The effect of Cultural differences on
E-commerce.
A case study research of retail organisation Tesco.
Author: Anke Klomberg
Studentnumber: s1896334
Adress: Hoeting 55
6578 BK Leuth
Phonenumber: +31657155652
Email: anke_klomberg@hotmail.com
University: University of Groningen
Faculty: Faculty of Economics and Business
Specialty: MSc International Business and Management
Supervisors: Mr. I. Kalinic
Abstract
List of abbreviations
B2B: Business to Business
B2C: Business to Customer
C2C: Customer to Customer
E-commerce: Electronic commerce or Internet commerce
E-business: Electronic business or business through the Internet
E-vendors: Electronic vendors
E-customers: Electronic customers
E- loyalty: Electronic loyalty
GHS: Grocery Home Shopping
GLOBE: Global leadership and organizational behaviour effectiveness
research program
Homeplus: South Korean Grocery Home Shopping website
MNE: Multinational enterprise
Tesco dotcom: International online department of Tesco
UK: United Kingdom
US: United States
Overview tables and figures
TablesTABLE 1:DIMENSIONS IN MODEL HOFSTEDE (SOURCE:HOFSTEDE,1983) ... 19
TABLE 2:DIMENSIONS IN MODEL HALL (SOURCE:HALL,1976) ... 20
TABLE 3:SCORES ON THE DIMENSIONS OF THE MODEL HOFSTEDE AND HALL UNITED KINGDOM ... 33
TABLE 4:SCORES DIMENSIONS HOFSTEDE SOUTH KOREA... 36
TABLE 5:E-COMMERCE COUNTRIES... 44
TABLE 6:KEY FIGURES TESCO ... 44
TABLE 7:OVERALL SALES TESCO ... 44
TABLE 8:COUNTRY SPECIFIC SALES SOUTH KOREA TESCO ... 45
TABLE 9:SALES DOT.COM SOUTH KOREA (M OF KRW) ... 45
TABLE 10:SALES DOT.COM SOUTH KOREA (M OF GBP) ... 45
TABLE 11:CUSTOMER SURVEY SATISFACTION LEVEL 2007-2008 ... 52
TABLE 12:CUSTOMER SURVEY SATISFACTION LEVEL 2010-2011 ... 53
TABLE 13:CUSTOMER SATISFACTION SOUTH KOREA HOMEPLUS WEBSITE ... 53
TABLE 14:CUSTOMER SURVEY SOUTH KOREA 2007-2008 ... 81
TABLE 15:CUSTOMER SURVEY SOUTH KOREA 2010-2011 ... 82
Figures FIGURE 1:CONCEPTUAL MODEL ... 23
FIGURE 2:INTERNATIONALISATION PATH TESCO DOT.COM ... 42
FIGURE 3:OVERALL SALES PER REGION ... 72
FIGURE 4:SALES DOT.COM SOUTH KOREA ... 72
FIGURE 5:NUMBER OF ORDERS SOUTH KOREA ... 73
FIGURE 6:NUMBER OF CUSTOMERS DOT.COM SOUTH KOREA ... 73
FIGURE 7:TESCO.COM UNITED KINGDOM ... 83
FIGURE 8:HOMEPLUS.CO.KR SOUTH KOREA ... 83
FIGURE 9:PRODUCT PAGE INCL. REVIEW SOUTH KOREA ... 84
FIGURE 10:HOMEPLUSSTORY.CO.KR SOUTH KOREA ... 84
Overview
INTRODUCTION ... 7
1. THEORETICAL BACKGROUND ... 10
1.1E-COMMERCE ... 10
1.2E-COMMERCE AND RETAIL SECTOR ... 13
1.3E-COMMERCE AND CULTURE ... 14
1.4E-COMMERCE, CUSTOMER CONFIDENCE AND INTERNET ACCESS ... 16
1.5CULTURAL DIFFERENCES ... 17 1.5.1 Cultural distance ... 21 1.7CONCEPTUAL FRAMEWORK ... 23 1.7.1 Research question ... 23 1.7.2 Conceptual model ... 23 1.7.3 Sub-questions... 24 2. RESEARCH DESIGN ... 27 2.1RESEARCH OBJECTIVE ... 27 2.2METHOD ... 28 2.3DATA COLLECTION ... 30 2.4COUNTRY SELECTION ... 31
3. CULTURAL DIFFERENCES UNITED KINGDOM VERSUS SOUTH KOREA ... 33
3.1GENERAL CULTURAL DIFFERENCES ... 33
3.1.1 Scores United Kingdom ... 33
3.1.2 Implications E-commerce ... 34
3.1.3 Scores South Korea ... 35
3.1.4 Implications E-commerce ... 36 4. CASE OF TESCO LTD ... 40 4.1ORGANISATION TESCO ... 40 4.1.1 Background ... 40 4.1.2 Business model ... 41 4.2STRATEGY ... 41 4.2.1 Business strategy ... 41 4.2.2 E-commerce strategy ... 42
4.3FOCUS UPON CULTURE ... 43
4.4FINANCIAL DATA ... 43
4.4.1 Countries ... 43
4.4.2 Key figures ... 44
4.4.2 Overall sales ... 44
4.4.3 Country specific sales ... 44
5. FINDINGS ... 46
5.1BUSINESS TO CONSUMER ... 46
5.1.1 General information ... 46
5.1.2 Changes made in line with cultural dimension scores ... 47
5.2.1 General information ... 54
5.2.2 Business to Business e-commerce Tesco ltd ... 54
6. DISCUSSION ... 57
7. CONCLUSION, LIMITATIONS AND FURTHER RESEARCH ... 61
7.1CONCLUSION ... 61
7.2LIMITATIONS AND FURTHER RESEARCH ... 61
REFERENCES ... 63
APPENDICES ... 71
1.MEASUREMENT CULTURAL DISTANCE ... 71
2.FINANCIAL DATA TESCO ... 72
3.INTERVIEW SOUTH KOREAN OFFICE ... 74
4. CUSTOMER SURVEY SOUTH KOREA ... 81
5.SCREEN VIEW UNITED KINGDOM VERSUS SOUTH KOREAN WEBSITE ... 83
Introduction
With the Internet fast growing e-commerce is also taking a lift providing companies with an equal chance to reach customers globally through the web, despite their size and nationality (Hwang, Jung and Salvendy, 2006). Over the last ten years the number of Internet users around the globe increased rapidly with 444,76 per cent from 360.985.492 users in 2000 till 1.966.514.816 users in 20101. Starting from zero in 1995 the global e-commerce sales has increased fast with sales of $2.3 billion in 1998 (Liao, Proctor and Salvendy, 2008). Zhou, Dai and Zhang (2007) even estimated the sales to grow from $ 172 billion in 2005 to $ 329 billion in 2010. The Internet‟s power, scope and interactivity also provides retailers with an unique opportunity to transform the customers shopping experience through e-commerce. E-commerce provides retailers with a mechanism for; broadening target markets, improving customer communications, extending product lines, improving cost-efficiency, enhancing customer relationships and delivering customised offers (Doherty and Ellis-Chadwick, 2009). With the Internet shopping becoming of a more global nature and the Internet increasing in terms of the number of cross-national interactions between Internet vendors (e-vendors) and Internet consumers (consumer) more attention is being paid to the phenomenon of e-commerce (Kim, 2008).
