1214 Decision Factors for the Adoption of an Online Payment System by Customers Category Dimension Factors Literature Perceived characteristics of online payment methods Perceived risk Credit card fraud Bhatnagar et al. (2000) Lack of protection by government policy and legal regulation Biukovic (2002) *RQ]iOH] Strauss et al. (2002) Exposure to personal information Luo (2002) Wang et al. (1998) Concern of system security Hwang et al. (2003) Pavlou (2003) Perceived EHQH¿WV Perceived usefulness (PU) Davis (1989) Perceived easiness of use (PEOU) Davis (1989) (I¿FLHQF\ Chou et al. (2004) Daft et al. (1986) Convenience Yu et al. (2002) )LQDQFLDOEHQH¿WV Chen et al. (2003) Lucas et al. (2002) Wilson et al. (2002) Vendor’s system characteristics Product or service features Multiple functions of product or service Debruyne et al. (2002) Web site features Web site satisfaction Lee et al. (2005) Liang et al. (2002) Ranganathan et al. (2002) Customer’s characteristics Client-side technology Reliability Hill (2003) Effectiveness Security Demographic variables Gender Banerjee et al. (2005) Garbarino et al. (2004) Age Gilly et al. (1985) Pommer et al. (1980) Education Akhter (2003) Income Internet experience Computer knowledge Slyke (2002) Online shopping Eastin (2002) Online stock trading Online auctions Online vending APPENDIX I. Summary of Online System Adoption Factors Addressed in Related Literature 1215 Decision Factors for the Adoption of an Online Payment System by Customers Please rank the statements below from (1) Strongly Disagree to (5) Strongly Agree Strongly Disagree Agree Strongly Agree Customers’ Use Intention Q1: I would like to use an online payment system to pay my bills. 12345 Perceived Risk Q2: The risk of credit card fraud for online transactions and Payments is low for me. 12345 Q3: I would feel free to submit my personal information online to creditors (vendors) so that they can better serve my online-transaction needs. 12345 Q4: Existing government policies are VXI¿FLHQWWRNHHSRQOLQHWUDQVDFWLRQVDQG payments safe and secure. 12345 Q5: Existing legal regulations for online transactions and payments can effectively protect my information privacy. 12345 4,KDYHFRQ¿GHQFHLQWKHVHFXULW\RI the existing online transaction network. 12345 3HUFHLYHG%HQH¿WV Q7: Learning to use the online payment system is easy. 12345 Q8: The online payment system enables me to pay my bills faster. 12345 Q9: I would prefer to pay bills online if I can get a discount and/or bonus from creditors and vendors. 12345 Q10: I would prefer to pay bills online if I have many credit accounts to pay off, because it can save postage costs. 12345 APPENDIX II. Questionnaire for Pay-Bills-Online Experience 1216 Decision Factors for the Adoption of an Online Payment System by Customers Q11: I would prefer to pay bills online if I have many credit accounts to pay off, because it can help me better meet the payment deadline and avoid the late penalty. 12345 Q12: I would prefer to pay bills online as I can HDVLO\¿QGDFFHVVWRFRPSXWHUVDQGWKH,QWHUQHW 12345 Vendors’ Service Features Q13: I would prefer to pay bills online if my payments can be scheduled for automatic deductions at regular intervals each month. 12345 Q14: I would prefer to pay bills online if I have control over how much I want to pay and when I want to pay. 12345 Vendors’ Web site features Q15: It’s easy to interact with the Web site of the online payment system. 12345 Q16: The Web site design of the online payment system looks attractive to me. 12345 Client-Side Technology Q17: Having famous-brand anti-virus and ¿UHZDOOVRIWZDUHLQVWDOOHGRQP\FRPSXWHUV would make me more willing to pay bills online. 12345 Q18: A higher speed (transmission rate) for my Internet access would make me more willing to pay bills online. 12345 Q19: The newest version of my operating system should be more secure for online payments and less vulnerable to online thefts. 12345 Q20: Having non-Microsoft-Windows operating system installed on my computer(s) would make me more willing to pay bills online. 12345 APPENDIX II. continued 1217 Decision Factors for the Adoption of an Online Payment System by Customers Q21: I would be more likely to pay bills online with DSL-type Internet service being available at my home or RI¿FHWKDQZLWKRXW 12 3 45 Customers’ Characteristics Q22: I would be more likely to pay bills online after my family income grows. 