2Literature Review
2.1 E-commerce evaluation models
2.1.1 Different e-commerce evaluation models

DeLone, W.H. and McLean, E.R. first published the DeLone & McLean IS Success Model in 1992. It was the firstr e-commerce evaluation model. In early stages, informed numbers of subsequent studies and was widely referenced and made use by many articles and journals for example, Seddon and Kiew (1996) and Seddon (1997).

Figure 1: Delone and Mclean’s Model of IS Success (1992)

http://www.ttc-switch.com/Thesis_Tips/Reference/Literature_Review/

After 2000, many research models on e-commerce evaluation were published, they referenced to D&M Model but more or less different.

Molla, A. and Licker, P.S. (2001) issued their E-commerce Success Model. This model is based on 1992 DeLone & McLean Model. They tried to keep the richness of D&M Model and while same time to allow capturing the peculiar nature of e-commerce with new factors. There are differences from D&M Model and E-commerce Success Model. EC system quality and content quality replaced system and information quality respectively. Also customer e-commerce satisfaction replaced user satisfaction in D&M. Trust and support and service are added.

E. Gide and M.X. Wu (2007) and Lowry, Vance, Moody, Beckman, and Read (2008) were significant different models to Delone and Mclean’s Model of IS Success.

E. Gide and M.X. Wu (2007) suggested using the term of EBS to measure e-commerce success. EBS termed as E-commerce Business Satisfaction.
A definition is proposed by Gide and Wu for EBS as: “A measurement for overall satisfaction that a business has with an e-commerce system meeting its requirements and expectations”.
The proposed model provided by Gide and Wu is for analyzing EBS, which is formed with critical success factors on human resource, technology, security, relationship, finance, marketing, and ethics and law.

Lowry, Vance, Moody, Beckman, and Read (2008) built their theory model, called branding-associationtrust model (BATM). BATM involves four stages, building image to customers, increasing initial trust, showing the strong association and brand alliances and finally integrating their theory by extending and confirming to McKnight et al.’s model.

Brown, I. and Jayakody, R. (2009) compared 7 different e-commerce evaluation models from 1992 to 2005. Despite the dot-com failure in 2000s, B2C e-commerce had continued to grow steadily.

Since companies are making large investments in e-commerce applications but are hard pressed to evaluate the success of their e-commerce systems (DeLone & McLean, 2003), therefore it is necessary to find the sufficient ways to measure the e-commerce systems.#p#分頁標題#e#

The 7 models that Brown and Jayakody compared are DeLone & McLean (1992), Seddon & Kiew (1996), Seddon (1997), Rai et al. (2002), Molla & Licker (2001), DeLone & McLean (2003) and Iivari (2005).

Here are the different evaluations dimensions of different models. These models provided a parsimonious way of understanding and evaluating B2C e-commerce success. I added Wang (2008)’s research into the comparison table because Wang (2008) will be the model reference of my research.

Factors Wang 2008 Iivari 2005 D&M 2003/2004 Rai et al. 2002 M&L 2001 Seddon 1997 S&K 1996 D&M 1992
Service Quality ? ? ?
System Quality ? ? ? ? ? ? ? ?
Information Quality ? ? ? ? ? ? ? ?
Trust ?
Perceived usefulness/Value ? ? ? ? ?
Intention to Use ? ?
Net Benefits of Use ?
User Satisfaction ? ? ? ? ? ? ? ?
Use ? ? ? ? ? ?
Individual Impact ? ?
Organizational Impact ? ?
?: Factors used in the model.

2.1.2 Updated DeLone & McLean Model
As the e-commerce systems had grown fast in the past years, they reviewed more than 100 articles to review the IS success measurement to make it suitable to the current e-commerce conditions. A ten year update of DeLone and McLean Model was issued in 2003.

