DETERMINANTS OF INFORMATION TECHNOLOGY
ADOPTION IN PORTUGAL
Tiago Oliveira and Maria F. O. Martins
Instituto Superior de Estatística e Gestão Informação, Universidade Nova de Lisboa
Campus de Campolide, 1070-312 Lisboa, Portugal
Keywords: Web site adoption, e-Commerce adoption, Technology-organization-environment, Binary decision.
Abstract: There is an absence of empirical studies on information technology (IT) adoption decision in Portugal. This
paper is based on a representative sample of 2626 Portuguese firms and it analyzes the determinants of web
site and e-commerce adoption decisions using a technology-organization-environment (TOE) framework.
The proposed statistical methodology advocates that the IT adoption decisions are taken sequentially, stage
by stage. Findings also suggest that the relevant drivers of web site and e-commerce adoption are not
necessarily the same. For web site adoption we found 8 drivers. For e-commerce we found 5 drivers.
Explanations and implications are offered.
1 INTRODUCTION
Literature on information technology (IT) adoption
and diffusion at firm level (Hong and Zhu, 2006)
suggests that when analyzing this topic, one should
consider the nature of the IT. For simple
technologies, like the internet or Web site, the
adoption process is expected to be inexpensive and
easy and probably will not bring about fundamental
changes to the firm. However, for advanced
technologies, especially those related to online
transactions, the adoption process may be
complicated and costly. That is perhaps why, in
2006, even though most firms in Portugal are
internet adopters (83%), only 35% owned a web site
and a limited part of them, 7%, have adopted e-
commerce. These national figures are clearly below
the EU-15 mean level, where 94% of firms are
internet users, 66% own a web site and 16% have
adopted e-commerce practices.
The two main purposes of this study are the
following:
To examine the importance of technology-
organization-environment (TOE) related factors
as fundamental determinants of web site and e-
commerce adoption;
To analyze the extent to which there are
significant differences in the factors driving these
two types of IT.
To achieve these research objectives, we used a
rich data set of 2626 firms that are representative of
Portuguese firms with more than 10 employees in
2006, (excluding the financial service sector).
In this study, as suggested by Hong and Zhu
(2006), we defined e-commerce as any application
of web technologies that enables revenue generating
business activities over the internet.
2 THEORICAL FRAMEWORK
AND CONCEPTUAL MODEL
The TOE model (Tornatsky and Fleischer, 1990)
identifies three aspects that may possibly influence
web site and e-commerce adoption: technological
context (technology readiness, technology
integration and security applications); organizational
context (firm size, perceived benefits of electronic
correspondence, IT training programs, access to the
IT system of the firm, internet and e-mail norms and
main perceived obstacle); and environmental context
(competitive pressure). In accordance with the TOE
theory, we developed in the next subsection a
conceptual framework for web site and e-commerce
adoption (see Figure 1).
264
Oliveira T. and O. Martins M. (2009).
DETERMINANTS OF INFORMATION TECHNOLOGY ADOPTION IN PORTUGAL.
In Proceedings of the International Conference on e-Business, pages 264-270
DOI: 10.5220/0002261502640270
Copyright
c
SciTePress
Figure 1: Conceptual framework for web site and e-
commerce adoption.
2.1 Technology Context
Technology readiness can be defined as technology
infrastructure and IT human resources. Technology
infrastructure establishes a platform on which
internet technologies can be built; IT human
resources provide the knowledge and skills to
develop web applications (Zhu and Kraemer, 2005).
Theoretical assertions are supported by several
empirical studies (Hong and Zhu, 2006, Iacovou et
al., 1995, Kwon and Zmud, 1987, Zhu et al., 2003,
Zhu and Kraemer, 2005, Zhu et al., 2006, Zhu et al.,
2004)
H1a and H1b. The level of technology readiness
is positively associated with web site and e-
commerce adoption
Evidence from the literature suggests that
integrated technologies help improve firm
performance by reduced cycle time, improved
customer service, and lowered procurement costs
(Barua et al., 2004). As a complex technology, e-
commerce demands close coordination of various
components along the value chain. Correspondingly,
a greater integration of existing applications and the
internet platform represent a greater capacity of
conducting business over the internet (Al-Qirim,
2007, Mirchandani and Motwani, 2001, Premkumar,
2003).
