Factors Affecting the Acceptance & Adoption of M-Commerce in Pakistan

Running Head: FACTORSAFFECTING THEACCEPTANCEAND ADOPTION OF M -COMMERCEIN PAKISTAN

FACTORS AFFECTING THE ACCEPTANCE AND ADOPTION OF M -COMMERCE IN PAKISTAN 2
Table of Contents
Abstract 3
Chapter 1 Introduction 4
1.1 Background of research
1.2 Significance of study
1.3 Purpose of study
1.4 Research objectives
1.5 Research questions
1.6 Conceptual framework
4
5
5
6
6
7
Chapter 2 Literature Review 8
2.1 M-Commerce Services
2.2 Factors influencing behavioral intention to adopt M-Commerce
8
10
Chapter 3 Methodology 18
3.1 Sampling unit
3.2 Sampling frame
3.3 Sampling method and type
3.4 Type of respondents
3.5 Research Design
3.6 Questionnaire Design
3.7 Development of Survey Instrument
18
18
19
19
20
20
21
Chapter 4 Analysis 22
4.1 Measurement Model – Confirmatory Factor Analysis
4.2 Structural Model – Path Analysis
22
24
Chapter 5 Discussion 26
5.1 Interpretation of findings
5.2 Limitations
5.3 Guidelines for future research
26
27
28
Appendix I References 29
Appendix II Questionnaire 33
Appendix III Outputs 38
Appendix IV Graphs

Abstract
This paper describes the current situation of mobile commerce in Pakistan and the direction in
which it is developing. To do so, the study looks first at the growth of mobile market in the world
and gives some examples about this. This research also gives some examples of the mobile
commerce services that are available and used in Pakistan. In addition to the use of mobile services,
it describes in separate sections the factors that helped to develop mobile commerce in Pakistan.
Chapter 3 of this study explains the methodology which is used to collect the data, whereas chapter
4 analyzes the data and states the findings. The methodology incorporated is questionnaires
through surveying. A sample size of 240 respondents helped determine the statistical results for
the surveys distributed. Chapter 5 will discuss the findings and will state some of the key success
factors of developing mobile commerce in Pakistan. Finally by analyzing and discussing the data
collected, the study concludes by giving some recommendations for the future research in
relevance to the topic.

Chapter 1: Introduction
1.1 Background of Research
With the explosion and development of the wireless networks and technology such as 3G and 4G
and their licenses releasing all over Pakistan, the amount of intelligent users along with their mobile -
integrated usage of applications such as mobile navigation, mobile payment and mobile gaming would
subsequently increase. A scenario such as this deduces that mobile commerce (or simply “m-commerce”)
is rapidly entering into a developmental phase globally. Therefore, m-commerce can be simply explained
as a new electronic marketing concept which constitutes the usage of wireless handheld devices including
mobile phones and personal digital assistance (PDAs), to connect to the internet for the purpose of
communicating or conducting business without the existence of any locational hindrances. M-commerce
can be termed as a natural extension of electronic commerce (e-commerce) which allows the users to
perform an interaction with other users or firms in a wireless mode conveniently anywhere/anytime.
Mobile commerce is a relatively new concept in the Pakistani market hence the general population
hasn't drawn the much required attention towards it. Thus, the understanding of how mobile users accept
mobile services is crucial to understand some basic characteristic of acceptance behaviour of m-commerce
and discuss the major influencing factors aiding the popularization of m-commerce in a developing country
like Pakistan. It can be easily stated that m-commerce is thought to be the next major shift in technology
involvement post-ecommerce era. M-commerce is 34% of e-commerce transactions in the world where as
by the end of 2015, it is forecasted that mobile share can reach around 40% globally (State of Mobile
Commerce, 2015).
In Pakistan, there is a surprisingly rising number in the adoption and usage of wireless technology
for m-commerce as more consumers now own a mobile phone relative to having a personal computer at
home. Pakistan is competing at a strong position currently with different nations like India, Bangladesh and
Philippines as a global capital of telecommunication. Being one of the world’s fastest growing mobile
markets in terms of subscriber base and telecommunication sector development, it still lacks advanced
mobile applications compared to Europe, North America, Japan, Taiwan and South Korea. However, a
number of cellular players and developers backed by incubation centers are rapidly launching sophisticated
mobile applications in the present time. Unique institutions and the nature of cellular market conditions of
Pakistan however superimpose in a complex interaction that harbors an inconsistent nature. The Pakistani
m-commerce market is therefore drastically different from the Western world.