12 3 45 Q23: What is your gender? Female Male Q24: What is your age? <20 20-29 30-39 40-49 50-59 >60 Q25: What is your education background? High school or below Associate Bachelor’s Master’s Doctoral Customers’ Internet Experience Q26: How many years of computer experience do you have? 1 or less 2-4 5-7 8-10 >10 Q27: How many times per month do you do online shopping? Never 1-5 times 6-10 times 11-15 times >15 times Q28: How many times per month do you do online security trading? Never 1-5 times 6-10 times 11-15 times >15 times Q29: How many times per month do you participate in online auctions (bidding)? Never 1-5 times 6-10 times 11-15 times >15 times Q30: How many times per month do you do e-business (online vending)? Never 1-5 times 6-10 times 11-15 times >15 times APPENDIX II. continued 1218 Decision Factors for the Adoption of an Online Payment System by Customers APPENDIX III. APPENDIX IV. Frequency Distributions of Respondents’ Perceived Risk to Pay Bills Online 0123456 Q1 0 10 20 30 40 50 60 Frequency Mean = 3.8 Std. Dev. = 1.276 N = 148 Frequency Distributions of Respondents’ Intention to Pay Bills Online 0123456 Q2 0 10 20 30 40 50 60 Frequency Mean = 2.99 Std. Dev. = 0.993 N = 148 1219 Decision Factors for the Adoption of an Online Payment System by Customers APPENDIX V. Factor Analysis of Measurement Items: Loadings from Rotated Component Matrix Scale Items Loadings UI I would like to use an online payment system to pay my bills. .572 PR1 The risk of credit card fraud for online transactions and payments is low for me. .641 PR2 I would feel free to submit my personal information online to creditors (vendors) so that they can better serve my needs for online transactions. .531 PR3 ([LVWLQJJRYHUQPHQWSROLFLHVDUHDOUHDG\VXI¿FLHQWWRNHHSRQOLQH transactions and payments safe and secure. .819 PR4 Existing legal regulations for online transactions and payments can effectively protect my privacy of personal information. .895 PR5 ,KDYHFRQ¿GHQFHLQWKHVHFXULW\RIWKHH[LVWLQJRQOLQHWUDQVDFWLRQ network. .586 PB1 Learning to use the online payment system is easy. .665 PB2 The online payment system enables me to pay my bills faster. .733 PB3 I would prefer pay bills online if I can get a discount and/or bonus from creditors and vendors. .719 PB4 I would prefer to pay bills online if I have many credit accounts to pay off, because it can save postage costs. .742 PB5 I would prefer to pay bills online if I have many credit accounts to pay off, because it can help me better meet the payment deadline and avoid the late penalty. .782 PB6 ,ZRXOGSUHIHUWRSD\ELOOVRQOLQHLI,FDQHDVLO\¿QGDFFHVVWRFRPSXWHUV and the Internet. .556 VSF1 I would prefer to pay bills online if my payments can be scheduled for automatic deductions at regular intervals each month. .555 VSF2 I would prefer to pay bills online if I have control over how much I want to pay and when I want to pay. .665 VWF1 It’s easy to interact with the Web site of the online payment system. .773 VWF2 The Web site design attracts me to use the online payment system. .753 CST1 +DYLQJIDPRXVEUDQGDQWLYLUXVDQG¿UHZDOOVRIWZDUHLQVWDOOHGRQP\ computer(s) would make me more willing to pay bills online. .800 CST2 Having non-Microsoft-Windows operating system installed on my computer(s) would make me more willing to pay bills online. .809 CST3 The newest version of my operating system should be more secure for online payments and less vulnerable to online thefts. .935 CST4 A higher speed (transmission rate) for my Internet access would make me more willing to pay bills online. .545 CST5 I would be more likely to pay bills online with DSL-type fast Internet VHUYLFHEHLQJDYDLODEOHDWP\KRPHRURI¿FHWKDQZLWKRXW .613 IP I would be more likely to pay bills online after my family income grows. .778 1220 Decision Factors for the Adoption of an Online Payment System by Customers APPENDIX VI. Factor Analysis of Measurement Items: Component Correlation Matrix by Items Item 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 UI 1 PR1 .69 1 PR2 .66 .52 1 PR3 .81 2 .25 1 PR4 .71 .32 .36 .65 1 PR5 .55 1 .10 .12 .07 1 PB1 .33 .70 .28 .12 .04 1 