E-commerce is the commercial activity that deals directly with the trading of goods and services and with other related business activities, where the electronic communication medium plays a central role (Heng, 2003). Differences within the distribution of e-commerce relate to; the various levels of economic and socio-technical infrastructure and the different cultural aspects across nations (Lopez- Bassols and Vickery, 2001; Schneider, 2002; Hwang, Jung and Salvendy, 2006). Culture is a key concept here, since people in different countries often approach similar tasks in different ways, due to cultural differences (Liao, Proctor and Salvendy, 2008).
The literature states that culture influences Business to Customer (B2C) e-commerce on the aspects of site attractiveness, customer information and decision support requirements and building customer loyalty (Jarvenpaa, Tractinsky and Vitale, 2005). For B2B e-commerce culture has its influence more on the organisational level (Usunier, Roulin and Ivens, 2009-2010). Also convergence applies more in B2B e-commerce, as due to globalisation MNC‟s
drive the market towards adaptation of e-commerce and other small companies copy their best practice (Gibbs, Kraemer and Dedrick, 2003).
Even though a lot of articles pay attention to the phenomenon of cultural differences in relation to e-commerce, none of these articles focus upon a particular line of business. So, a practical point of view from an organisational perspective is lacking. Further, the Grocery Home Shopping (GHS) is a very sensitive market, as customers prefer to touch, smell and look at the product (Schneider, 2002; Hwang, Jung and Salvendy, 2006). Understanding the effect of cultural preferences in e-commerce, therefore becomes of increasing importance. Final, there are arguments that cultures are converging and the Internet is becoming more of a global nature raising the question if culture can still be presented along different dimensions and influences e-commerce.
The aim of this research is to investigate to which extend cultural differences influence Business to Customer (B2C) and Business to Business (B2B) e-commerce. Other factors influencing e-commerce, such as Internet access will be left out. In order to acquire the required data needed for extending the existing theory this research is set up as case study research, using data from desk research as well as interviews. The case study is set up as a cross country research using both data from the United Kingdom and South Korea. The organisation Tesco, a retailer operating in a “hypermarket” is selected for this particular case2.
From the theory it is found that the United Kingdom and South Korea along the dimensions of both Hofstede (1983) and Hall (1976) score completely opposite, with a score of 94,31. The main findings show that the South Korean business department of Tesco has adapted several aspects in their web-design to generate customer loyalty, built site attractiveness and provide customer information and decision support requirements in line with these differences. For example the Homeplus website provides extensive reviews alongside products, shows a front webpage were a lot of different things are going on, i.e. flashing images, bright colouring and it provides photographs of the products sold (Kang C. and Lee K.Y., personal communication
1st June 2011) (Kim H., personal communication, 13th July 2011). In case of B2B e-commerce
the effect of cultural differences appears to be less forth-coming. There is little to no attention paid towards B2B e-commerce from Tesco. Further, Tesco being an MNC introduces similar
electronic systems across their subsidiaries, without considering cultural differences (Falize
F., personal communication, 16th June 2011). Final, certain aspects of B2B e-commerce take
place along the same line as B2C e-commerce, as Tesco sells their products to small
organisations (Falize F., personal communication, 16th June 2011).
Based upon the data collected it can be argued that cultural differences do have an effect on e-commerce and that in the retail market it is even more important to localise due to the sensitivity of this market (de Mooij and Hofstede, 2002). Overall the data proposes that cultural differences across countries still exist and remain influencing the behaviour of their local inhabitants. So, even though the theories of both Hall and Hofstede were developed before the Internet existed and e-commerce was introduced, these dimensions can also be used to measure the cultural effects in this market and more specifically in the sensitive retail market.
1. Theoretical background
E-commerce has become a hot item with the Internet growing with 444,76 per cent over a
period of ten years3. The web-based e-commerce branch provides opportunities for
multinational business companies and gives customers the possibility to purchase goods from anywhere (Hwang, Jung and Salvendy, 2006). The interest in e-commerce is reflected in several different articles, relating e-commerce to all kind of concepts. There are three factors that influence the usage of e-commerce or form barriers to international e-commerce; culture –language-, consumer confidence and Internet access or infrastructure (Lopez-Bassols and Vickery, 2001; Schneider, 2002). As the focus of this research is on e-commerce -both B2B and B2C- and the differences caused by culture this factor is extensively outlined. However the influences of other dimensions are also shortly mentioned. In order to measure culture across countries different theories are suggested.
1.1 E-commerce
There are two concepts mentioned in the literature related to the Internet, namely e-business and e-commerce, however the word “Internet” does not necessarily imply that e-commerce is involved (Leonard and Jones, 2010). Even though these definitions are customarily perceived to be related, these aspects are distinctively different (Fasli, 2007). E-business in general refers to doing business electronically (van der Vorst, van Dongen, Nouguier, Hilhorst, 2002) and can more specifically be defined as connecting critical business systems and constituencies directly through the Internet, extranets and intranets (Awad, 2007). E-business includes an organisations internal operations as well as operations that are related to third parties, i.e. customers, suppliers and distributors. E-business creates the possibility for organisations to integrate and streamline their intra and inter-business processes more efficiently and effectively in order to better satisfy the needs and expectations of their customers (Fasli, 2007). E-business can also be used to establish new partnerships and new working conditions, through the Internet, new markets and new parties to facilitate the identification of the logistics and or information management process (van der Vorst, van Dongen, Nouguier, Hilhorst, 2002). E-commerce can be a form of e-business as a solution to expand and better serve a market base or knowledge management system to improve efficiency, the other way around however is impossible (Fasli, 2007). The focus of this particular study is on e-commerce.
E-commerce can be defined as a commercial activity that deals directly with the trading of goods and services and with other related business activities where the electronic communication medium plays a central role (Heng, 2003), it is the transaction of buying and/ or selling by electronic means (Leonard and Jones, 2010). E-commerce invariably involves the conduct of economic related activities that take place between a minimum of two parties who interact electronically, where these activities cross organisational boundaries (Fasli, 2007).These activities include the communication of information, the management of payment, the negotiation and trading of financial instruments and finally the management of transport (Heng, 2003).