1.2 Significance of the study
This study aimed to provide a better comprehension about what aspects will lead to the eventual
acceptance and adoption of m-commerce in Pakistan. An increasingly rapid growth is experienced in terms
of capabilities of mobile devices, applications, services, standards as well as network implementation
(Sugianto et al., 2007). The rapid development in mobile technology and the construction of m-commerce
models are reflected relatively low in the M-commerce adoption and acceptance ratesinPakistan. Although
an immense potential for business startups and growth in m-commerce persists in Pakistan, in comparison
to developed countries like Japan, South Korea and USA, Pakistan still resides in its infancy stage. Hence,
such a research becomes significant for local firms and marketers to acknowledge diversifying their range
of operations in the particular category of m-commerce and extending their benefits by adopting it. M-
commerce has also become a major topic of interest for the IS research community and a key priority for
many business organizations (Ropers, 2001). Scholars and industry representatives are diverting their
attention towards electronic wireless media, envisaging that the next - or the real phase of e-commerce
growth will be in the area of mobile commerce (Bertrand et al., 2001).
This research gives firsthand information on how factors such as perceived usefulness, ease of use,
trust/privacy and perceived cost from the technology acceptance model lead to a change of attitude and an
eventual acceptance and adoption of m-commerce. Moreover the theoretical framework used in this
research is different from the previous ones and has been taken from diverse sources and discusses all those
variables collectively that play an important role in understanding the factors leading to m-commerce
acceptance and adoption. The gap that this research is trying to fulfill is that it is studying an infant concept
of m-commerce that is gradually gaining popularity all over the country and hence is the first time being
written in the context of Pakistan-specific studies.
1.3 Purpose of study
Taking domestic and business consumers as the major research objects, the paper makes an
insightful study of their adoption of m-commerce based on the relative literature reading and detailed
analysis. Aconceptual model is constructedthrough the integration of technology acceptance model(TAM)
with the theory of reasoned action (TRA), and discussion of the influencing factors and willingness to
accept m-commerce is carried out, finally providing a thorough analysis of the interrelationship among
these particular factors. Using the aid of an electronic survey, the research additionally aimed to provide an
initiating analysis of user satisfaction and the forms of limitations normally faced in the adoption of m-

commerce. Coming to the overall goal of the study, it is the development of a research plan allowing itself
to be used as a blueprint for m-commerce to progress in the future because of the absence of any studies in
the precise field of modern business in Pakistan.
1.4 Research objectives
The main research objectives for this paper comprise of the following:
 to identify user beliefs concerning the effects of discovery and usage of m-commerce services
 to determine the effects of information privacy and cost sensitivity on a customer’s willingness to
participate in m-commerce, and
 to identify a model for use in determining user’s acceptance and willingness to use m-commerce.
1.5 Research questions
This study aimed to answer the following research questions:
1. What is the relationship of the level of perceived usefulness with the attitudes towards using M-
Commerce technology?
2. What is the relationship of the level of perceived ease of use with the attitudes towards using M-
Commerce technology?
3. What is the relationship of the level of perceived trust and privacy in using M-Commerce with the
attitudes towards using M-Commerce?
4. What is the relationship of the perceived price incurred in using M-Commerce with the attitudes
towards using M-Commerce?
5. How would development in the M-Commerce sector aid in its adoption and acceptance in Pakistan?

1.6 Conceptual Framework
The conceptual framework for this study composes of five independent variables (left) and
two dependent variables (right) as illustrated in figure 1.6 below:
Figure 1.6: A conceptual framework for the research

