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Organisational culture and adoption of electronic commerce

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Using a qualitative approach, this study examines e-commerce adoption in the Saudi tourism industry. The research concerns organisational factors for tourism firms to consider when moving their sales online. The competing values framework was used to
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  Organisational Culture and Adoption of ElectronicCommerce A Study of the Saudi Arabian Tourism Market   Hani Brdesee, Brian Corbitt, Siddhi Pittayachawan, Wafaa Alsaggaf School of Business IT and Logistics, RMIT University, Melbourne, Vic. Australiahaniid@hotmail.com, brian.corbitt@rmit.edu.au, siddhi.pittayachawan@rmit.edu.au  Abstract- Using a qualitative approach, this study examines e-commerce adoption in the Saudi tourism industry. The researchconcerns organisational factors for tourism firms to consider whenmoving their sales online. The competing values framework wasused to classify the firms’ organisational culture. The study’sfindings suggest a relationship between the organisation’s cultureand its ability to use electronic commerce. Further, a significantfinding is that the firm with a developmental culture had thehighest level of adoption or intention to adopt online marketing (e-commerce). The conclusion from this study is not only externalfactors impact technology adoption but also the organisationalculture plays a significant role in the decision to adopt e-commerce.    Keywords- Technology Acceptance, Electronic Commerce,Orgnaisational Culture, Tourism, Saudi Arabia I.   I  NTRODUCTION  Technology is an agent of change for any organisation;from one business model to another, from a hierarchy to another,or for its business practices [1]. Over the last few decades,organisations and individuals embraced information andcommunications technology (ICT), readily adopting the newcommunication tools and the internet, and heralding theintroduction of the digital age [2]. Airlines, for example, reducethe complexity of ticketing and scheduling through the agency of the internet, where ticketing is simplified for both airline andcustomer, and benefits shared through cost-effective pricing.One key agent of change is unquestionably technology, whichwas initially adopted to automate aircraft scheduling and evolvedthrough ticketing, seating allocations to advertising [3]. Whenchange is profound, such as the airlines’ continuing adoption of ‘next generation’ technology, the effect on the organisation ismanifest as its business model continues to adapt Thus themeans by which organisations manage change requiresknowledge of the nature of the entity, especially its culture.Organisational culture effectiveness is widelyacknowledged and extensively used in research as a predictor of quality improvement [4,5]. An understanding of organisationalculture underpins quality development through new or revisedinformation systems. Therefore, this research comprises a studyof the promising religious tourism market in Saudi Arabia,identifying the culture of organisations in their transformationfrom traditional market to online markets.II.   L ITERATURE REVIEW  In technology adoption research, Hofstede’s earlynotion of a national culture was later augmented by workplace behaviour [6]. Hofstede et al. [7] list six organisation culturaldimensions which are useful in informing the   discussion:  Process vs. results orientation, Employee vs. job orientation, Parochial vs. professional, An open or closed system, Tight vs.loose control, and Pragmatic vs. normative . Reference [7] findthat organisations vary in the way their practices are perceived by their respective members. Once identified, those dimensionsdescribe shared norms and beliefs which in turn may informtechnology adoption decisions [8].However, in a well classified framework, theCompeting Values Framework, initially developed by Reference[9] to define two main organisational culture dimensions, perceives descriptive dimensions differently to Reference [7]. Itwas later extensively modified [10,11]. The first dimensionresults from the values of organisational flexibility or organisational order, whilst the second dimension varies from anexternal focus to an internal focus. The framework has four quadrants, each of which reflects a type of organisation culture(figure 1). 978-1-4673-0242-5/12/$31.00 ©2012 IEEEThe 7th International Conference onComputer Science & Education (ICCSE 2012)July 14-17, 2012. Melbourne, Australia857MoB1.5  F IGURE 1. T HE COMPETING VALUES FRAMEWORK OF ORGANISATIONALCULTURE EFFECTIVENESS  Source: Adapted from References [9,10,11] The four quadrants comprise:1.    Developmental (entrepreneurial) culture: a developmentalculture values flexibility and has an external focus2.    Rational culture: the organisation understands theenvironment and market, and achieve its goals via planningand goal setting. All decisions are driven by rational-economic criteria and it has an external focus3.    