E-commerce originally started with the consumer to consumer market (C2C) which means there are individuals who buy and sell items among each other. This consumer to consumer market appears when an individual person sells an item through a web auction site to another person, i.e. E- bay (Schneider, 2002). Today there are two other sets of e-commerce, that require different tactics: first, there is the business to consumer market (B2C) that argues that e-commerce is locally divergent and driven by consumer markets where consumers behave in accordance to their shopping preferences and values (Hwang, Jung and Salvendy, 2006). The business to consumer market can be described as alternative ways of executing transactions between buyers and sellers, where the buyers are the end consumers4. Second, there is the business to business market (B2B) that is less divergent and related to building global networks of suppliers, customers and subsidiaries to be able to compete globally (Hwang, Jung and Salvendy, 2006). This market can be defined as the execution of transaction between buyers and sellers that are business organisations that form a network of organisations and long-term trading partners (Awad, 2007). Especially in the B2C market the improvement of international e-commerce requires investigating the local consumers market that is distinguished by online shopping preferences (Hwang, Jung and Salvendy, 2006).
The Internet and e-commerce allow a company –despite its size and nationality- an equal chance to reach customers globally through the web and further accelerate global marketing (Hwang, Jung and Salvendy, 2006). It can play a key role in reducing cost, improvement of product quality, reaching new customers or suppliers and creating new ways to sell existing products. Therefore providing the opportunity to increase sales, decrease the cost for the seller
and increase the purchasing opportunities for the buyer (Schneider, 2002). International e-commerce pursues to establish efficient global transactions, with the exclusion of the transaction context, i.e. transaction partners, places and methods. However consideration of the political, social, cultural, technical and economic conditions of the local markets is important (Heng, 2003).
Over the years, e-commerce has grown at high speed, transforming the way worldwide consumers shop (Hwang, Jung and Salvendy, 2006). Even though companies have expanded their e-commerce business rapidly, there are some important issues in e-commerce that have prevented the online sales from increasing as rapidly as expected (Liao, Proctor and Salvendy, 2008). It can be said that e- commerce has not yet developed equally around the globe (Hwang, Jung and Salvendy, 2006). The differences within the distribution of e-commerce is caused by different factors; the various levels of economic and socio- technical infrastructure, the different cultural aspects across nations and the aspect of certain products that are difficult to sell through e-commerce since people prefer to touch, smell or examine them closely, i.e. high fashion or perishable food products (Schneider, 2002; Hwang, Jung and Salvendy, 2006). This is extended by Liao, Proctor and Salvendy (2008) who state that: first of all, consumers often feel frustrated and intimidated when trying to find a desired product online. The quality of the information available on websites is a key factor of e-commerce success. It influences consumers shopping experience and determines whether or not a consumer buys the product or revisits the e-commerce website in the near future.
As technical issues such as network infrastructure and computer literacy as well as subjective factors such as trust and culture inhibit the transnational e-commerce market these barriers can be accounted for in both the B2C and B2B market (Berthon, Pitt, Cyr and Campbell, 2008). With the global world converging on different aspects, such as economical standards, the manifestation of value differences becomes inherently stronger. Therefore understanding and adopting to these differences is of growing importance. Also the e-commerce market is currently being very competitive, since the competition is only a click away. Consumers in case of negative experiences can immediately switch to competitors, who will gain the opportunity of sales and customer relation (Liao, Proctor and Salvendy, 2008).
1.2 E-commerce and retail sector
The Internet‟s power, scope and interactivity provides retailers with a unique opportunity to transform the customers shopping experience, by introducing e-commerce. The Internet provides the opportunity to provide information, facilitate two way communication with customers, enhance customer relationships, collect market research data, promote goods and services, extend product lines, deliver customised offers, improve cost-efficiency and to support the online ordering of merchandise. This leaves retailers with an extremely rich and flexible retail channel (Doherty and Ellis- Chadwick, 2009).
access to human capital, trading partners, a larger customer base that can be used for cross channel promotions and are at a higher risk of being perceived as technological laggards if they lack participation in e-commerce (Nikolaeva, 2006).
As overall argued that companies when internationalising should alter their operation on a country by country basis (Straughan and Albers-Miller, 2001), in the retail market the external influence of culture is of even more concern. Retailers need to be more aware of culture because, domestic markets are becoming more culturally diverse and exploration of market development strategies are becoming more primary means of corporate growth (Jarevenpaa, Tractinsky and Vitale, 2000). Hence, retailers should focus upon a localised concept considerably, due to the sensitivity in the market (de Mooij and Hofstede, 2002).
One line of business that is highly sensitive in the retail market is Grocery Home Shopping (GHS), since groceries are categorised as products that are difficult to sell through e-commerce. Customers prefer to touch, smell, eat or examine these products closely (Schneider, 2002; Hwang, Jung and Salvendy, 2006; Picot-Coupey, Hure, Cliquet and Petr, 2009). Online shopping lacks the social interaction of offline shopping and the potential to evaluate groceries prior to purchase (Hand, Riley, Harris, Singh and Rettie, 2009). Further, Grocery products are low-involvement purchases made with minimum effort. The routine dimension of this type of shopping means that customers mostly rely on experiences (Picot- Coupey, Hure, Cliquet and Petr, 2009).With the online grocery market fast growing, this phenomenon presents a challenge for supermarket chains competing for a share –balancing their online and offline investments- (Hand, Riley, Harris, Singh and Rettie, 2009). The high difficulty selling groceries online is seen as a discontinuous innovation that requires a significant change in behaviour. Currently online shopping for food is a niche market and to develop this beyond the niche market size it is important for retailers to understand what triggers consumers to change their purchasing behaviour and the extent to which their online shopping experience reinforces the adaptation process (Hand, Riley, Harris, Singh and Rettie, 2009).
1.3 E-commerce and culture
differences- go up and this presents new challenges and opportunities in business (de Mooij and Hofstede, 2002; House, Hanges, Javidan, Dorfman and Gupta, 2004). In the retail industry, convergence and similarities across borders used to be of main focus, however current research has proven that consumptions differ across countries, since customers do not take rational actions and base their purchasing decision on maximisation of utility (de Mooij and Hofstede, 2002).