1 PB2 .33 .74 .23 .12 .10 .24 .37 1 PB3 .44 .72 .35 .11 .12 .08 .20 .16 1 PB4 .51 .84 .43 .09 .12 .09 .29 .40 .46 1 PB5 .47 .81 .34 .14 .19 .09 .23 .51 .45 .39 1 PB6 .60 .42 .69 .12 .15 .08 .27 .40 .47 .34 .42 1 VSF1 .39 3 .39 .59 .10 .20 0 .24 .19 .38 .30 .41 1 VSF2 .45 3 .26 .68 .14 .17 .17 .12 .55 .49 .51 .48 .26 1 VWF1 .48 2 .41 .10 .07 .76 .60 .37 .28 .29 .23 .41 .11 .26 1 VWF2 .28 1 .16 .12 2 .69 .28 .18 .25 .22 .14 .41 .08 .17 .53 1 CST1 1 .14 0 .05 1 .18 1 .03 1 .66 1 1 .22 1 1 1 1 CST2 2 .15 1 .04 1 .12 0 1 2 .79 2 .05 .23 2 2 1 .55 1 CST3 .06 1 1 .01 .05 .04 .10 .12 .01 .06 .06 .18 .56 1 .14 .19 1 .11 1 CST4 .15 .09 .02 .20 .04 .20 .23 .18 1 .18 .03 .21 .91 .19 .17 .32 .10 .23 .08 1 CST5 .35 .05 .11 1 1 .13 .22 .39 .24 .68 .42 .37 .12 .26 .17 .28 1 .51 1 .29 1 IP .05 2 1 .01 .13 .29 1 1 .12 1 .33 1 1 .06 3 .37 .04 .11 .07 .01 .30 1 1221 Decision Factors for the Adoption of an Online Payment System by Customers APPENDIX VII. Factor Analysis of Measurement Items: Component Correlation Matrix by Scales Scale 1234567 UI 1.000 PR .730 (.000) 1.000 PB .682 (.000) .447 (.000) 1.000 VSF .596 (.000) .371 (.003) .543 (.000) 1.000 VWF .510 (.000) .141 (.087) .476 (.000) .203 (.013) 1.000 CST 111 (.177) .253 (.062) .249 (.002) .191 (.019) .189 (.021) 1.000 IP .101 (.545) .020 (.812) 108 (.189) 035 (.671) .194 (.018) .151 (.066) 1.000 Note: In parentheses are p-values (two-tailed). This work was previously published in the International Journal of E-Business Research, edited by I. Lee, Volume 3, Issue 4, pp. 1-32, copyright 2007 by IGI Publishing (an imprint of IGI Global). 1222 Copyright © 2009, IGI Global, distributing in print or electronic forms without written permission of IGI Global is prohibited. Chapter 4.15 Fotogenika.com: A Small Virtual Organization Serving the Mexican Market Esperanza Huerta Instituto Tecnológico Autónoma de México, Mexico EXECUTIVE SUMMARY Fotogenika is a small e-business that was born out of the idea of two young Mexican entrepreneurs. It started its operations in March 2004, and after a few months, it managed to successfully create a small customer base. Fotogenika.com is the com- mercial name of a company established in New York City that delivers digital pictures in Mexico. The company serves Mexicans living out of their country who want to keep in touch with their families in Mexico. Owned by Mexicans living in the U.S., Fotogenika understands the strong ties among Mexican families and their need to keep in touch with their family. Fotogenika shows how culture is important to serve customers in $PHULFDDQGKRZWRIRFXVRQDSUR¿WDEOHPDUNHW niche. Also, this case presents the technology and marketing challenges that small startup e-busi- nesses face, as well. Finally, Fotogenika’s busi- ness proposition demonstrates the advantages of displacing a product digitally to where it will be produced and delivered at a low cost. ORGANIZATION BACKGROUND Gabriela Perezcano, co-founder of Fotogenika. FRPZDVTXLWHVDWLV¿HGZLWKZKDWKHUFRPSDQ\ had accomplished. In June 2004, just a few months after starting operations, Fotogenika had success- fully created a small customer base. A virtual organization, where most of its processes were outsourced, Fotogenika printed and delivered digital pictures in Mexico from orders based in the U.S. After proving that Fotogenika’s business proposition was successful, Perezcano was ready to expand her business. Perezcano was born in Mexico City and mi- grated to the U.S. because her husband had a job there. Having a strong business background and DQHQWUHSUHQHXUPHQWDOLW\VKHGHWHFWHGDSUR¿W- able business niche. As a Mexican living in a foreign country, she understood the need to keep in touch with her family. Family ties are strong among Mexicans. Mexicans living in the U.S. are concerned about the welfare of their families in Mexico. This concern leads Mexicans to continu- 1223 Fotogenika.com ously send money to their families. In fact, in 2003 Mexicans in the U.S. sent $13,266 million to their homes (Ingresos por Remesas Familiares, 2004). That same year, the money Mexico obtained from their citizens living in the U.S. was second only to the money Mexico obtained from oil (Ingresos por Remesas Familiares, 2004). People keep in touch with their loved