Hierarchical culture: the organisation focuses on its internalmanagement and documentation and does not consider theenvironment. There is an internal focus on the task rather than the individual doing the task.4.   Group (team) culture: the key is in maintenance of humanresources, focus on cohesive relationships and individualcommitment. This culture also has an internal focus.The competing values framework of organisationalculture effectiveness is also acknowledged and extensively usedin research to assess organisational culture as a predictor of quality improvement implementation to enhance satisfaction andadoption, among other outcomes[4,5].III.   C ONTEXT  Saudi Arabia is the home of Islam, and King Abdullahis the Custodian of the Two Holy Mosques of Makkah andMadinah. These cities are the destination for some five millionvisitors each year for the public Hajj or the personal Umrah pilgrimages. Thus western region of Saudi Arabia’s economy,after oil, is historically based on religious tourism. However,there is little research into the effects of globalisation and itstechnology transformation on the Saudi tourism industry.The Kingdom has long acknowledged the importanceof technology, establishing the Ministry of Communications andInformation Technology to regulate and promote technology for economic and social development. Of primary importance is ane-business infrastructure, establishing a support centre for the private sector. However the acceptance of e-commerce by Saudiorganisations is limited for logistical, cultural, and organisationalreasons [12,13]. It is therefore necessary to study the industryand its environment to understand the issues relating to cautionin technological adoption through the industry.   IV.   C ONTRIBUTION  Theorists identify behaviours that lead to adoption or refusal of new technology [14]. However, less research isfocused on the organisational culture to understand the attitudeof organisations toward new innovations. Reference [15], basedon institutional theory, found that technology organisations andorganisations’ stakeholders affect transformation and change.This discussion relates to an organisation’s culture, the key tosuccessful change implementation; thus gives insight into behaviours and attitudes within organisations that can affectivelyimpact technological development, particularly in a promisingSaudi tourism market.V.   R  ESEARCH M ETHODOLOGY  This research applied a qualitative method, that isinterviews of industry stakeholders, to understand the problemregarding the inability of the religious tourism industry to gainefficiencies from online sales. An interpretive form of analysiswas employed [16,17].VI.   D ATA COLLECTION &   P REPARATION  To inform the study, potential industry participantsfrom Jeddah for interview were sourced from the Ministry of Commerce and Industry’s online open access database. Jeddah isthe second largest city in Saudi Arabia and the gateway toMakkah and Madinah and the majority of licensed religioustourism agents are located in the city. The selection of the study participants was randomised from the tourism industry sectors[17]. In total, 11 firms were selected from the sub-sectors of accommodation, air travel, events and attractions, and includedfive firms offering religious travel (Hajj or Umrah or both) andfour travel agents. Using interpretive analysis, the data wereexamined for a general sense of how e-commerce is used or accepted in the firm and the factors that encourage or impedeacceptance of online sales. Evidence shows that the decision for using an information system is grounded in organisation culture[15].During the interviews, the participants were questionedregarding their workplace culture’s preparedness for change.Further, questions were directed towards identifyingorganisational attitudes and behaviours that reflect the workplaceculture in achieving organisational objectives [10,11,12] 858MoB1.5  VII.   D ISCUSSION  In the context of this study, the model at figure 1 showscultural forms as moderating factors to organisations’effectiveness, in this case, their potential to adopt e-commerce(online bookings). The following analysis aims to provide arelationship between the organisational culture and the level of online marketing acceptance; utilisation or intention to adoptonline booking may be extracted from these views. Part of thediscussion includes individual differences, that is, the participant’s attitude, and this is a study variable. Organisation One Participant P1 occupied anexecutive position in a leading family-based tourism firm, well-educated with medium experience. In the interview, P1 was notconfident that the Kingdom was using ICT appropriately.