H2a and H2b. The level of technology
integration is positively associated with web site and
e-commerce adoption.
The lack of security may slow down
technological progress. For example, for Portugal in
2002 this was the greatest barrier to internet use
(Martins and Oliveira, 2005) and in China it is one
of the most important barriers to the adoption of e-
commerce (Tan and Ouyang, 2004).
H3a and H3b. Security applications is positively
associated with web site and e-commerce adoption
2.2 Organization Context
Firm size is one of the most commonly studied
determinants of IT adoption (Lee and Xia, 2006).
Several empirical studies indicate that there is a
positive relationship between the two variables (Pan
and Jang, 2008, Premkumar et al., 1997, Thong,
1999, Zhu et al., 2003)
H4a and H4b. Firm size is positively associated
with web site and e-commerce adoption
Empirical studies consistently found that
perceived benefits have a significant impact in IT
adoption
(Beatty et al., 2001, Gibbs and Kraemer, 2004,
Iacovou et al., 1995).
H5a and H5b. Perceived benefits of electronic
correspondence is positively related with web site
and e-commerce adoption
We used IT training programs as a proxy of
employees’ education level, because in our survey
we do not have this variable. The presence of skilled
labor in a firm increases its ability to absorb and
make use of an IT innovation, and therefore it is an
important determinant of IT diffusion (Caselli and
Coleman, 2001, Hollenstein, 2004, Kiiski and
Pohjola, 2002).
H6a and H6b. IT training programs are
positively associated with web site and e-commerce
adoption
The fact that workers can have access to the IT
DETERMINANTS OF INFORMATION TECHNOLOGY ADOPTION IN PORTUGAL
265
system from outside of the firm reveals that the
organization is prepared to integrate its technologies
(Mirchandani and Motwani, 2001).
H7a and H7b. The level of access to the IT
system from outside of the firm is positively
associated with web site and e-commerce adoption
Regulatory environment has been acknowledged
as a critical factor influencing innovation diffusion
(Zhu et al., 2003, Zhu and Kraemer, 2005, Zhu et al.,
2006, Zhu et al., 2004). Firms often refer inadequate
legal protection for online business activities,
unclear business laws, and security and privacy as
concerns in using web technologies (Kraemer et al.,
2006).
H8a and h8b. The presence of internet and e-
mail norms is positively associated with web site and
e-commerce adoption
Research into IT adoption and implementation
suggests that when the technology is complex, as is
the case for e-commerce, the main perceived
obstacles are particularly relevant because in this
case, the adoption process may be complicated and
costly (Hong and Zhu, 2006).
H9b. Main perceived obstacle is negatively
associated with e-commerce adoption
2.3 Environmental Context
Competitive pressure refers to the degree of pressure
felt by the firm from competitors within the industry.
Porter and Millar (1985) analyzed the strategic
rationale underlying competitive pressure as an
innovation-diffusion driver. They suggested that, by
using a new innovation, firms might be able to alter
the rules of competition, affect the industry
structure, and leverage new ways to outperform
rivals, thus changing the competitive landscape. This
analysis can be extended to IT adoption. Empirical
evidence suggests that competitive pressure is a
powerful driver of IT adoption and diffusion (Al-
Qirim, 2007, Gibbs and Kraemer, 2004, Hollenstein,
2004, Iacovou et al., 1995, Mehrtens et al., 2001,
Zhu et al., 2003).
H10a. The level of web site competitive pressure
is positively associated with web site adoption
H10b. The level of e-commerce competitive
pressure is positively associated with e-commerce
adoption.
3 DATA AND METHODOLOGY
3.1 Data
The data used in this study were provided by
National Institute of Statistics (INE) and result from
the survey on the use of communication and
information technologies in firms (iutice) in 2006.
