption of the internet among adoption of the internet. needed to investigate the growth stages of the
organizations in Singapore Though this is the basic for internet adoption across industry sectors and
e-commerce adoption, the application types. Application of
study does not consider inter-organizational systems should be
e-commerce adoption investigated
Teo et al. (1997) They presented a contingency model for the This study is based on an This model could be expanded to e-commerce
internet adoption in Singapore empirical analysis adoption as it deals with a country in Asia
of e-commerce implementation in Hong Kong industries: barriers to the E-commerce in
implementation of e-commerce; and benefits achievable through e-commerce. A Hong Kong
conceptual model, as presented in Figure 1, has been used to study the status of the
application and implementation of e-commerce in Hong Kong industries.
The conceptual model shown in Figure 1 illustrates the major factors that influence
the application and implementation of e-commerce, namely: perceived usefulness of
web; perceived barriers of the internet for e-commerce; usage of the internet; and 147
perceived benefits of the internet for e-commerce. This model is based on the analysis
of literature and some reported case experiences. The details of the model are discussed
below.

3.1. Usage of internet from application perspective

The overall usage on the internet influences the success of e-commerce in a country.
For example, in some countries, the internet is mostly used for messaging and
browsing, and not for buying or selling products or downloading files. This might be
due to an overall understanding as represented in the culture of buying and selling
behavior in a particular country. The level of internet usage also indicates the extent to
which internet technology is popular in a country. In addition, the reliability and speed
of the internet influences the level of internet usage, and hence its wider applications,
including e-commerce. Cost of internet time plays a major role in purchasing products
and downloading of files. Lack of government support in making internet connections
available (for example, by liberalizing telecommunication sector policies) plays a part.

3.2. Perceived usefulness of web pages

The perceived usefulness of web pages plays an important role in e-commerce
application and implementation. Most people believe that web can improve exposure
from the supplier perspective, and can increase access to global information on a

Figure 1.
A conceptual framework
for the application and
implementation of
e-commerce
INTR variety of topics (including products and services, politics, stock markets, travel, and
15,2 so on). Because the internet has 24-hour access worldwide, companies believe that
having a web page enhances their visibility and presence, and indicates that the
company is technologically advanced. This also provides a foundation for migrating to
advanced information technologies and systems. It might also influence overall
organizational competitiveness in long-term. Web sites offer a range of benefits to an
148 organization, including reduced transaction times and reduced advertising and
transaction costs (Isakowitz et al., 1998).

3.3. Perceived benefits of the internet for e-commerce

Using the internet for business is popular nowadays, and this provides the advantage
of variety and a new channel for commerce (Walters and Lancaster, 1999). According
to Michalski (1995), the internet provides global access at a relatively low cost. It allows
firms to have a “virtual front door” to customers through a home page, as well as
creating useful interactions with customers, suppliers, and stakeholders. In addition, it
provides a simple illustration of the broad application of e-commerce. A review of the
literature indicates the following as being the major benefits of the internet for
e-commerce: quick response and access to global information; improvement in
customer service by establishing effective lines of communication; a platform for
low-cost advertising and hence for selling and buying products; low-cost entry for a
network of firms for possible strategic alliances and collaboration; and the potential for
a global market. In addition to this, there are intangible benefits which include
strategic opportunities, a company image associated with modern technology, and
easy migration to the next level of technology.

3.4. Perceived barriers of the internet for e-commerce

The success of application and implementation depends upon recognizing the barriers
presented by the internet for e-commerce. Once a company is able to identify these
barriers, it can determine strategies and technologies to overcome them.
Riemenschneider and McKinney (1999) have stated that the obstacles for assessing
the adoption of e-commerce are security, cost, training, technical knowledge, and
adherence to corporate standards. Scupola (2001) has distinguished three categories of
barriers to adoption for internet commerce. The first category is the “perceived costs”,
which include financial investment, administrative changes, and the time it takes to
put the system in place. The second category is the “organizational readiness”, which is
the extent to which an organization is ready to adopt e-commerce – such as skills and
knowledge of information technology, internal IT support, and support form external
parties such as IT vendors. The third category is “external environment”, which
includes government regulation and trading partners.
In the next section, this model is validated with the help of an empirical study
conducted with Hong Kong industries using a structured questionnaire. The details of
the research questions and methodology are discussed in the following section.