‘Compared to well known global companies such as Walt  Disney’s theme parks, our firm does not have complextechnology in our operations, . . . however, within the countrywe certainly lead the market as far as our competition isconcerned. We use smart card machines for admission to theattractions and to play games. Other companies still use coins’[P1].Further, the participant noted the lack of industrycompetition to drive innovation toward online trading, and this issupported by the evidence that only two participants adopted business to business e-commerce. P1’s approach in comparinglocal and global firms indicated that the firm displayed a rationalculture organisation [11]. As market leader, the firm had notconsidered online booking, with issues raised relating tologistics, customer demand and competition. It could therefore be concluded that, whilst rational culture organisations may beinnovative, such innovation can be through a competitiveenvironment using in this instance, smart card technology, rather than online booking. Organisation Two The second participant waseducated and experienced, an executive of a large travel agencygroup. P2 was enthusiastic about online marketing and willing toengage in online booking; however, the country’s infrastructure,the inefficiency of the Saudi ICT industry, and customer demandwere barriers to adoption. P2’s organisation had a joint focus on both the external competitive environment and internally, ontheir human resources:‘We are different, we work as friends and a teamwork spiritdominates. New employees adapt to this environment and work well with longer term staff. Every Thursday we gather together and talk about our experiences and discuss issues and the meansto address them . . . we motivate employees with annual bonuses based on sales, budgets, and targets’[P2].This example represents an internal focus, thusindicating a group (team) culture. However, P2’s firm alsoconcentrated on technology, placing as many processes as possible online. The firm developed an integrated informationmanagement system, whilst their competitors used only online booking systems without integrating these into their organisations’ management systems. Therefore, this organisationexhibited a development culture, leading to the observation thatorganisations that exhibit a development and a team culture aremore willing to adopt new innovations like online marketing. Organisation Three Participant P3 shared post-graduate qualifications and executive ranking with P1, althoughP3’s was an Umrah firm for international bookings. Whilst notaccepting online sales, the participant acknowledged theimportance of e-commerce to this part of the business. P3 saidthat the firm had tried several times to outsource the online partof the business; however, they found barriers similar to P1’sfirm. The local ICT industry did not have the capacity to deliver the complex information, decision making, purchase andfinancial confirmation. There were also structural barriers toincoming visitors; Hajj and Umrah bookings could not besatisfied online as the Saudi government required that pilgrimservices were marketed through on overseas agent. Further, therewere limited annual numbers of visas for non-Arabian Peninsula pilgrims, and P3’s firm could not provide online hotel bookingsunder this regime. Nevertheless, given the governmentrestrictions, P3 was willing to use online booking for other customers.Participant P3’s firm reflected a hierarchy culture andteam culture [11]. The hierarchy culture organisations follow policy and procedures and emphasise stability and predictability.This was precisely P3’s observations in the interview regardingorganisation values. The participant said that every employeegets a contract setting out rights and responsibilities to the firm,and encouraging behaviour that embraces best work practicesand procedures.‘We have a job description for each employee that includesworkplace polices and procedures . . . we set policy and practicesfor all parts of the organisation and these are followed . . . we arevery keen to let our employees know about their objectives, andthe incentives that they earn like the bonuses for the Hajj andUmrah seasons, and certificates of appreciation we give periodically for high performance . . . we reward senior management (in other ways) privately. It makes a lot of difference for the following season’ [P3].Through long experience, P3 stated that the firmavoided the ICT industry; once through an unfortunateexperience with a local provider, the second time with high costand significant underperformance from a reputable global provider. The ICT systems were therefore built in-house andmanaged finance, human relations, administration, customers 859MoB1.5  and suppliers, and warehouse stock, and allowed the firm toforecast sales, income and profits. The systems had ahierarchical function so that they supply information from thedata to the appropriate profit centre, and the appropriate teammember or manager at that centre. The observation is thereforethat such firms can be innovative and move their managementsystems online. Organisation Four The participant P4, an executive,had experience in other travel agencies. However, P4 found themanagement culture ‘aggressive’ towards employees and the participant was seeking to implement organisational policies and practices to improve the workplace environment. Whenrequested, P4 said there were issues in adoption of business to business commerce.