Chapter 2: Literature Review
Mennecke & Strader (2003) have stated, "In this new decade, marketing is poised to witness an
unprecedented explosion of mobility, creating a new domain of mobile commerce". They continue to add,
"The proliferation of mobile Internet devices is creating an unparalleled opportunity for mobile commerce."
The buying and selling of goods and services aided through wireless handheld devices such as mobiles and
personal data assistants has emerged as one of the most common definitions of m-commerce.
M-commerce can be termed as a natural extension or a subset of electronic commerce (e-
commerce) (Jwelassi & Enders, 2005). Figure 2 illustrates this concept in a diagram form below:
2.1 M-Commerce Services
One way to categorize mobile commerce services can be according to their respective end-user
types (namely consumers and businesses) or the targeted market segment which can comprise of B2C,B2B
or C2C markets. (Panis et al., 2001) has stated: “The majority of existing mobile commerce services deal
with an exchange of product, service or information between B2C”. These applications of m-commerce

comprise of mobile financial services and transactions, personalized and location-specific mobile
advertising and mobile interactive games.
Mobile commerce also allows business-to-business (B2B) commerce to achieve greater efficiency.
Anthony (2006) states “instead of conducting face-to-face meetings or videoconferences, employees can
receive valuable information from their managers through calls or text messages to their cell phones.” He
adds on an example to detail this, “through the use of notification and monitoring applications, shop floor
workers can receive notifications if production specifications have changed, as well as respond when they
have made the necessary changes.” Other B2B services offered can potentially include mobile inventory
management and wireless business re-engineering.
In reference to the services available to consumers to carry C2C transactions, Lori (2010) states
“Mobile devices offer a unique opportunity to conduct C2C m-commerce tasks. Many individuals are
conducting C2C m-commerce activities as a means to acquire products at a more reasonable price, to
acquire products that are considered scarce, or to sell items as another source of income, to name a few.”
Therefore the Mobile Commerce services can be categorized into four main categories to provide a
more explicit explanation as done by Islam et al., (2010):
1. Entertainment: Music, videos, games, graphics and TV streaming services.
2. Communication: Short messaging service (SMS), unified messaging, electronic mail, online chat
rooms and video conferencing.
3. Transaction: Banking, broking, shopping, auctions, betting, booking and reservations, mobile wallet,
voting, and competition/contests.
4. Information: News,city guide, directory services,navigation and maps, traffic and weather, corporate
information, market data and mobile advertising.

2.2 Factors influencing the behavioral intention to adopt M-Commerce
1) Adoption ofM-Commerce
Looking from a theoretical perspective, the Technology Acceptance Modelor TAM has been the
most commonly used base for studying the adoption of m-commerce, trailed by the Theory of Reasoned
Action (TRA) (Fishbein & Ajzen, 1975) as well as the Theory of Planned Behavior (TPB) (Ajzen, 1991).
External variables such as perceived usefulness and perceived ease of use determine the user’s attitude
towards the usage of a technology which directly affects its behavioural intention to use and eventually
leads to the actual usage stage or the adoption stage. An example can be acquired from a study by Lu, Yu,
Liu, and Yao (2003) on wireless Internet adoption for which they have constructed and incorporated a
TAM-based conceptual framework. However,this is not relatively astonishing since this theory has been
repetitively implemented for studying wired Internet adoption. An illustration of the Technology
Acceptance Modelis provided below in Figure 2.2:
Figure 2.2: The Technology Acceptance Model (or TAM)
Similarly, the model constructed by Carlsson et al (2006) is also based on the technology acceptance
model and their results disclose that the significant factors for consumers’ attitude and behavior intention
about mobile commerce service comprise of perceived usefulness, perceived interest, and perceived price.
In an identical study, Thong et al (2006) have detailed on how the factors such as perceived ease-of-use,
perceived usefulness, user satisfaction, perceived entertainment and user experience gap have convinced