4. Research questions and methodology

The research questions and hypotheses were based on the above-mentioned barriers
and critical success factors, together with the benefits of e-commerce. That is, the
guidelines for questions and hypotheses were: an appreciation of the benefits of
e-commerce; and an understanding of the barriers for the implementation of E-commerce in
e-commerce. The following research questions were posed: Hong Kong
.
What are the major barriers to the implementation of e-commerce?
.
What are the major benefits of e-commerce?
The above questions have been answered with the help of empirical research
conducted with companies in Hong Kong. The survey questionnaire was sent to a 149
random sample of 1,000 company addresses from those listed in theBusiness Directory
of Hong Kong (2000).
Considering the nature of the research questions, it was decided that empirical
analysis was the research method of choice. A structured questionnaire (available upon
request from authors) was used for the data collection. The questionnaire was designed
on the basis of the research issues discussed in Section 4 and consisted of the following:
.
profile of respondent organizations, respondents, e-commerce usage, and
different e-commerce technologies in use;
.
perceived barriers to implementation of e-commerce; and
.
perceived benefits achievable through e-commerce.
The data collected using the questionnaire is presented in Tables II-IX. Table II
presents the profile of respondent organizations. Of 108 responses received, the
majority were from small and medium-sized companies with fewer than 1,000
employees. About 55 percent of the responses were from companies that employ 60-199

Profile Frequency Percentage

Number of employees
,50 13 12.1
50-199 55 51.4
200-499 15 14
500-999 15 14
1000-5,000 2 1.9
.5,000 7 6.5
Total 107 100
Organization’s entire operation
Hong Kong and mainland China 41 38.3
International 66 61.7
Total 107 100
Industry type
Manufacturing 23 21.3
Finance, banking and business services 18 16.7
Wholesale, retail, import and export 14 13
Government 9 8.3
Transport, storage and communication 20 18.5
Hotel, restaurant and tourism 6 5.6
Education and training 2 1.9
Construction 2 1.9
Utilities 2 1.9
Others 12 11.1 Table II.
Total 108 100 Profile of organizations
INTR Profile Frequency Percentage
15,2
Position
IT manager/MIS manager/system analyst 75 72.8
Analysis programmer/system engineer 8 7.8
System consultant/consultant 3 2.9
150 CEO/director 7 6.8
General manager/manager 7 6.8
Others 3 2.9
Total 103 100
Age
,26 21 19.4
26-30 42 38.9
31-35 25 23.1
36-40 12 11.1
41-45 5 4.6
46-50 2 1.9
.50 1 0.9
Total 108 100
Education level
Secondary 2 1.9
Post-secondary certificate/diploma 43 39.8
Bachelor’s degree 50 46.3
Master’s degree 11 10.2
Others 2 1.9
Total 108 100
Working experience
, 3 years 31 29
3-6 years 22 20.6
7-10 years 25 23.4
11-14 years 14 13.1
.14 years 15 14
Total 107 100
Computing experience
, 3 years 26 24.1
3-6 years 30 27.8
7-10 years 31 28.7
11-14 years 15 13.9
Table III. .14 years 6 5.6
Profile of respondents Total 108 100

people. About 62 percent of the companies had international operations. Four major
industries – manufacturing; finance, banking, and business services; wholesale, retail,
import and export; and transport, storage, and communications – shared the major
percentage (60 percent) of respondents.
Table III presents the profile of respondents. About 73 percent of the respondents
had an IT background, which included IT managers, MIS managers, and systems
analysts. A majority of the respondents were aged 23-40 years old. About 50 percent of
them had more than seven years experience with computers. Most of them had at least
a post-secondary certificate, and 46 percent had a bachelor’s degree. This highlights
the importance of education and experience in IT implementation.
Profile Percentage
E-commerce in
Hong Kong
Use of the internet to support company business
A few times a month 3.3
A few times a week 11
A few times a day 13.2
About once a day 6.6 151
Several times a day 65.9
Total 100
Time of using the internet to support company
business
, 1 year 16.4
1-2 years 42.9
3-4 years 28.6
5-6 years 3.3 Table IV.
.6 years 8.8 Usage of e-commerce on
Total 100 the internet (n ¼ 91)