‘To summarise the reasons that stopped us doing businessthrough the internet, first, Saudis are not yet ready to use e-commerce; second, Saudis do not embrace change; and third, theinvestment in such technology is very high and would takeavailable capital needed elsewhere’[P4].Further, the participant spoke of a business to businessinformation system the firm was purchasing from an Indian ICTcompany to achieve objectives including tracking customer  preferences and later offering promotions based on thatinformation. They already gained competitive advantage fromthese customisations.‘We know that service customisation takes us to a differentsector of the market. The system we are implementing will offer this facility ... also we are really keen to gain better control of thesales and payment process and this will be another advantagefrom the system. I think the system will be ready to use byOctober (2010)’ [P4].The participant also mentioned competition; thatcompetitor websites were checked regularly to compare theservices provided by P4 with other offers. This monitoring alsoextended to business strategies and the interviewee stated thatonce e-commerce was implemented and successful, they toowould go online with their sales. As this firm focussed on goalsachievement, competition, and business targets, these factorsreflect a rational culture. Therefore, P4’s views supported thefinding that organisation 1, another rational culture, had no priority for innovation such as online bookings, although theywere quite willing to market their services on the internet. Organisation Five P5 had an ICT qualification and theinterviewee was enthusiastic in promoting online tourism packages, noting three factors in online marketing.‘There were a number of reasons that motivated us to use onlineoffers. We wanted a high number of customers so that theinternet offered us exposure to the market. Another reason wasthe social structure of Saudi community, where women like tocompare destinations and offers and most of the time they arethe ones who make the decision, not their husbands. Also, as youknow, Saudi men do not like to take their wives to travelagencies, so they can easily check travel offers at home’ [P5].The participant mentioned the firm’s values such asteamwork and its workplace ethics, the firm’s business strategywas online marketing, and the discussion centred on advantagesfor both P5’s firm and for their customers. To this firm, internetmarketing represented market reach and market growth; thisindicated that the firm seeks innovation and new resources, adevelopmental culture. Therefore, firms exhibiting adevelopmental culture are more likely to adopt e-commerce anduse online sales. Organisation Six The firm used its workplace values inmarketing Hajj services to local customers, aligning the familyvalues of the pilgrims with those of the company’s employees.P6 noted how this alignment affected the business strategy,marketing, and customer services, as the majority of the firm’sstaff were contractors working for the Hajj season, so that it wasimportant that they liked the work and would return next season.Thus managers and employees worked and socialised together,and discussed issues. P6 believed this commitment and familyspirit was reflected in customer service.‘I like making a family work environment for the workers; thenthe employees are satisfied and this is reflected in the care theygive our customers. After each season we ask the pilgrims whowere customers to fill out a questionnaire. Most of the responsestalk about the family environment they feel during the Hajj. Thisevaluation leaves a good impression and encourages them torefer us to their friends and relatives’[P6].This firm was a strong example of the group (team)culture. Linking this work environment to the firm’s attitudetoward e-commerce adoption P6 was not willing to undertakethe costs involved with an online presence. P6 suggested insteadthat the government could provide a commercial portal for alltourism providers to market their services. P6’s firm wouldimmediately market their Hajj services if such a portal wasavailable. It is again clear that team culture organisations areflexible and willing to adopt online booking. Organisation Seven , Participant P7 had considerableexperience in tourism, representing a mid-sized firm, P7 reportedthat larger firms are in a better situation for a significantfinancial outlay to move to an online sales strategy. This impactsthe competing values framework, as firm size is assumed to beconsistent. However, P7 explained the firm’s strategy of goalachievement.