We used a sample of 2626 firms with more than 9
employees that is statistically representative of the
whole private business sector in Portugal at January
2006, excluding the financial sector.
3.2 Methodology
In our model we examine the influence of several
TOE factors on the adoption decision at two
adoption stages (see Figure 2).
Figure 2: Stage of adoption by firms.
We estimated the following probit model, for
stage adoption i:
P(y
i
=1/x
i
)=Φ(x
i
β
i
) for i=1,2
(1)
Where y
1
=1 is web site adoption, y
2
=1 is e-
commerce adoption, x
i
is the vector of the
explanatory variables, β
i
the vector of unknown
parameters to be estimated, and Φ(.) is the normal
cumulative distribution.
Within our context, the e-commerce adoption
decision (stage 2) should be modeled jointly with the
decision on web site adoption (stage 1), taking into
account the fact that e-commerce adoption decision
is observed only for those firms who own a web site.
As it is usual in statistical analysis, we use a
bivariate probit model with sample selectivity that
estimates simultaneously the system of two
nonlinear equations, in our case, two probit models
taking into account sample selection. If the
hypothesis of uncorrelated errors (ρ=0) is not
rejected then we can proceed as usual by specifying
two sequential models (Greene, 2008). This means
ICE-B 2009 - International Conference on E-business
266
that we can compute, without the existence of
selectivity bias, one binary model (probit or logit)
for web site adoption with all firms and another
binary model (probit or logit) for e-commerce only
with firms that had adopted web site.
The probit or logit model has been used in the IT
literature to study the following adoptions:
computer-mediated communication technologies
(Premkumar, 2003), internet (Martins and Oliveira,
2007), web site (Oliveira and Martins, 2008) and e-
business (Pan and Jang, 2008, Zhu et al., 2003).
Definition of explanatory variables
A technology readiness
index was built by
aggregating 8 items on technologies used by the firm
(on a yes/no scale): computers, e-mail, intranet,
extranet, own networks that are not the internet (own
exclusive networks), wired local area network
(LAN), wireless LAN, wide area network (WAN),
and one item standing for the existence of IT
specific skills in the firm (on a yes/no scale) (Zhu et
al., 2004). The first 8 items represent the penetration
of traditional information technologies, which
formed the technological infrastructure (Kwon and
Zmud, 1987). The last item represents IT human
resources (Mata et al., 1995). To aggregate these 9
items measured in yes/no scale, we used multiple
correspondence analyses (MCA). The MCA is a
method of “multidimensional exploratory statistic”
that is used to reduce the dimension when the
variables are binary (Johnson and Wichern, 1998).
The first dimension explains 38% of inertia. In the
negative side of the first axis we have variables that
represent firms that do not use IT infrastructures and
do not have workers with IT skills. On the positive
side we have the variables that represent the use of
infrastructures and workers with IT skills. This
resulting variable reflects the technology readiness.
Technology integration (TI)
was measured by the
number of IT systems for managing orders that are
automatically linked with other IT systems of the
firm. The variable ranges from 0 to 5. This variable
reflects how well the IT systems are connected on a
common platform. Security applications (SA)
was
measured by the number of existing security
applications in the firms. The variable ranges from 0
to 6. Firm size
was measured by three binary
variables: small firms (S
1
) (10 up to 49 employees);
medium-size firms (S
2
) (50 up to 249 employees);
large firms (S
3
) (more than 249 employees).
Perceived benefits of electronic correspondence
(PBEC) was measured by the shift from traditional
postal mail to electronic correspondence as the main
standard for business communication, in the last 5
years (on a yes/no scale). IT training (ITTP)
programs is also binary variable (yes/no) related to
the existence of professional training in
computer/informatics, available to workers in the
firm. Access to the IT system of the firm (AITSF)
was measured by the number of places from which
workers access the firms information system. The
variable ranges from 0 to 4. Internet and e-mail
norms (IEN) was measured by whether firms have
defined norms about internet and e-mail (on a yes/no
scale). Main perceived obstacles
was measured by
five dummy variables reflecting the main problems
faced in the implementation of e-commerce solution.