Profile Average (percent) SD

Messaging (e-mailing, internet phone, group

discussion, etc.) 48.9 30.1
Browsing (using a browser to surf the WWW for
reading files and documents) 20.7 17.5
Downloading (coping files from WWW such as Table V.
images, software, etc.) 12.8 10.9 Usage of internet from
Purchasing (product ordering through the Net) 2.8 6.1 application perspectives

Reasons Percentage

No perceived advantage at all in using web at all 34.4

Not connected to the internet 18.8
No support to connect to internet and set up web Table VI.
page 15.6 Reasons for not using
No time to learn the use of web page 9.4 web page to promote
Others 21.9 companies/products
Total 100 (n ¼ 32)

Meana SD

Web page can help existing and potential customers 3.817 0.932
Enhanced company image 3.942 0.868
Increased competitiveness 1.625 0.847 Table VII.
Note: aThe factors were measured on a five-point scale, with 1 ¼ “Strongly disagree” and Perceived usefulness of
5 ¼ “Strongly agree” web pages (n ¼ 104)
INTR 5. Results and analysis
15,2 In this section, the results and analysis of the empirical study are presented and
discussed. The main aim of this analysis is to identify the major critical barriers and
success factors for the implementation of e-commerce. First, the applications of
e-commerce and the internet in Hong Kong industries are analyzed. Then, the
perceived usefulness and benefits of web pages and the internet for e-commerce are
152 discussed. Finally, the perceived barriers of the internet for e-commerce are presented.
A framework for the successful application and implementation of e-commerce on the
internet is then presented.

5.1. Application of e-commerce and the internet in Hong Kong industries

This section highlights the current usage of e-commerce and the internet in the Hong
Kong industries surveyed. Table IV presents the usage of e-commerce on the internet,
and shows that more than 66 percent of respondents indicated that their organization
used the internet several times a day to support company business activities. Table V

Meana SD

Quick response and access to global information 4.245 0.741

Improved customer service 3.745 0.884
Low-cost advertising medium 3.519 0.907
Enhanced competitiveness (because competitors are
already on the Net) 3.321 1.010
Table VIII. Low-cost entry to the Net for e-commerce 3.349 0.873
Perceived benefits of the Expansion into new global markets 3.394 1.083
internet for e-commerce Note: aThe factors were measured on a five-point scale, in which 1 ¼“Not a benefit” and 5 ¼ “A
(n ¼ 106) major benefit”

Meana SD

No appropriate legal framework exists for

conducting e-commerce on the Net 3.452 1.165
Lack of technical/development personnel 3.077 1.220
Lack of qualified personnel to perform training and
maintenance of the Net facilities 3.000 1.199
Inadequate knowledge of using the Net for
e-commerce 2.981 1.038
Lack of security that our company needs 3.423 1.103
Cost justification: justification for investment is
problematic 3.133 1.144
E-commerce on the Net involves high set up cost 3.058 1.027
Hard to measure the investment return on
e-commerce on the Net 3.204 0.994
Table IX. Hard to measure how effective for conducting
Perceived barriers of the e-commerce on the Net 3.190 1.020
a
internet for e-commerce Note: The factor were measured on a five-point scale, where scale 1 ¼ “Not a barrier” and 5 ¼ “A
(n ¼ 106) major barrier”
shows the usage of the internet from an application perspective. The respondents were E-commerce in
asked to indicate their usage of the internet based on four generic uses of the internet Hong Kong
(Teo et al., 1997) – messaging (e-mailing, the internet phone, group discussion, and so
on); browsing (using a browser to surf the WWW for reading files and documents);
downloading (copying files from the WWW, including images, software, and so on);
and purchasing (ordering products through the internet). The results show that most
usage of the internet (from the application perspective) is messaging (48.9 percent), 153
whereas only 2.8 percent use it for online purchases.
Table VI gives the reasons for not using a web page to promote a company or its
products. About 34 percent of the respondents indicated no perceived advantage at all
in using the web. The major reasons for not using web pages for e-commerce were no
connection to the internet, and no support services to connect to the internet and
develop web pages (34.4 percent). Time was also a constraint for not using web pages.
These observations indicate that a lack of knowledge of the usefulness of web, and a
lack of support for implementation of the internet for e-commerce, is the major reasons
for not using web pages for e-commerce.