Firms that provide goods and services on the Internet address different cultural audiences simultaneously, where a global consumer interface may require a certain degree of internationalisation and/ or standardisation in order to develop or maintain a global image. It can be argued that the success of a global interface may only be achieved when the interface design takes into consideration the cultural nuances of the target audience (Chau, Cole, Massey, Montoya- Weiss and O‟Keefe, 2002). Cultural preferences and biases are therefore suggested to affect the degree of friendliness of an interface like background colour, graphics and spatial orientation (Chau, Cole, Massey, Montoya- Weiss and O‟Keefe, 2002). For example for website design the colour blue is the most accessible colour worldwide (Awad, 2007). The fault made by many organisations wanting to take advantage of the globalisation of businesses and the advent of the Internet is the set up of websites for each country or city they are locally present in, featuring the respective local language and contents, however use typically uniform website designs and features around the globe (Sia, Lim, Leung, Lee, Huang and Benbasat, 2009). Especially American and Britain retailers tend to ignore cultural differences when expanding to new geographical markets, thereby forgetting the fact that retailing is a very localised concept that requires a great sensitivity to local tastes and habits (de Mooij and Hofstede, 2002).
commerce must find ways to overcome the tradition of trust building (Schneider, 2002). Back in the days the reputation of businesses grew commensurately with the growth of multinational operations. Trustworthiness needed to be vouched by satisfying customers before a company was able to expand their business abroad (Schneider, 2002). Trust building is necessary because results indicate that by creating trust and satisfaction there is an increase in repeating purchase intentions (Abdul- Muhmin, 2011). Therefore in order to build trust in Internet stores – particularly if they are relatively unknown-, different web strategies and design features have been proposed (Cyr, 2008; Sia, Lim, Leung, Lee, Huang and Benbasat, 2009). Web site design preferences vary across cultures and affect trust and satisfaction (Cyr, 2008). Trust is created through recommendations, since customers base their purchasing decision on that (Kim, 2008). Recommendations from friends and family play a more important role in a tightly coupled social community than in a loosely coupled social community, since group norms and opinions from members in tightly coupled social community strongly influence their decisions. Therefore cultural dimensions – individualism, collectivism and uncertainty avoidance- affect the differences in perceptions of trust and the willingness of consumers to trust e-vendors and to accept uncertainty (Kim, 2008).
On the other hand there are different articles (Jarvenpaa, Tractinsky and Vitale, 2000; Lim, Sia, Lee and Benbasat, 2006) mentioning that Internet trust has adopted a universalist approach, assuming that trust is built uniformly across different national cultures. When cultures come into contact with each other they might converge on some aspects (House, Hanges, Javidan, Dorfman and Gupta, 2004). Even though marketing scholars and Internet practitioners have recognized the importance of culture in influencing consumer behaviours, still typically similar constructs and relationships are investigated in Internet shopping regardless of cultural aspects (Sia, Lim, Leung, Lee, Huang and Benbasat, 2009).
So therefore the situation might be that regardless of the cultural differences between the different regions, in this case Eastern and Western Europe and Asia, the consumer behaviour in e-commerce is similar, therefore leaving options open for other factors that influence the differences in foreign sales, revenues and consumers, i.e. Internet access.
1.4 E-commerce, customer confidence and Internet access
Internet access or infrastructure (Lopez- Bassols and Vickery, 2001; Schneider, 2002). So, when comparing countries with each other, they might not only differ in cultural and economic aspects, but also in the acceptance and infrastructural scale of e-commerce (Liao, Proctor and Salvendy, 2009).
First, users are still hesitant to embrace e-commerce, due to concerns surrounding delivery problems, reliability, fraud etc (Lopez- Bassols and Vickery, 2001). It can be argued that service quality delivery through web sites is an essential part of strategy to success, even more than low price and web presence (Zeithaml, Parasuraman, Malhotra, 2011). Furthermore there are differences in how websites in different regions handle payment and delivery services. The results of examination from e-commerce sites show that sites from different areas use a variety of payment and delivery methods, which are aberrant from systems used in the USA. There are also regional differences in how e-commerce sites have chosen to deal with low credit card penetration and poor delivery systems (Hawk, 2004).
Second, Internet infrastructure including the computers and software connected to the Internet and the communication networks over which the message packets travel can be measured as the amount of internet users, the Internet penetration rate and the growth of Internet users (Schneider, 2002; Liao, Proctor and Salvendy, 2009). It reflects in the telecommunications infrastructure and the economic situation of a country (Shih, Dedrick and Kreamer, 2005; Cieslik and Kaniewska, 2004). In many countries besides the United States the telecommunications industry is either government owned or highly regulated by the government. These regulations have inhibited the development or limited the expansion of the Internet infrastructure and telecommunications (Schneider, 2002). Both the United Kingdom and South Korea are countries with Internet potential, since both countries have a high level
of Internet users and Internet penetration around 80 per cent5.
1.5 Cultural differences
Going in depth culture is a collective phenomenon, where people learn patterns of thinking, feeling and potential acting from living within a defined social environment, i.e. country (Chau, Cole, Massey, Montoya-Weiss and O‟Keefe, 2002). Culture is the “collective programming of the mind which distinguishes the members of one category of people from those of another” (Hofstede, 1984). Culture consists of practices and values, where practices
are acts or “the way things are done in the particular culture” and values are artefacts because they are human made and judgments about “the way things should be done” (House, Hanges, Javidan, Dorfman, Gupta, 2004). Individual consumer tastes and purchasing patterns are partly determined by collective values of the local community (Chau, Cole, Massey, Montoya- Weiss and O‟Keefe, 2002). Socially learned norms and values (culture) provide standards that people often use to evaluate the behaviour of others and at the same time to guide their own judgments and behavioural decisions (Briley and Wyer, 2001). Therefore conceptualisation of the norms and values that pervade in different societies might help to predict the differences in both social and non-social behaviour that predominate these societies and to understand why these difference occur. So the cultural context can create understanding for the negative and positive consumer reactions (Chau, Cole, Massey, Montoya- Weiss and O‟Keefe, 2002).
Several models have been developed throughout the years that are concerned with detecting and analysing cultural differences; One of the most common known models is that of Hofstede (1983), who investigated why some concepts of motivation did not work in the same way across countries, by research from an IBM database between 1967 and 1973. According to his model the way different people from different countries perceive and interpret their world can vary alongside four dimensions; power distance, uncertainty avoidance, individualism and masculinity and long term versus short term orientation (time perspective) (Hofstede, 1983; Hollensen, 2008), see table one.
Dimension Explanation
Power distance Deals with the degree of inequality between people in physical
and educational terms.
Uncertainty avoidance Concerned with the degree to which people in a country prefer formal rules and fixed patterns of life, i.e. career structures and laws as a mean of enhancing security.
Individualism Looks at the degree to which people in a country learn to act as
individuals rather than as members of a group.
Masculinity Refers to the degree to which “masculine” values, i.e.
Time perspective The way members in an organisation exhibit a pragmatic future oriented perspective rather than a conventional history or short term point of view.
Table 1: Dimensions in model Hofstede (Source: Hofstede, 1983)
A second model commonly known is proposed by Hall (1976). This model makes a differentiation between high context and low context cultures, which mainly focuses upon communication aspects (Hall, 1976; Hollensen, 2008), see table two. In this model “context” refers to how individuals and their society seek information and knowledge (Hollensen, 2008). Low context cultures rely on the spoken and written language. Senders of messages encode their messages, expecting that the receivers will adequately decode the words used to gain a good understanding of the message. On the other hand high context culture use and interpret more elements surrounding the message in order to develop their understanding of the message. The social importance and knowledge of the person and the social setting add extra information and will be perceived by the message receiver (Hollensen, 2008). It is furthermore argued that people from high context cultures (i.e. Japanese, Chinese, Italian, Latin American, Arabic, African, Korean etc.) obtain information from personal information networks, like friends, family, and business acquaintances. Where on the other hand low- context cultures (i.e. Swiss, Austrian, New Zealand, American, Canadian etc.) seek information about decisions from direct information sources, like watching, reading, reports and databases (Kim, 2008).