DeLone & McLean (2003) also thought that IS success is a multidimensional and interdependent construct, so that it is necessary to study the interrelationships of those factors and dimensions. DeLone & http://www.ttc-switch.com/Thesis_Tips/Reference/Literature_Review/McLean updated their model in 2003. It is because the e-commerce contexts captured the attention of DeLone & McLean. Customers and suppliers use the e- commerce systems to make decisions for buying and selling and other business transactions through the internet, the internet became a communication and information system phenomenon. (DeLone & McLean, 2003)
Wang, Y.S. (2008) pointed out the advantages of using D&M Model to evaluate e-commerce.
Based on prior studies, DeLone & McLean (2003) propose an updated model of IS success by adding Service Quality as a new dimension. They grouped all impact factors into one impact factor called Net Benefits. They deleted the Individual Impact and Organizational Impact. Since the customers are voluntary to use the e-commerce system, the usage frequency is keeping increasing. Also the system usage was always used as a dependent variable in many empirical studies, the use of system had become new important dimensions in measuring e-commerce success. System Use and Intention to Use are continued to be considered important factors in the updated D&M IS Success Model.

This research will make use of Wang’s (2008) research model with customer Trust as a plus which trust has not been covered by DeLone and McLean to build up a new model for researches.#p#分頁標題#e#

DeLone & McLean IS Success Model gave a milestone of the evaluation on e-commerce system and provided an important reference for later researches. Those evaluable factors were used by many other journals to build up their models

Wang’s (2008) model is developed from the D&M Model. Waag’s model considers the views of customers of e-commerce system while D&M Model mainly focuses on the companies views to evaluate the net benefits for the companies. Therefore it is more suitable to use Wang’s model in evaluating the customer feedbacks.

I will review the D&M model factors by factors. (Satisfaction and Trust will be in Chapter 2.2)

DeLone, W.H. and McLean, E.R. (2004) claimed that “even though new business models are emerging, the fundamental role of IT has not changed”, therefore the measurement methods of the success of information systems should be kept unchanged. Although many new technologies had been developed and created, the underlying dimensionalities of IS success are still the same.

2.1.2.1 System Quality

In the e-commerce context, system quality is measuring the usability, availability, reliability, adaptability and quick response time (they represented the abilities of the system) of the system (DeLone & McLean, 2003). The software and hardware (including system architecture, accessibility and visual appearance) are both important in stabilizing the performance of systems. According to Seddon (1997), the design of interface is a main concern in system quality. The interface should be consistent and easy to use.

2.1.2.2 Information quality

Information quality may be defined as content quality in some studies. It represents the presentation and organization of information/content and to what extent the users control or customize the content (Von Dran et al., 1999) and the content must contain value sources and containers, for example products and services. If a system is without content, it is simply useless. (Hartman et al, 2000) DeLone & McLean (1992) considered that it is an important indicator in measuring IS success. RM: Information quality has received increased attention since the advent of the Internet and World Wide Web (WWW). Molla & Licker (2001) suggest that in the e-commerce context, it should be referred to as content quality, whilst DeLone & McLean (2004) suggest retaining the label information quality. Information and content quality are used interchangeably in this study. Lederer et al. (2000) found information quality to be a major influence on the perceived usefulness of websites, as suggested by Seddon (1997) and as validated by Rai et al. (2002) concerning traditional IS. Rai et al. (2002) also validated the relationship between information quality and user satisfaction as suggested by DeLone & McLean (1992) and Molla & Licker (2001). DeLone & McLean (2003) argue that information quality influences intentions to use a system, which may equally apply to intentions to continue using a system#p#分頁標題#e#

2.1.2.3 Service Quality

Service quality is also called ‘Support and Service’ (Molla & Licker, 2001). It is defined as the overall supports givens by e-commerce systems to the users and customers. (DeLone & McLean, 2003) Molla & Licker (2001) mentioned e-commerce satisfaction (customer satisfaction, user satisfaction) is depended on how well the service quality (or support and service) is that provided by the companies and e-commerce service providers. RM: DeLone & McLean (2003) also show this relationship in their updated model of IS success. They further indicate that service quality influences intentions to use a system, which may equally apply to intentions to continue using a system.