5.2. Perceived usefulness of web pages

Table VI shows the mean ratings of the perceived usefulness of web pages. Perception
was assessed on a five-point rating scale with 5 being “strongly agree” and 1 being
“strongly disagree”. Therefore, an average score of 3 or above can be taken as
indicating perceived usefulness of web pages. Factors scoring a rating of 3 or above
were, in descending order of magnitude, as follows: increase in international exposure;
enhanced company image; and assistance to existing and potential customers. As can
be seen from Table VII, ‘Increased international exposure’ had the highest mean score
of 4.0 and ‘Increased competitiveness’ had the lowest mean score of 1.625.
The results indicate that the companies had a narrow perspective of the perceived
usefulness of web pages for e-commerce. For example, they believed that web pages do
not contribute to organizational competitiveness. In fact, e-commerce does help to
reshape organizational strategies and techniques, and hence organizational
competitiveness. In addition, the advantages of web pages in assisting existing and
potential customers, increasing international exposure, and enhancing a company’s
image will help to improve overall organizational competitiveness.

5.3. Perceived benefits of the internet for e-commerce

Table VII shows the mean ratings of the perceived benefits of the internet for e-commerce.
The measure of the relative degree of perception as a benefit was set on a five-point rating
scale with 5 being “a major benefit” and 1 being “not a benefit”. The benefits with a mean
rating greater than 3 on a five-point scale, in descending order of magnitude, were as
follows: quick response and access to global information; improved customer service;
low-cost advertising medium; expansion into new global markets; low-cost entry to the
internet for e-commerce; and enhanced competitiveness (because competitors are already
on the internet). As can be seen from Table VIII, “quick response and access to global
information” had the highest mean score of 4.245 whereas “Enhancing competitiveness
because competitors are already on the Net” had the lowest mean score of 3.321.
Respondents were generally in agreement with regard to quick response and access
to global information as being the key benefits of the internet for e-commerce.
INTR However, there were considerable differences among companies regarding other
15,2 benefits of the internet for e-commerce – such as improving customer service, low-cost
advertising medium, and low cost to entry to the internet for e-commerce. These
differences were even more apparent with respect to support for the internet on
organizational competitiveness and helping to expand into new global markets.

154 5.4. Perceived barriers of the internet for e-commerce

The perception of barriers of the internet to implementation of e-commerce was
investigated by asking respondents to rate each of the nine potential barriers, as shown in
Table VIII. Table VIII shows the mean ratings of the potential barriers. These were
assessed on a five-point rating scale with 5 being “a major barrier” and 1 being “not a
barrier”. Therefore, an average score of 3 or above from the respondents can be taken as a
perceived barrier of the internet to implementation of e-commerce. The barriers with a
mean rating greater than 3 on a five-point scale, in descending order of magnitude, were
as follows: no appropriate legal framework for conducting e-commerce on the internet;
lack of security for company needs; difficulty in measuring the investment return on
e-commerce on the internet; difficulty in measuring the effectiveness of conducting
e-commerce on the internet; cost-justification for investment is problematic; lack of
technical and development personnel; e-commerce on the internet involves high set-up
costs; and lack of qualified personnel to perform training and maintenance of Net facilities.
As can be seen from Table IX, “No appropriate legal framework exists for conducting
e-commerce on the Net” had the highest mean score of 3.452, whereas “Inadequate
knowledge of using the Net for e-commerce” had the lowest mean score of 2.981.
Companies are constrained in doing business on the internet because of the lack of a
legal framework for conducting e-commerce on the internet. Government leaders should
therefore develop policies and an appropriate legal framework for doing business on the
internet. However, there was a high level of disagreement among respondents regarding
barriers to implementation of e-commerce on the internet. A lack of trained and qualified
people was the major barrier to implementing e-commerce. The lack of security was
rated as the next major barrier. It is apparent that suitable performance measures and
metrics need to be established for measuring the implications of e-commerce on the
internet. Based on the literature, we note that many companies hesitate to implement the
internet for e-commerce due to a lack of a legal framework for conducting e-commerce on
the internet, and a consequent lack of confidence. The general perception among many
companies is that they do not have the internet experts or IT skilled workers to perform
the task. Many companies are afraid of doing business via the internet because they lack
confidence in security and confidentiality (Udo, 2001). In addition, companies lack a
systematic framework for justifying investment in internet technologies. Many
companies fail to appreciate the full implications of the internet for their organizations,
and look at only tangible financial benefits. But there are many non-financial and
intangible benefits of the internet for e-commerce that would improve the prospects of
long-term survival for companies. Post-implementation assessment is important in
improving business on the internet. This requires suitable performance measures and
metrics to monitor the performance of the internet in e-commerce.