Characteristic Low context culture High context culture
Communication and language
Explicit, direct Implicit, indirect
Sense of self and space Informal handshakes Formal hugs, bows and
handshakes
Dress and appearance Dress for individual success,
wide variety
Indication of position in society, religious rule
Food and eating habits Eating is necessity, fast food Eating is social event
Time consciousness Linear exact, promptness is
valued time= money
Elastic relative, time spent on enjoyment, time= relationships
Family and friends Nuclear family, self oriented,
value youth
Extended family, other oriented, loyalty and responsibility, respect for old age
Value and norms Independence, confrontation of
conflict
Beliefs and attitudes Egalitarian, challenge authority,
individuals control destiny,
gender equity
Hierarchical, respect for authority, individuals accept destiny, gender roles
Mental process and learning Lateral, holistic, simultaneous,
accepting life‟s difficulties
Linear, logical, sequential,
problem solving
Business/ work habits Deal oriented, rewards based on
achievement, work has value
Relationship oriented, rewards based on seniority, work is necessity.
Table 2: Dimensions in model Hall (Source: Hall, 1976)
The existing literature already uses the above mentioned models for research into e-commerce and culture. In line with Hofstede‟s model (1983) on cultural differences several authors have investigated the difference across countries in e-commerce and the aspect of trust using these dimensions. In the article of Kim (2008) the model of Hofstede is used to test the effect of trust on behaviour intention (willingness to purchase), where the data indicates that trust has a positive effect on the intention to purchase. Another study conducted by Pavlou and Chai (2002) found that cultural differences play a significant role in customers‟ e-commerce adoption, by usage of Hofstede‟s cultural dimensions. Hofstede and Hall are commonly used to compare the US with China, finding distinctive differences in preferences and requirements of e-commerce (Liao, Proctor and Salvendy, 2009). Another model used is GLOBE in describing cultural differences in relation to e-commerce. The study of Cockcroft and Heales (2005) uses the GLOBE dimensions to investigate the relationship between culture and privacy and trust and privacy. So the models of Hofstede, Hall and House, Hanges, Javidan, Dorfman and Gupta are commonly used in the literature aimed at researching the relationship between cultural differences and e-commerce.
interdependencies are created. It is said that the model of Hofstede is becoming old fashion and no longer viable in these new conditions (Nakata, 2009). Also the model of Hall leaves room open for debate, since it is stated that the same weaknesses can be detected here as in the theory of Hofstede. Furthermore the model of Hall in today‟s setting asks for extension and new frameworks (Nakata, 2009). The GLOBE model re-examines national culture from a new perspective, mitigating many of the concerns of earlier approaches (Crockfort and Heales, 2005). However the GLOBE study makes a distinction between cultural values and cultural practices, where the results due to distinction show a negative relation between cultural values and cultural practices for seven out of the nine dimensions (Taras, Steel and Kirkman, 2010).
Even though there is a lot of criticism on the models of Hofstede and Hall, for this particular research these models are most suitable. As these models –when understood and applied in the right manner- can provide inside information on other cultures, make it possible to interact with people from other cultures effectively and provide the organisation with information on people‟s –shopping- behaviour within these cultures. Furthermore this research is aimed at understanding the effect of cultural differences on e-commerce and the model of Hofstede provides two main dimensions that are of high interest for Internet shopping; uncertainty avoidance and individualism versus collectivism. These dimensions can be linked to the willingness to accept potential risk involved with shopping on the web and to the trust aspect that is granted to unknown online vendors (Lim, Leung, Sia and Lee, 2004). Also, a lot of research available on the relationship between cultural differences and e-commerce defines the cultural differences along the dimensions of Hofstede and Hall. Finally, other models such as the GLOBE is less suitable, since the focus of GLOBE is on the effect that culture has on leadership, organizational effectiveness, economic competitiveness and the human condition of the members of the society studied. The GLOBE model has a large focus on leadership behaviours and organizational practices (House, Hanges, Javidan, Dorfman and Gupta, 2004).
1.5.1 Cultural distance
development (Sousa and Bradley, 2008). Firms that enter foreign markets must be prepared for these factors as they cause challenges. In the current literature some articles use the concept psychic and cultural distance as synonyms, however it is important to note that these are in fact two different concepts.
Psychic distance can be derived from the Greek word psychikos, which means the mind or
soul and refers to something in the mind of the individual. The distance in this case exists in the mind of the individual and depends on how he/she perceives the world. So it is the perception of the individual about the differences between the home country and the foreign country that shape the psychic distance. Therefore psychic distance cannot be measured with factual indicator like publicly available statistics on education, economic development etcetera (Sousa and Bradley, 2006).
Cultural distance refers to the cultural level and not to the individual level as with psychic
distance. This concept can be defined as the degree to which cultural values in one country are different from those in another country. Cultural distance uses cultural values to assess the
distance among countries instead of individual perceptions (Sousa and Bradley, 2006).
Cultural distance can be defined as to which extent the shared values and norms in one country differ from those in another country (Beugelsdijk and Slangen, 2010).
Cultural distance is used to explain the choices of internationalisation and the results on firm performance, adaptation of international market strategy and use of entry mode (Sousa and Bradley, 2006). It relates to a firm‟s market selection, entry mode choice decision and international performance (Drogendijk and Zander, 2010). In addition another research area of cultural distance investigates cultural differences in a relational perspective (Drogendijk and Zander, 2010). Therefore initiating this concept into the research might support the findings of cultural differences and the effect on e-commerce.
CDj =
Formula 1: Cultural distance formula (Source: Morosini, Shane and Singh, 1998)
CDj: Cultural distance
Iij: Host countries score on cultural distance Iip: Home countries score on cultural distance
1.7 Conceptual framework
Based on the existing literature and their main results it can be suggested that national culture has an influence on the market in e-commerce. Therefore if organizations want to take advantage of the market of globalisation through e-commerce they might need to take into consideration the varying ways that cultures affect this, so they are able to use the right strategy that suits potential markets (Elbeltagi, 2007).
1.7.1 Research question
This research is set up, to find to what extent cultural differences affect e-commerce within a global setting. Based upon the existing literature the main research question formulated is;
What effect do cultural differences have on e-commerce?
1.7.2 Conceptual model
The following conceptual model, see figure one, has been made to provide a visual of the issues researched and the relationship between the concepts.