Web site competitive pressure (WEBP)
and e-
commerce competitive pressure (ECOMP) are
computed as the percentage of firms in each of the 9
industries that had already adopted a web site/e-
commerce two years before the time of the survey,
i.e. in 2004. As in Zhu et al. (Zhu et al., 2003) the
rationale underlying our model is that an observation
of the firm on the adoption behavior of its
competitors influences its own adoption decision. To
control for type of industry we used a binary
variable (yes/no), representing the service sector
(SER).
We made an analysis of reliability for variables
that were obtained by multi-item indicators. We
used the standardized Kuder-Richardson Formula 20
(KR-20) estimated, which is a special form of
coefficient alpha that is applicable when items are
dichotomous (Kuder and Richardson, 1937). The
KR-20 obtained are: for technology readiness (KR-
20 = 0.78), technology integration (KR-20 = 0.92),
security applications (KR-20 = 0.71) and access to
the IT system of the firm (KR-20 = 0.73). All of KR-
20 are higher than the generally accepted level of
adequacy of 0.60 (Nunnally and Bernstein, 1994).
These results suggest that all of the factors are
considered to be satisfactory for the reliability of
multi-item scale.
4 ESTIMATION RESULTS
Initially we estimated a bivariate probit model with
sample selectivity. No support was found to the
existence of selectivity in our sample, at the usual
5% significance level (p-value=0.12). Since the two
adoption decisions are uncorrelated, we can estimate
our model with two single probit models. Table 1
reports the estimation results. We also estimated two
logit models. As expected, the results are analogous.
DETERMINANTS OF INFORMATION TECHNOLOGY ADOPTION IN PORTUGAL
267
Table 1: Estimated results.
Explanatory
variables
Probit (sequential equations)
Web site (y
1
) E-commerce (y
2
)
Coef. Coef.
Technology context
TR 0.699*** -0.055
TI 0.008 0.087***
SA 0.087*** 0.040
Organization context
Firm size (S
1
is reference variable):
-S
2
0.064 -0.056
-S
3
0.263*** 0.158
PBEC 0.166** 0.168**
ITTP 0.274*** 0.112
AITSF 0.170*** 0.099**
IEN 0.152** 0.024
Main perceived obstacle
+
:
-Goods and services
are not susceptible of
being sold through the
internet
nc -0.707***
Competitive pressure
WEBP 0.021*** nc
ECOMP nc 0.029***
Controls
SER -0.122* 0.299***
Constant -1.367*** -1.792***
Sample size n
1
=2626 n
2
=1773
Note: nc means that the variable is not considerated; * p-
value<0.10; ** p-value<0.05; *** p-value<0.01;
+
the other
main perceived obstacles are not statistically significant in the
model.
Goodness-of-fit is assessed in three ways. First,
to analyze the joint statistical significance of the
explanatory variables we computed the likelihood
ratio test. Secondly, we use the Hosmer-Lemeshow
test (Hosmer and Lemeshow, 2000), which
compares the fitted expected values of the model to
the actual values. For web site adoption and for e-
commerce adoption, there is no support to reject
both models. Finally, the discrimination power of
the model is evaluated using the area under the ROC
curve, which is equal to 83% and 75% for web site
and e-commerce adoption, respectively. This reveals
an excellent discrimination for both models (Hosmer
and Lemeshow, 2000). The three statistical
procedures reveal a substantive model fit, a
satisfactory discriminating power and there is
evidence to accept an overall significance of the
model.