5.5 Benefits and barriers in the context of Hong Kong

The benefits and barriers of e-commerce in each country differ from another. This is
due to the fact that there are several cultural, behavioral, technological and educational
differences exist. This could be seen from Hong Kong as well. Referring to Table X, E-commerce in
people in Hong Kong are quite comfortable to use the internet for messaging, browsing
and downloading. However, a little enthusiasm from them in purchasing online. This
Hong Kong
has something to do with their culture combined with lack of standards, legislation,
security and confidence in buying goods/services online. Moreover, factors such as
connection to the internet, support services and assistance to develop web pages and
knowledge of the usefulness of the web influence the application of e-commerce and the 155
internet in Hong Kong. People in Hong Kong perceive that e-commerce has narrow
scope of application and does not contribute to organizational competitiveness.
However, they see e-commerce will enhance international exposure, enhanced
company image and assistance to existing and potential customers.
People in Hong Kong believe that e-commerce facilitates access to global information,
improved customer service, low-cost advertising and entry into new global markets. The
major barriers in understanding the benefits of the internet for e-commerce are the lack
of awareness of the major implications of e-commerce on organizational competitiveness,
technical support, and some cultural influences. This again demonstrates people in
different countries perceive the benefits of the internet for e-commerce from their own
knowledge, technological and cultural perspectives. People in Hong Kong believe the
major barriers for the adoption of e-commerce are the absence of well established legal
framework, legislation, lack of security, difficulty in measuring the performance of
e-commerce, lack of qualified technical personnel, high-set up costs and training
facilities. They see these could be overcome by suitable strategic planning, and
developing a sound system and standards, secured systems for transactions and
confidential information, and a tailor-made e-commerce platform for Hong Kong taking
into account its cultural, economical, technical and behavioural characteristics.

6. A generic framework for application and implementation of e-commerce

In this section, a generic framework is presented with the objective of supporting the
application and implementation of the internet for e-commerce. This framework is the
result of the validation of the theoretical model, together with the conclusions of the
empirical analysis conducted in Hong Kong. The empirical analysis supported some of
the assumptions of the theoretical model, whereas others were not supported. Based on
the feedback received from respondents, the model has been revised to reflect these
practical considerations.
The generic model is presented in Figure 2. It has four major areas for the successful
application and implementation of the internet for e-commerce. There is a need to
educate participants to increase awareness of the internet for e-commerce. Many
companies are not aware of the potential applications and strategic advantages.
Government should provide support to companies to form consortia to investigate the
development of the internet for e-commerce, with the objective of enhancing confidence
in downloading files, and in carrying out purchasing and financial transactions. The
best strategy is to start with business-to-business (B2B) e-commerce among partnering
firms. By lowering the cost of the internet and by lowering connection times,
companies can be encouraged to use the medium and thus gain confidence for wider
e-commerce applications.
Companies seem to prefer traditional media for advertising compared with the
internet. However, they believe that the internet is an effective medium for quick
response and access to global information. Only about 75 percent expressed confidence
 15,2

156
INTR

Table X.