The main concept is e-commerce, which is claimed to be effected by cultural differences. The concept e-commerce is separated into B2B and B2C e-commerce. Internet consumer commerce is measured along the lines of building customer loyalty (trust), site attributes and consumer information and decision support requirements (Jarvenpaa, Tractinsky and Vitale (2000) and supported by financial data, such as foreign online sales. The five dimensions of Hofstede and the high versus low context culture dimension of Hall are added as concepts to measure the cultural differences between countries and to verify what effect cultural differences have on e-commerce. Also because earlier conducted research shows that these concepts, especially uncertainty avoidance and individualism versus collectivism have a distinct effect on e-commerce, i.e. the research of Kim (2008) and Liao et al. (2008). As mentioned by Briley and Wyer (2001) the aspects of individualism and collectivism in relation to norms and values influence the behaviour of people.
1.7.3 Sub-questions
In order to answer the research question the following sub-questions have been formulated; the first and second sub-question are based upon literature research in order to identify the cultural differences and cultural distance between the countries selected. The remainder of the sub-questions is specified to the case of Tesco and their e-commerce business.
1. What does the literature state about cultural differences and distance between South Asian and Western European countries based upon theory?
The first sub-question is answered through desk research, using different articles and books. This sub-question is answered by the model of Hofstede (1983) and Hall (1976) selected from the existing theories measuring cultural differences across countries. The interpretation of cultural differences is made, based upon existing literature. Furthermore by defining what the concept cultural distance entails and what is considered to be distant in the literature, this is used to support the cultural differences between Western European and South Asian countries. The cultural distance is measured using the formula of Morosini, Shane and Singh (1998).
The second sub-question is answered through desk research, using different articles and books. Also here the models of Hofstede (1983) and Hall (1976) are used to describe the differences between the B2B and B2C market.
3. What is Tesco’s e- commerce strategy?
The third sub- question is answered by observation and questionnaires with management of Tesco. This question is formulated to get insight on how Tesco has formulated specific strategies surrounding their e-commerce business and to see how they currently cope with cultural differences.
4. How are the foreign sales, revenues and amounts of consumers of Tesco distributed across Eastern Europe, South Asia and Western Europe?
The fourth sub-question is answered by searching through financial records and annual reports of Tesco from the years after the entering date into the country. Also semi-structured interviews with management from the financial department will be used, to get a more detailed and clear description of the financial statements and the structuring. The distinction between the different regions will be made, since it is important to see what effect culture has on their foreign sales, revenues and amount of consumers in e-commerce business and how this can be improved.
5. How does Tesco view the cultural differences and distances between South Asian and Western European countries?
The fifth sub-question is answered through semi- structured interviews. The information from the semi-structured interviews provides details on what the organisation Tesco perceives under cultural differences and what information was available to them when expanding abroad. If any of the information required is also available through archives (notes or meetings) than these reports are also studied in order to answer this sub-question.
2. Research Design
As mentioned in chapter one over the last couple of years more attention has been paid to globalisation through the Internet, where firms use the Internet and websites to expand abroad (Hwang, Jung and Salvendy, 2006). This extensive usage of Internet and the introduction of e-commerce lead to differences around the globe, being caused by among others culture. This chapter gives a distinct description of the research problem, and the methodology in order to answer this problem.
2.1 Research objective
The main problem faced with is that even though considerable research has implicated that national culture influences commerce and different cultures request different tactics in e-commerce, these articles do not focus upon a particular line of business. Cultural differences across countries and the effect it has on e-commerce is described generally and focuses upon certain aspects. The specifics and reach of the cultural differences influencing or changing e-commerce is missing. Further, the retail market and especially Grocery Home Shopping is very sensitive, since customer prefer to touch, smell and look at the product (Schneider, 2002; Hwang, Jung and Salvendy, 2006). Therefore it is suggested that the retail sector and GHS, requires localisation of web-platforms (de Mooij and Hofstede, 2002). Understanding specifically to what extend cultural differences affect e-commerce, therefore becomes of increasing importance. Third, there is a lot of debate about converging cultures and the Internet becoming of a more global nature. So the question raised is whether cultural differences can still be categorised along the present dimensions or if the affect of cultural differences on e-commerce diminishes or expands. Final, convergence is a common understanding in the B2B e-commerce, due to the “push” nature of MNCs. So, differences can occur between B2C and B2B e-commerce that are influenced by the scope of culture.
The problem faced with can be categorised along the lines of a causal, multi-phenomenon problem (Thomas, 2004), where a relationship is detected between the dependent variable being e-commerce (Business to Business and Business to Consumer) that is influenced and/or changed by the independent variables (culture, confidence and accessibility of Internet). The results from e-commerce in the format of sales and the lay-out/ web design are changed or affected to a certain extent across countries by national cultures (preferences, shopping behaviour of consumers) and access to Internet or the amount of Internet users.
The interest of this paper stems from the fact that even though a considerable amount of research in the field of culture influencing e-commerce has been performed, this research provides some additional insights. First, the main research into the effect of cultural differences relating to e-commerce is aimed at (parts of) China compared to the United States (Lia, Proctor and Salvendy, 2009; Qiu, Shu Jen and Shao, 2003). This research on the other hand focuses upon the United Kingdom compared to South Korea. As existing literature of e-commerce on Western European countries is lacking, this research can provide additional insights. Second, this research approaches the extent to what cultural differences affect e-commerce from the specific retail sector and Grocery Home Shopping market. This generates specific information on the effect of cultural differences. Finally, this research compares both the B2C market and the B2B market, to research if the extent to what culture influences e-commerce differs across sectors.
2.2 Method
Piekkari and Welch, 2004). This in depth view is important to understand exactly the changes and adaptations made in web-design in order to grasp the influence cultural differences have on e-commerce. Surveys and/ or historical data collection leave no room open for face to face interaction and there is no possibility to add or alter data collection methods in order to retrieve necessary information (Eisenhardt, 1989). Additionally, it provides an opportunity to link macro level findings –cross cultural and country data-, with industry level data –financial data and specific changes in the retail sector of Tesco ltd.- and with firm decision making – view on cultural differences-. Finally, case study research provides the opportunity of observation and interaction compared to surveys and archival data, thereby generating additional information of importance to research the extent to what cultural differences affect e-commerce (Marschan-Piekkari and Welch, 2004).