users to adopt mobile services incessantly, which is supported by the users’ behaviors and activities on
mobile networks. Most of the empirical studies have comprehended factors such as perceived ease-of-use,
perceived usefulness and perceived cost having a substantial effect on users’ inclination to make use of
mobile services continuously, and also have an indirect effect on their continuous usage through the
satisfied mediation.
H1: The attitude towards using M-Commerce technology has an influential effect on the intention
to adopt M-Commerce technology.
2) Perceived Usefulness
Recent m-commerce adoption model studies have revealed that Perceived Usefulness is a prominent
factor which is widely used in explaining consumer behaviour (Hong et al., 2008). Perceived Usefulness
can be defined as “the degree to which a person believes that using a particular system would enhance his
or her productivity” (Davis, 1989). TAM used the common TRA model (Fishbein & Ajzen, 1975) to the
particular domain of user acceptance of computer technology, substituting the TRA’s attitudinal
determinants with two particular behavioral beliefs: perceived usefulness and perceived ease of use in a
technology acceptance measure.
A Malaysian-specific research conducted by Poo Vern Huei (2004) in reference to users’ acceptance
of wireless computing devices revealed that perceived usefulness has shown an important positive
relationship in relation to the adoption of the wireless computing devices. The same factor was also made
use of by researchers Bax and McGill (2002) in their study on Web Applications on Mobile Computing,
where perceived usefulnesswasused asan independent variable. These results proposed thatthe individua ls
who perceived the wireless computing devices were usefultended to adopt the wireless computing devices.
Extensive research is available in the Information Systems and M-commerce that completely supports
and provides proof of the major effect of perceived usefulness on usage or adoption intention (Davis et al,
1989; Kim & Garrison, 2009; Khalifa & Shen, 2008). In recent times, a great number of empirical studies
have revealed that perceived usefulness is the key predictor of M-commerce adoption and it captures the
perceived benefits associated with using mobile commerce (Wei et al., 2009; Khalifa & Shen, 2008; Kim
& Garrison, 2009). This construct precisely assesses the extrinsic characteristics of mobile commerce as
well as exposes how the usage of mobile commerce can aid the users to attain task-related goals like
effectiveness and efficiency (Wei et al., 2008).

It has been deemed essential that the user believes that mobile commerce is of a great use to them,
ultimately influencing them to adopt mobile services and repeat their usage. Prior to the user performing a
specific behavior, he/she would prefer to search, analyze and study some information on the basis of his
demand levels, post series of psychological evaluations or SWOT analysis, user will have behavioral
intention while he considers a particular tool or system is useful and has high performance price ratio.
Therefore,customer needs and customer experiences or other useful factors analyzed from information can
significantly influence the usage behavior of mobile commerce. As a result, it is a perceived notion that an
individual believing M-commerce to be useful and convenient will generate positive attitudes towards using
M-commerce services.
H2: Perceived usefulness positively affects the intention ofusers to adopt mobile commerce.
3) Perceived Ease-of-use
Perceived ease of use for a system is defined as the specific degree to which a person holds beliefs
regarding a particular technology that its usage will be free of any mental effort according to Davis (1989).
It has been specifically incorporated as a vital factor in the adoption of mobile commerce (Davis, 1989; Li
et al., 2007; Wei et al., 2009; Bhatti, 2007). A large number of empirical studies have tested ease of use as
a predominant determinant of intention to use m-commerce (Agarwaland Karahanna,2000). Several prior
empirical studies have presented a positive influence of perceived ease of use on users in the adoption of
m-commerce technologies. (Wei et al., 2008; Khalifa & Shen, 2008; Kim & Garrison, 2009) Therefore,it
can be said that the perceived ease of use reflects the perceived efforts in the usage of mobile commerce by
a user (Khalifa & Shen, 2008).
Some authors have found this construct exerting a mediation effect. Significantly, it is one of the major
behavioral beliefs influencing userintention to technology acceptance in both original and the revised TAM
models. Furthermore, it can be obviously said that any individual holding the perception that M-commerce
technology is easy to use is very likely to have positive attitudes towards using M-commerce and therefore,
it has been constituted in this study to determine its impact on the mobile commerce intent of the user as
well. Finally leading to the conclusion of second hypothesis that:
H3: Perceived ease ofuse has a positive effect on the intention to use mobile commerce.