2.1.2.4 Perceived Value (or Perceived Usefulness)

Perceived Value is positively affected the user satisfaction within the information system area. (Rai et al., 2002 and Seddon, 1997) Bhattacherjee (2001) also gave the opinions that the perceived value as a key indicator influencing the customers’ and user’s intention to use and reuse the e-commerce system.

2.2 Customer Satisfaction & Trust

Kim, D.J., Ferrin, D.L. and Rao, H.R (2003): Trusted processes are a key success factor in online e-commerce. Accordingly, online sellers need to create an environment in which a consumer can be http://www.ttc-switch.com/Thesis_Tips/Reference/Literature_Review/confident about any online transactions. Two elements of such a facilitating environment are trust and satisfaction - two essential ingredients for successful long-term business relationships with customers.

2.2.1 Satisfaction

The first ingredient is satisfaction of Kim & Rao (2003) - which is a particularly important foundation for a successful long-term relationship. Consumer satisfaction is an attitude formed through a mental comparison of the service and product quality that a customer expects to receive from an exchange with the level of quality the consumer perceives after actually having received the service/product.

User Satisfaction is the most general perceptual measure of information systems success (Seddon, 1997). In the e-commerce environment it is an important means of measuring customers’ opinions of the e-commerce system (DeLone & McLean, 2003). Customers in this study refer to only those who directly use e-commerce services. Wang et al. (2001) developed a measure of customer information satisfaction with e-commerce websites. The measure had dimensions of customer support, security, ease of use, transactions and payment, information content, digital products and services and innovation. Several of these dimensions overlap with those in IS success models (DeLone & McLean, 2003; Molla & Licker, 2001). For example customer support (service quality), ease of use (system quality) and information content (information quality) appear as dimensions in both success and satisfaction measures. This indicates a lack of conceptual clarity between satisfaction and success in the IS literature#p#分頁標題#e#

2.2.2 Trust

The second ingredient of Kim & Rao (2003), trust, plays a vital role in almost any commerce involving monetary transactions. The issue of trust may be even more critical in electronic commerce because an Internet purchase is based on the consumer’s confidence in processes that are not transparent online, in contrast to that of traditional brick-and-mortar businesses where trust is based on personal relationships and face-to-face interactions between the consumer and the merchant.

Corbitt, B.J., Thanasankit, T. and Yi, H. (2003) defined the some points of importance of customer trust. Trust is characterised by uncertainty, vulnerability and dependence. These characteristics are reflected in an online transaction, where customers cannot see the seller face to face, physically examine the merchandise, or collect the merchandise upon payment. The expectation of getting the right delivery is based on belief in the merchant’s technical competence, goodwill and past experience with the merchant due to the fact that both regulatory and technical systems of B2C e-commerce are far from perfect.

In the relationship marketing paradigm, trust is generally viewed as an essential ingredient for a successful relationship.

Trust is a critical factor for consumers’ patronage behavior.

Trustworthiness of the technology supporting the e-commerce transaction is of vital importance to consumers’ trust. The more customers count on the online services, that is, the more they view it as a trusted relationship, the greater the trusted premium that best practice companies will command and the greater the corresponding erosion of trust for those with poor IT operations.

Molla, A. and Licker, P.S. (2001) stated that trust reflected the important issues, security and privacy which are affecting e-commerce system’s future.

Security relates to the protection of information or systems from unsanctioned intrusions or outflows. Fear of the lack of security is one of the factors affecting ecommerce growth and development. The extent to which e-commerce systems ensure that transactions are conducted without any breach of security is an important consideration that might affect e-commerce use and customers’ e-commerce satisfaction.

Privacy, on the other hand, refers to the ability of an individual to keep his/her identity confidential during the course of a transaction and the protection of various types of data that are collected (with or without the knowledge of customers) during customers’ interaction with e-commerce systems. Privacy issues -- such as the amount of personal information required to complete transactions, the privacy policy and rules followed by e-commerce sites and customers’ disposition towards the provision and disclosure of personal data – may affect the Use of ecommerce systems and Customer Satisfaction. In general, the trust that customers have in the system (and/or the party behind the system) to conclude their transaction securely and to maintain the privacy of their personal information affect their level of satisfaction and their voluntary use of e-commerce systems.#p#分頁標題#e#

Ong, C.E. and Singh, M. (2009) mentioned that trust is important concepts in B2C e-business. Consumer trust is strengthened if businesses are reactive in acknowledging and addressing consumer issues winning their trust. Consumer trusting beliefs, satisfaction and emotion also influence consumer confidence subsequently increasing trust in B2C e-business. In B2C e-business, trust exists when consumer has confidence in business’s benevolence and integrity.