The selection of the particular case chosen for this research is based upon the following aspects; first, Tesco meets the criteria that are consistent with the research problem. Tesco currently operates in the e-commerce business with both General Merchandise and Grocery Home Shopping and sets up their e-commerce business in countries that can be viewed as culturally different from their home country the United Kingdom. Second, Tesco provides the opportunity to perform an internship at their organisation, thereby granting access to the data needed in order to complete the case study research. Also considering the amount of time available for conducting this research, Tesco provides personal contact with the interviewees necessary to perform this case study. Further detailed financial data is made available, specified across countries and detailed into e-commerce, amount of customers and GHS and General merchandise. Finally, Tesco is a multinational corporation, which implies that the research problems present tend to be rich and entail multiple factors. As in this case; strategies, cultural aspects and financial specifications (Marschan- Piekkari and Welch, 2004).
data collection methods, in order to get an in depth view on the extent to what cultural differences affect e-commerce (Eisenhardt, 1989). Final, theory expansion is aimed at providing additional insights to the theory and looking into the phenomenon, it provides freshness to an already researched subject (Eisenhardt, 1989). Therefore the level of in-depth created by case study research allows better answering of the research questions, where focusing upon surveys and historical data is insufficient (Marschan- Piekkari and Welch, 2004).
2.3 Data collection
In line with case study research the data collection is featured by triangulation. The data collection is performed by the usage of different methods or even different kind of data on a single phenomenon. In case study research this triangulation stems from the fact that sources of information need to be validated, checked and looked at from different angles (Marschan- Piekkari and Welch, 2004). This research also combines both qualitative and quantitative data common for case study research. Quantitative research evidence is selected from annual reports, articles, books and different documents provided. These findings will be bolstered by qualitative data to understand the theory that lies underneath (Eisenhardt, 1989). The qualitative research evidence comes from semi structured interviews, as questions need to be set up differently for the different respondents and also the order of questions might need adaptation (Thomas, 2004). Furthermore they leave room open for questions used as confirmation (Blumberg, Cooper and Schindler, 2005). Second, partly unstructured interviews are set up to get a discussion about certain aspects going, where the line of questioning keeps structure and additional questions or clarification can be asked in order to obtain all necessary information. Finally as mentioned by Eisenhart (1989) and Yin (1984) notes from observations, general meetings with employees and unanswered questions open for further research are set up, to provide additional data or answers to relationships.
In order to get a solid based answer to the different sub-questions and because data construction by asking questions can be associated with significant problems, i.e. misinterpretation of questions, lacking response several groups will be addressed.
Management at Tesco that is concerned with the sales through foreign websites.
Management in the countries Tesco is present at, to see the preferences in shopping.
International employees at Tesco that provide information about their work and can be observed.
These groups have been selected since it is expected that these have access to and can provide the information necessary to answer the research question. Since the data from the questionnaires will be qualitative, the results are interpret and analysed by several methods: first, there is the summarisation (Thomas, 2004), in which the text and answers retrieved from interviews are shorter and simpler, however with minimum loss of information. Second, there is content analysis, since certain usage of words of reference to specific points can indicate that this is of high importance (Thomas, 2004). Especially with cultural aspects and the entry mode strategy, this shows the importance or influence of specific aspects and makes it possible to define these alongside the theories.
In addition to that, data construction by using documents and records is used. These documents are used as resource for the research, thereby the main interest of the document lies in the content (Thomas, 2004). Furthermore these documents can give inside information on what has already been found and what is done with this information (Blumberg, Cooper and Schindler, 2005). The following documents are used;
Annual reports of Tesco, to verify foreign sales and revenues.
Customer surveys of Tesco South Korea.
Archives at Tesco, with documents on entering strategies, internationalisation
strategies and choice of entry.
Articles from business journals, to see the cultural differences/ distances among
countries.
Books, to see the cultural differences/ distances among countries.
2.4 Country selection
are in the top ten of Internet users in 2010. Also the United Kingdom covers around 10% of the users in the European region, whereas South Korea covers around 5% of the users in the Asian region. Furthermore, both countries experienced a growth in users from 2000 till 2010 and currently account for a high amount of Internet users, where the United Kingdom has 51.442.100 million users and South Korea has 39.440.000 million users. In addition both countries have around 80% penetration level6. Therefore it is expected that the influence of Internet usage and access on e-commerce can be neglected. Second, South Korea can be viewed as an emerging market, providing firms with possibilities to invest (Raju, Khanapuri, 2009; Ahmed, Rosser and Uppal, 2010). Based upon these two indicators South Korea creates opportunities for e-commerce to grow and set foot in this country. Third, South Korea and the United Kingdom are chosen, since many research has already been conducted in relation to China and the United States and their cultural effects on e-commerce. These researches look into the information content preferences of online consumers and the problems in online globalisation in relation the characteristics and trends of the Internet and e-commerce (Liao, Proctor and Salvendy, 2009; Qiu, Shu Jen and Shao, 2003). So therefore these two countries add to the existing academic literature in that they provide additional insights.
3. Cultural differences United Kingdom versus South Korea
In this explanatory study the objective is to examine to what extent cultural differences affect e-commerce between the United Kingdom and South Korea in both the B2B and B2C market. To determine the differences and distance between the United Kingdom and South Korea secondary data on the dimensions of Hofstede (1983), Hall (1976) and the formula of Morosini, Shane and Singh (1998) was used.
3.1 General cultural differences
Attitudes, beliefs and values are part of every culture and influence nearly all aspects of human behaviour (Eng and Kim, 2006). Significant evidence exists that cultures around the globe are getting more interconnected and the world of business is becoming more global. However as these economic borders come down, cultural barriers go up and value differences become strongly manifested (de Mooij and Hofstede, 2002; House, Hanges, Javidan, Dorfman and Gupta, 2004). So localisation (enhancing the site in order for it to fit the target users at different local levels) and culturability (the merging of culture and usability, representing the relationship between design elements and culture) are important (Cyr and Trevor-Smith, 2004). Furthermore, consumers prefer variety seeking in their choices, which is dedicated to people‟s desire to appear unique. This is less pronounced among Eastern versus Western cultural members (Yoon, Suk, Lee and Park, 2011).
3.1.1 Scores United Kingdom
It has been argued that the United Kingdom culturally relates more to the United States than Continental Europe, even though it is part of the European Union (Littrell and Valentin, 2005). Therefore this might have its effect on the cultural dimension scores, see table 3.
Dimensions Score High Score Low
Power distance XX Uncertainty avoidance XX Individualism XX Masculinity XX Time perspective XX Context culture XX
Table 3: Scores on the dimensions of the model Hofstede and Hall United Kingdom7
3.1.2 Implications E-commerce Business to Consumer
knowledge relying on the spoken en written language, which is encrypted in the explicit code (Hall, 1976; Hall and Hall, 1990; Hollensen, 2008). Information about decisions is sought from direct information sources, like watching or reading reports and databases (Kim, 2008). This relates to strong preferences for logical and structural lay-outs, static websites, greater presence of email support and complete, clear and precise messages (Cyr and Trevor- Smith, 2004).