4) Perceived Trust & Privacy
Rousseauet.al. (1998) provides the definition of trust as“a psychological state comprising the intention
to accept vulnerability based upon positive expectations of the intentions or behavior of another”. Wei et
al., (2009) specifically notes that trust in m-commerce particularly refers to ‘the degree to which an
individual perceives that usage of m-commerce is secure and comprises of no privacy threats’. Perceived
Trust is a significant construct which is greatly affecting consumer behavior and also aids in the
determination of the success of M-commerce (Wei et al., 2009). Several existing technology adoption
studies and models prove perceived trust to be an important predictor to explain the adoption of M-
commerce (Wei et al., 2009; Cho et al., 2007). Consumers can overcome any uncertainty and risk
perceptions with the presence of trust factor involved (McKnight 2002) and its presence can also support
in building appropriate favorable positive anticipations of performance along with other preferred benefits
(Gefen, 2000). Moreover, for trust to exist, “consumers need to essentially believe that the sellers have the
ability and motivation to reliably deliver goods and services according to the quality expected by the
consumers” (Jarvenpaa, 2000).
Prior empirical studies revealed trust to be a significant component to enhance customer satisfaction,
which subsequently strengthens consumer loyalty towards m-commerce (Lu et al., 2008; Siau & Shen,
2003). Because of the fact that m-commerce still currently lies in its infancy stage and numerous payment
systems, regulating policies, technical protocols and transaction standards need a standardization check,
trust evolves as a major significant factor for user acceptance,and earning that trust is crucial to attain
accomplishments in the m-commerce arena (Min, Ji, & Qu, 2008). Therefore, the incorporation of a trust
component into m-commerce studies (Lin, Lu, Wang, & Wei, 2011) is realized, specifically in the context
of m-commerce service providers. Furthermore, this component should also be integrated in concepts such
as perceived ease of use and perceived usefulness (Min et al., 2008). Additionally, provided that security
and privacy considerations are major hindrances to internet use/commerce,consumers will certainly prefer
not communicate and share any personal data in the absence of the trust component (Hoffman, Novak, &
Peralta, 1999). Hence, the research moreover emphasises that perceived trust influences the intention to
adopt mobile commerce through directly affecting behavioural intentions.

This study aims to identify consumers’ perceived trust of M-Commerce technology in general as well
as the consumers’ perception that their personal information will be kept private while using mobile
technology. Similar to how online consumers provide credit card or other personal information to online
websites, consumers utilizing M-Commerce channels will also be exposed to possible fraudulent or
unethical use or distribution of personal information. Because of this, it is hypothesized that an individual
who trusts using M-Commerce technology will have more increasingly positive attitudes towards using M-
Commerce. Therefore, Hypothesis 3 proposes that:
H4: The level ofperceived trust and privacy in using M-Commerce has a positive relationship with
attitudes towards using M-Commerce.
5) Perceived Cost
This study has incorporated the perceived cost construct and defined it as the degree to which an
individual believes that usage of m-commerce is costly. Perceived Cost is an important consideration in the
installation and distribution of M-commerce. Unlike others factors,the perceived cost is also a significant
factor in decision making for users regarding the use of m-commerce (Hong et al., 2008). Wei et al., 2009
pointed out that cost factor is one of the elements that could potentially hold back the growth of M-
commerce. Additionally, he also noted that cost factor can comprise of preliminary purchase cost (for
example, hand setfee),ongoing usage cost(for example, subscription fee),service feesand communication
fees,and maintenance cost or upgrade cost. Various prior empirical studies have established that cost was
not a consideration or proven by researchers in the explanation of M-commerce adoption (Liu and Wei
2003 and Turel et.al., 2007). Despite that, Li et al (2007) deduced cost as a significant forecaster of m-
commerce adoption. A study conducted by Kristina (2002) on the acceptance of mobile service shares
revealed that pricing issues appeared as one of the most substantial factors limiting the usage of mobile
services.
Y. Wind (1977) notes that perceived price is known to signify the internalisation or encoding of a
product or service’sobjective selling price. The transition from wired e-commerce to wireless m-commerce
incurs furthercosts,comprising of access-,equipment- along with transaction-related costs (Constantinides,
2002), which altogether reveals that mobile commerce is generally a costlier solution than the wired