Singh, M. (2002) also stated trust is important. Trust can help to build up a better relationship with customers. Fear of security will cause customers to abort their transactions. Therefore, Most of the online e-commerce websites informed customers that all the transactions and information they entered are secured.

Kim, G., Shin, B.S. and Ho Geun Lee, H.G (2009) put initial trust as the main factor of their theory. A trust relationship presumes that the trusted party will behave benevolently; a trusting party cannot control or force the trusted party to fulfil the expectation; and there is a certain level of dependency between a trustor and a trustee. Trust has been a recurring issue in interpersonal and business relationships. With the surge of e-commerce, more studies are being conducted on the conceptual structure and formation mechanisms of trust.

3 Hong Kong e-commerce
3.1 Current situation of e-commerce in Hong Kong

The Economist Intelligence Unit (2006) studied the e-commerce situation in Hong Kong. Financial institutions are the most prominent users of e-commerce. A growing number of banks provide online banking. HSBC (UK), the largest bank in Hong Kong, conducts about half its foreign-exchange trade online. HSBC is one of the largest foreign-exchange market-makers in the world, and it connects to about 50 institutional clients through dedicated Internet lines. The bank is also involved with FXall.com, an Internet portal that allows spot trade as well as forwards and swaps.
Hong Kong took a major step in securing online banking in June 2005, when the Hong Kong Monetary Authority required the use of a two-factor authentication system for high risk transactions online: a reusable password chosen by the user, plus another password delivered at each log-on via short-message service (SMS) by e-Cert (a digital certificate issued by Hong Kong Post and stored in the Smart identity card held by every Hong Kong resident) or by a portable authentication device. Twelve banks launched their two-factor authentication services using e-Cert in late June 2005. HSBC went a step further by giving its online customers a keychain-sized security device. Users must enter the device serial number and a unique security code issued at the touch of a button.
Online share trading is widespread. Hong Kong Exchanges and Clearing completed the implementation of the third generation of the Automatic Order Matching and Execution System (AMS/3) in August 2001, allowing investors and brokers to trade securities electronically through the Internet, mobile phones and other electronic channels. The stock market also uses an electronic off-platform trading #p#分頁標題#e#http://www.ttc-switch.com/Thesis_Tips/Reference/Literature_Review/system, whereas banks employ an interbank real-time gross-settlement system. An online foreign-exchange service, called eFXtrade, is available to retail investors.
The government took the lead in promoting e-commerce by establishing the Electronic Service Delivery (ESD) scheme in October 2000. ESD strives for a paperless government by offering services online. It involves converting common government forms to electronic format so that the public can complete them electronically, sign them digitally and submit them to the government via the Internet. The legislature passed another government initiative to promote e-commerce in January 2000, with the Electronic Transactions Ordinance; it gave digital signatures used in electronic transactions the same legal status as their paper-based counterparts.

3.2 Issues about Hong Kong e-commerce
The HKMA announced on 29 September 2003 that there were a total of 29 cases of suspected ATM frauds involving HK$1.2 million reported in the past 12 months. Since then 4 more cases have been reported but only one of them is a new case. The other three relate to alleged unauthorised transactions that occurred more than 6 months ago. The total reported cases now amount to 33 involving HK$1.6 million, out of which 15 (45%) have been settled.

On 27th April 2010, the HKMA received another report from a bank that one of its ATM terminals was suspected to be attacked by fraudsters. It is the first ATM fraud reported after 2003. The bank has reported the cases to the Police. The HKMA has already requested the bank to conduct a detailed investigation into the incident and a thorough inspection on all its ATM terminals.