Business to Business
Both the low score in power distance and the high score on individualism implicate site attractiveness, site clarity, personalisation and online business (Usunier, Roulin and Ivens, 2009-2010). B2B e-commerce is positively influenced by low power distance, since people actively participate in the decision making process of the organisation which fosters innovation and interaction with the organisation (Usunier, Roulin and Ivens, 2009-2010). In addition individualistic cultures- pursuing self interest and making the most of arising opportunities- can increase the recognition of e-commerce opportunities (Mayer-Guell, 2001). Third, the low score on uncertainty avoidance increases the ability to deal with the unpredictable marketplace the Internet offers and increases the adoption of online business (Mayer- Guell, 2001; Usunier, Roulin and Ivens, 2009-2010). The high level of masculinity is linked to lack of social contact and collaboration, this decreases online linkages for B2B organisations and therefore the interactivity decreases. Where it is argued that interactivity in the B2B e-commerce market is a key aspect in order to turn visitors into buyers (Mayer- Guell, 2001; Chakraborty, Lala and Warren, 2003). The short term orientation in the United Kingdom supports the recognition of the opportunities B2B e-commerce is offering (Vatanasakdakul, Tibben and Cooper, 2004). Finally, low context cultures, implicates that websites are easier to find, colours and graphics are used more effectively, navigation is more user friendly, contains more corporate and product information cues and offers more contract and relationship related content than websites from high context cultures (Usunier and Roulin, 2010).
3.1.3 Scores South Korea
Confucian culture (Kim, 2010), see table 4 for the scores on the dimensions of Hofstede (1983) and Hall (1976).
Dimension Score High Score Low
Power distance XX Uncertainty avoidance XX Individualism XX Masculinity XX Time perspective XX Context culture XX
Table 4: Scores dimensions Hofstede South Korea8
3.1.4 Implications E-commerce Business to Consumer
First, high power distance societies are characterised by inequality among members due to differences in power, wealth and other endowments which is expected and desired as the natural order of things. (Eng and Kim, 2006). Authority is viewed as important and can be enforced by images such as official certification logos (Ahmed, Mouratidis, Preston, 2009). It also gives online retailers the opportunity to create practical ways, operate affiliation and create a lock-in. The affiliation captures the attention of customers, where the lock-in turns the attention into continuous buying behaviour. This involves personal care, concern, personal attention and interaction with customers in order to make them feel privileged and different from others (Eng and Kim, 2006). Hence, high power distance is also associated with purchases of high branded products and services, since these represent social status in a community and account for brand loyalty (de Mooij and Hofstede 2002). Second, the high level of uncertainty avoidance leads to two substantial issues for e-commerce; first, website design should contain precise and specific product information that can be retrieved through effective site organisation and search mechanism. Second, website design should lead to increasing trust and include active images and webpage elements (Lo and Gong, 2005; Hwang, Jung and Salvendy, 2006). In addition South Korean customers prefer to touch the products, see pictures of the product, prefer brand name classification and consult other customer opinions as well as conservatively purchasing a new product (Hwang, Jung and Salvendy, 2006). In order to built trust among South Korean online customers the reliance on
extrinsic cues – reputation, country of origin, brand- becomes more important, because intrinsic cues – ingredients, taste, texture- are unavailable (Jin, Park and Kim, 2008). Therefore it can be noted that Korean customers tend to trust shopping websites that are controlled by large companies such as Chaebols, compared to independent shopping websites (Eng and Kim, 2006). Third, in collectivistic cultures the Internet is mostly used for social communication and hobbies, i.e. sending/receiving emails, accessing/ downloading software and conducting work related research (Zhou, Dai and Zhang, 2009). Further, collectivism affects the decision making process, which is highly influenced by reference groups or so called “Usenet groups”. South Korean customers value firsthand knowledge, recommendations and connectedness with other members of a group (Wilson and Abel, 2002; Eng and Kim, 2006; Hwang, Jung and Salvendy, 2006; Suh, Janda and Seo, 2006). Participating in online communities provides additional reference points for users. By using the appropriate communication tools that encourage group inputs, e-loyalty can be promoted. Such communication tools are online bulletin boards, forums, product comparison tools and product reviews sections that can be committed to attract South Korean customers (Eng and Kim, 2006; Hwang, Jung and Salvendy, 2006; Lee, Geistfeld and Stoel, 2007). Finally, frequent communication from the e-vendors towards customers in highly valued (Eng and Kim, 2006). Fourth, feminism refers to less attention for luxury items, which contradicts with the implications on high power distance (de Mooij and Hofstede, 2002). Long term orientation of South Korea influences e-commerce on two aspects; first credit cards are mostly used as debit cards or credit cards are not used at all. Second, customers prefer promotional activities that offer saving opportunities, for example saving stamps. These also create the possibility for long term relationships (de Mooij and Hofstede, 2002). In line with the high context culture of South Korea, there is a preference for visuals on the website and additional information beyond the written format is preferred (Cyr and Trevor-Smith, 2004). Furthermore, people from high context cultures obtain information from personal information networks, like friends, family and business acquaintances (Kim, 2008).
Business to Business
manner is reflected by industry pressures and government policies being influential in company decisions to adopt and implement B2B e-commerce (Thatcher and Foster, 2003). High power distance is finally associated with low website attractiveness, site clarity, personalisation and online business (Usunier, Roulin and Ivens, 2009-2010). Second, the high score on uncertainty avoidance is associated with the reluctance against involvement in risky operations. This indicates either governments or the demands of the largest customer(s) pressure organisations to engage in B2B e-commerce (Thatcher and Foster, 2003; Thatcher, Foster and Zhu, 2006; Usunier, Roulin and Ivens, 2009-2010). Third, collectivistic cultures embrace new standards and re-engineering for the good of their companies and customers. B2B e-commerce provides opportunities to improve personal relationships with customers and suppliers, as more time can be spend nurturing the relationships and less time to administrative details (Thatcher and Foster, 2003; Thatcher, Foster and Zhu, 2006). On the other hand collectivistic cultures have difficulty with the depersonalised communication through the Internet, as personalised contact is preferred and requires face to face communication (Usunier, Roulin and Ivens, 2006). Without collectivism, companies feel uncomfortable to participate in B2B e-commerce (Thatcher and Foster, 2003). Feminine characteristics in South Korea implicate B2B e-commerce is used to built and enhance relationships with customers (Thatcher, Foster and Zhu, 2006). On the contrary feminine cultures highly value personal contact, where organisations are worried electronic interactions would reduce the amount of friendship and personal relationships that are important for the organisation (Thatcher and Foster, 2003/ Vatanasakdakul, Tibben and Cooper, 2004). The long term perspective might lead to suspending introduction of B2B e-commerce and misjudgement of opportunities, since the market is rapidly growing and expanding. Considering future opportunities in B2B e-commerce might lead to organisations missing the boat (Vatanasakdakul, Tibben and Cooper, 2004). Finally, dealing with customers or partners from different communication cultures might create challenges, i.e. low context cultures meeting with high context cultures can generate communication problems, relating to cultural distance (Rosenbloom and Larsen, 2003).