‘We have few employees, we only work for a few events duringthe year, thus we don’t have corporate governance as we focus 860MoB1.5  on the success of each project . . . we measure our achievementson the success of the event or conference . . . and the financialreturn from each project’.The firm that P7 represented was goal-oriented and thusadopted a rational culture. That there was no online marketing by the firm was attributed several times by P7 to the high costand low quality of ICT providers, and this situation, the participant said, was unlikely to change in the near future  Organisation Eight This firm was a full provider of non-Arabian Peninsula pilgrim services. The interview with participant P8 was the shortest, as the activities of the firm wereunder the control of the Ministry of Hajj which provided thestructure and the logistics for the millions of pilgrims. The participant said that the firm was a service provider, and waslimited by the Ministry to a given number of pilgrims and directonline Hajj booking was not available to the firm. DeliveringHajj and Umrah services are highly controlled by select Makkahfamilies who hold the rights to contract with all offshore Hajj pilgrims. The family businesses were granted by King AbdulazizIbn Saud, the nation’s founder, thus the nature of theseorganisations is inherited and hierarchical, with Hajj businessallocated and retained by each family. These firms have no position except that allocated through history and thus do not seethe need for innovative practices. Organisation Nine Participant P9 was wellexperienced in religious tourism. P9 was of the opinion thatSaudi people did not understand the concept of e-commerce, and because of this, the firm would not adopt e-commerce at thatstage. Participant P9’s firm was team-based, and experienced;staff served customers and were rewarded according to theseasonal outcomes.‘We are in a tough business. It’s tough because you have todeliver optimum service to each customer in very limited time, but everyone here works together to deliver the best clientservices. If someone makes a mistake, we may work it out later, because often the team works out problems between them andthere’s no need for management intervention’ [P9].It is clear that this firm had a team culture. Becausetheir business is the Hajj and Umrah, the firm’s actions are alsogoverned by the Ministry, and there is no benefit of goingonline. Thus team culture firms are less interested in practisinge-commerce. Organisation Ten In this semi-public organisation, participant P10 was the head of e-commerce. This was the onlyorganisation with an e-commerce strategy and a separatefunction with a core responsibility for serving customers online,thus the e-commerce group was responsible for theadministrative as well as the technical functions for theorganisation’s online booking services. The executive’s currentstrategy was to realign its structure and work processes to reflecta change in ownership from the government to the private sector.‘Consulting with global tourism organisations and the Saudiindustry, the leadership is re-structuring the organisation. Sixstrategic units are being created, converting cost centres into profit centres . . . for example in the current status, the ICT unitis a cost centre, but in the new structure it will serve the other units by charging for its services’ [P10].This arrangement served to allow the ICT group tofocus on improving productivity and taking responsibility for thefunction throughout the organisation. This showed that byimproving work processes and upgrading its technology, theorganisation was focused on performance and thereforeexhibited a developmental culture. However, due to itsantecedents in the public sector, it also had a hierarchicalcultural dimension. The participant was not comfortable withthis facet of the organisation, mentioning the approval processseveral times.‘There are many reasons for such a delay in making decisions onimportant issues. One is the centralisation of the decision making process so that it takes an inordinate time to get a response.Another is that the organisation is still under publicadministration which means a lot of bureaucracy and that allfinancial issues are referred to the Ministry of Finance. Third, for important decisions you need cross-unit support and getting suchsupport from other parts of the organisation is really difficult’[P10].Again, the organisation’s leaders lacked appropriateengagement with staff. The participant was tasked with creatinga new group to improve organisational performance and spentseveral months at this work. Nearing completion, and withoutconsultation, P10 was summarily taken off this task and placedin the e-commerce position. Relating these two cultures,hierarchical and developmental to e-commerce adoption, theorganisation adopted online booking to improve sales and makethe entity more attractive to the private sector. Therefore theorganisations that exhibit a developmental culture are the mostwilling to adopt e-commerce; further, hierarchical culture firmsalso have a higher level of intention to use e-commerce. Organisation Eleven Participant P11 was similar to P4in many aspects, as their firms were both profit-oriented.However, P11’s firm did not have formal policies or proceduresfor staff and they worked under direct instruction from their supervisors. P11 stated that achievement was recorded throughthe number of files (customers) each season.‘Our work plans are not as much toward strategic developmentas a focus on sales and improving customer offers . . . weinstruct staff to tailor the offer to meet the customer’s needs, and performance is rewarded through bonuses and free trips’. 861MoB1.5
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