Hypotheses H1a-H10a and H1b-H10b were
tested analyzing the sign and the statistical
significance of the coefficients of the two adoption
decision models. As can be seen from Table 1, for
the web site adoption decision model all the
coefficients have the expected signs and the only
explanatory variable that is not statistically
significant is technology integration. We can
identify eight relevant drivers of web site adoption;
technology readiness and security application
reflecting the technological context; firm size,
perceived benefits of electronic correspondence, IT
training programs, access to the IT system of the
firm and internet and e-mail norms, representing the
organization context; web site competitive pressure
characterizing the environmental context. We can
conclude that hypothesis H1a, H3a, H4a, H5a, H6a,
H7a, H8a and H10a are confirmed and no support
was found for H2a. For the e-commerce adoption
model, the estimated coefficients also have the
anticipated signs: technology integration has a
positive effect on the e-commerce adoption
probability; perceived benefits of electronic
correspondence, access to the IT system of the firm
and e-commerce competitive pressure are also
important drivers of e-commerce adoption.
Moreover, our results indicate that goods and/or
services provided by the company that are not
susceptible of being sold through the internet is the
most important obstacle of e-commerce adoption. As
a whole, the results substantiate all hypotheses
formulated for the e-commerce adoption model
except H1b, H3b, H4b, H6b and H8b.
5 CONCLUSIONS
In this study we have proposed a conceptual model
based on TOE theoretical framework to analyze the
determinants of two different adoption decisions. At
the basic level, we considered the adoption of a
simple information technology, the web site and at
the more advanced level, a complex technology is
contemplated: e-commerce. While IT adoption
models have been widely discussed and studied in
theory and practice, few empirical publications exist
for southern European countries like Portugal.
We examined 2626 firms representative of the
Portuguese private economic sectors (except the
financial one) and the major findings are the
following: (1) from our empirical results, by
statistical tests, we conclude that the two adoption
decisions are taken at different stages; (2) the
relevant facilitators and inhibitors of web site and e-
commerce adoption decision found in our study for
Portuguese firms are, in general, similar to those
obtained in other IT adoption studies (Al-Qirim,
2007, Hong and Zhu, 2006, Zhu et al., 2006); (3) in
particular, our results suggest that organizational
factors like perceived benefits and access to firms IT
system contribute to both adoption decision process.
Similarly, competitive pressure, an environmental
ICE-B 2009 - International Conference on E-business
268
factor, significantly influences both adoption
decisions, meaning that competitive pressure is an
important innovation-diffusion driver in these two
stages of adoption; (4) other variables have limited
influence: technology readiness as a component of
technological factors, firm size, IT training programs
and internet and e-mails norms as organizational
factors, had a significant effect on web site adoption
decision but had no effect on e-commerce adoption.
This indicates that once a firm decides to own a web
site, these variables become less important for e-
commerce purpose. On the other hand, technology
integration has a relevant impact on e-commerce
adoption decision but is not important within the
web site adoption model, meaning that for e-
commerce adoption technologies that help improve
firm performance by reduced cycle time, improved
customer service, and lowered procurement costs are
needed (Barua et al., 2004).
In terms of policy implications, the above
findings suggest that a key factor is the improvement
of IT skills at the basic and higher levels. This can
be achieved by lowering, through different types of
policy instruments, the IT training cost, and by
promoting a closer relationship between firms,
associations and education institutions. With the cost
of infrastructure technology decreasing, the lack of
qualified IT human resources is probably one of the
major constraints for Portuguese firms’ technology
readiness improvement.
Our study also has important implications for
managers who are involved in processes of
introducing simple and complex IT innovations into
their organizations. First, managers should be aware
that technology readiness constitutes both physical
infrastructure and intangible knowledge such as IT
skills. This urges top leaders to foster managerial
skills and human resources that possess knowledge
of these new information technologies. Secondly,
our study sought to help firms become more
effective in moving from a traditional channel to the
internet by identifying the profile of early web site
and e-commerce adopters. For non-adopters, it
provides a mechanism for self-evaluation. For firms
that are already web site adopters, in the
development of strategies for e-commerce adoption,
it is fundamental to recognize that e-commerce
requires enhanced technology integration between
the existing applications and the internet platform.
The cross-sectional nature of this study does not
allow knowing how this relationship will change
over time. To solve this limitation the future
research should involve panel data.
ACKNOWLEDGEMENTS
We would like to acknowledge the National Institute
of Statistics (INE) for providing us with the data.
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