ones by different means. Phone calls, e-mails, and other communication media are commonly used. How- ever, people like to share their experiences through pictures, as well. At present, two photography technologies exist: analogue and digital. The capability of storing digital pictures in electronic devices has not diminished people’s need to have their pictures printed. In fact, important dealers in the photography industry, like Kodak, have increased their investment in printing digital photography (Barret & Carr, 2004). Aware of the growing number of Mexicans l i v i n g i n t h e U. S . w i t h i n c r e a s i n g l y h i g h e r i n c o m e levels, Perezcano decided to deal with that mar- ket (See Appendix 1 for statistics on Mexicans living in the U.S.). Customers in the U.S. would place their orders, and the company would print and deliver their digital pictures to Mexico. Fotogenika’s service was simple and straightfor- ward. Customers uploaded their pictures to their personal album on Fotogenika’s Web page. They ordered the pictures that were later printed and delivered to Mexico. In order to provide a value-added service for customers with slow Internet connections, cus- tomers were able to burn their pictures onto a CD DQGVHQGLWWR)RWRJHQLND¶VRI¿FHE\PDLO)RWR- genika would upload the pictures at no cost and return the CD to the customers. Also, customers without digital pictures could send the pictures to Fotogenika. Fotogenika would scan and upload the pictures for a fee. Then, Fotogenika would return the pictures to the customers. With the clear concept of concentrating on core activities in mind, Perezcano decided to establish Fotogenika as a virtual organization, outsourcing most of its business processes. The term virtual organization KDV EHHQ XVHG WR GH¿QHGLIIHUHQW concepts, all of them involving the distribution of work across geographical or organizational boundaries (Ariss, Nykodym, & Cole-Laramore, 2002; DeSanctis, Staudenmayer, & Wong, 1999). First, an organization is considered virtual when it employs telecommuters (Ariss et al., 2002; De- Sanctis et al., 1999; Markus, Manville, & Agres, 2000). Second, an organization is considered virtual when it involves several companies to perform a task (Lawton & Michaels, 2001). Third, an organization is considered virtual when most of its processes are outsourced, keeping in-house only the core activities (Ariss et al., 2002; Lawton 0LFKDHOV7KHODWWHUGH¿QLWLRQDSSOLHV to Fotogenika. However, the term virtual organization is better understood as a continuum in a range of different types of relationships rather than a pure organizational form (DeSanctis et al., 1999). De- Sanctis et al. (1999) identify four dimensions that G H¿ QH G LI IH U H Q W W \ S HV RI UH OD WL RQ VK L S V VS DF H W L PH culture, and boundaries. Virtual organization companies, compared to traditional companies, are more likely to establish distributed, asynchro- nous, multicultural, and external relationships. As a continuum, companies can have different degrees of virtuality. Fotogenika heavily relied on the pure virtual organization spectrum. In the space dimension, traditional organizations are colocated, whereas virtual organizations are distributed (DeSanctis et DO)RWRJHQLNDV¶RI¿FHZDVORFDWHGLQWKH U.S., whereas production facilities were located in Mexico. In the time dimension, traditional organiza- tions operate synchronously as opposed to virtual organizations that operate asynchronously (De- Sanctis et al., 1999). Fotogenika’s portal processed customer orders in 24 hours. As soon as an order was placed, it was sent to the Mexican lab for . transactions. .531 PR3 ([LVWLQJJRYHUQPHQWSROLFLHVDUHDOUHDGVXI¿FLHQWWRNHHSRQOLQH transactions and payments safe and secure. .819 PR4 Existing legal regulations for online transactions and payments can effectively protect my privacy of. her business. Perezcano was born in Mexico City and mi- grated to the U.S. because her husband had a job there. Having a strong business background and DQHQWUHSUHQHXUPHQWDOLWVKHGHWHFWHGDSUR¿W- able. Customers in the U.S. would place their orders, and the company would print and deliver their digital pictures to Mexico. Fotogenika’s service was simple and straightfor- ward. Customers uploaded