Hong Kong
Benefits and barriers
from the perspective of
Building blocks for the adoption of e-commerce Benefits Barriers

Application of e-commerce and the internet in Internet messaging, browsing, downloading No connection to the internet, no support services
Hong Kong industries to connect to the internet and develop web pages,
and lack of knowledge of the usefulness of web
Perceived usefulness Increase in international exposure, enhanced Narrow perspectives of perceived usefulness of
company image, and assistance to existing and web pages for e-commerce, and web pages do not
potential customers contribute to organizational competitiveness
Perceived benefits of the internet for e-commerce Quick response to global information, improved Lack of awareness of the major implications of
customer service, low cost advertising, medium e-commerce on organizational competitiveness,
expansion into new global markets technical support, and some cultural influences
Perceived barriers of the internet for e-commerce Plan carefully, develop a sound system and No legal framework, lack of security, difficulty in
standards, address security issues, educate the measuring the performance of e-commerce,
users and develop a tailor made e-commerce justification of investment is problematic, lack of
platform for HK customers technical and development personnel, high set up
costs and lack of qualified personnel to perform
training and maintenance of Net facilities
 E-commerce in
Hong Kong

157

Figure 2.
A generic framework for
the application and
implementation of
e-commerce

that the internet helps to improve customer service. The reason for this is that many
companies still believe in traditional networking and strategic alliances for improving
customer service. However, they should realize that, with the help of the internet, they
could perform better on customer service. More than 60 percent of the respondent
companies think that the internet does not enhance competitiveness, lower costs of
entry to strategic networks, or assist with expansion into new global markets.
Based on the analysis of barriers of the internet for e-commerce, the following are
critical success factors for the application and implementation of the internet for
e-commerce: a strong legal framework should be established with appropriate
legislation; governments should support universities to produce more IT graduates to
support local companies with their internet services and e-commerce marketplace
development; internet companies should develop security features so that companies
can have confidence in selling and buying goods with e-commerce; there is a need to
develop a framework for investment justification of the internet for e-commerce; and
there is a need to develop performance-measurement systems for evaluating the
performance of the internet for e-commerce.

7. Concluding remarks
E-commerce has significantly transformed the way in which companies do business. It
can be used to gain business benefits, opportunities and competitive advantage. Some
companies are doing well in creating business value from internet technologies, whereas
others are doing less well. In this paper, a survey analysis of the application and
implementation of e-commerce in Hong Kong has been presented. This study had several
INTR objectives, including: identification of the major users of e-commerce in Hong Kong
industries, establishment of the level of e-commerce usage in Hong Kong; identification
15,2 of perceived barriers to implementation of e-commerce; identification of perceived
benefits achievable through e-commerce; and recognition of critical success factors for
e-commerce adoption. The following are some of the recommendations for improving the
application and implementation of e-commerce in Hong Kong industries:
158 . Companies should start with business objectives and then identify suitable
information systems. They should also seek a suitable information system with
the objective of re-engineering their business processes and improving
organizational performance. Strategic alliances with partners in selecting and
implementing e-commerce systems are essential.
.
Investment justification plays a dominant role in the decision of a company as to
whether to adopt an e-commerce system.
.
E-commerce standards are very important to the establishment of an efficient
and effective system for data collection and transmission.
.
A regulatory and legal framework to protect buyers and sellers needs to be
addressed and developed by industry and government.
.
Trust, security, and payment mechanisms are foremost among the challenges to
be overcome if e-commerce transactions are to be facilitated in a digital economy
(Whinston, 1997).
Government should provide financial and technical support to local companies with
respect to the application and implementation of e-commerce. Supporting local
universities in educating and training the business community in e-commerce and its
applications, and in the development of e-commerce web sites, will help companies with
e-commerce. Strategic alliances with multinational companies and software vendors will
facilitate the development of e-commerce web sites, and hence the selling of goods on the
internet. B2B e-commerce has been very successful, and the lessons learnt from this
could be applied to the successful application and implementation of B2C e-commerce.
Streamlining business processes would be helpful before venturing into e-commerce.
Local chambers of commerce could establish community web sites for the use of local
companies in getting onto the e-commerce. Logistics information systems have been
gaining ground over recent years in utilizing the potential of e-commerce.

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