possibility. Furthermore, a demonstration has been made that financial and hardware/software resources
are vital for users in reference to information systems (Wu & Wang, 2005). Sathye (1999) lays great
emphasis on the essentiality of cost factors in regards to innovation adoption, stating that cost is one of the
major factors limiting individuals in Australia and Singapore from the adoption of internet banking. (Anil,
Ting, Moe, & Jonathan, 2003). Wu et al. (2005) has stated in reference to this context that in the case of
Malaysia, the behavioural intention is immensely impacted by cost between other factors. Moreover,
(Carlsson, Walden, & Bouwman, 2006) point out that cost is an essential consideration taken into account
by usersduring the application by of 3G (third generation) services,with issues suchas privacy and security
not being ranked as high significances as is cost in the case of Finland. Furthermore, (Wei et al., 2009)
presented cost to be one of the major hindrances in the utilisation of m-commerce amongst Malaysians.
Also cost is revealed as having one of the most noteworthy negative impacts on behavioural intention to
use (Chong et al., 2011; Wei et al., 2009). Likewise the qualitative interviews conducted by (Luarn & Lin,
2005) consequently found that a number of various consumers agree that financial factors significantly
influence their intention in the utilization of mobile banking. Yu (2012) similarly found cost to largely
influence the intention to make use of mobile banking, thus it can be deduced that:
H5: Cost negatively influences m-commerce behaviour usage intention
2.3 Development of m-commerce in Pakistan
The evolving market landscape, with a deeper penetration of computers and mobile phones, has
positioned Pakistan well to catch up with the global trend. There were times in Pakistan when people felt
insecure about conducting purchase on their phones because of the obvious vulnerability of our security
systems. However, attitudes such as this have now changed and all M-commerce businesses have done
extremely well to win the trust of the consumers. As stated by (Kanwal, 2014) currently, the size of the e-
commerce market is projected atabout Rs3.1bn, whereasm-commerce has hit the Rs15bn mark. According
to Internet Service Providers Association of Pakistan (ISPAP) there are 25 million internet and 15 million
smartphone users in Pakistan whereas the Economic Survey 2012-13 explains this as 13.5 percent and 8.1
percent respectively of the 184.35 million population of Pakistan. There are now almost 30 million internet
users and over 15 million mobile phone users in Pakistan which gives an indication of the massive market
potential M-commerce has in the economy.

Market watchers also see yet another peculiar trend in Pakistan because m-commerce has picked
up fasterthan e-commerce.This is all because of the fund transferfacilities [Easypaisa, Timepey, Mobicash
etc] provided by telecoms, ordinary citizens have been provided a viable solution for their needs. However,
online transactions have yet to move beyond utility bill payments in a big way. Some other dotcom startups
in specialised segments have recently introduced the facility of online payment in addition to cash on
delivery. They have forged a relationship with banks to offer the facility. Kanwal(2014) detailed that the
potential of growth in e-commerce and m-commerce has also caught the attention of Rocket Internet, a
renowned e-commerce-focused venture capitalist company. Rocket currently supports six businesses in the
country: Carmundi (online car dealers), Daraz, Easy Taxi, Foodpanda, Kaymu.pk (marketplace) and
Lamundi (realtors).
As per the 2015 statistics stated on Mobilemoney.com, 10 percent of Pakistani adults had
conventional banking accounts. Since the advent of mobile banking, this number has decreased and there
has been an increase in the percentage of people using mobile banking. Last year 3 per cent were mobile
banking users and this year has seen a hundred per cent increase with mobile banking users now up to 6 per
cent of the whole industry. In addition to this, the top banks in the country today manage as much as Rs1.3
billion in 5.1 million mobile accounts.
The current situation of Pakistan shows M-Commerce gradually ticking in, and potentially two
reasons that add to the delay include the unavailability of WAP-enabled phones and WAP gateways and
the second reason being the security concerns amongst the Pakistani population. It is difficult for mobile
phone vendors to financially justify nationwide WAP gateways when the market penetration of WAP
enabled smartphones is relatively low amongst the masses.Afterall, WAP is a pre-requisite for the activity
of M-commerce.However,with the recentrelease of 3Gand 4Gservices,most phones whethersmart phone
or the simple ones would be able to receive benefits of m-commerce through full-time connectivity with
the internet. It would be significant to include the forecast that "wireless" users will easily exceed the
number of fixed users in the coming two years’ time and hence neglecting a market with such an immense
potential would significantly undermine the expansion of business operations due to not staying updated
with technological advancements which are happening worldwide.

M-commerce is yet in its infancy stage and therefore has not been implemented in the complete
sense especially in developing economies like Pakistan where even basic e-business facilities are either
absent or have not been completely integrated. Hence, a considerable amount of progress is still required
in the area to expand the services of M-commerce and derive its benefits. Another hindrance to m-
commerce adoption is the means of payment and security. No consensus presently exists on the security
methodologies that must be constituted in all mobile-friendly websites nor do users feelsecure performing
online monetary transactions. A major shift in the m-commerce model of Pakistan is therefore experienced
where users prefer cash-on-delivery system more than online credit card payments to avoid providing
confidential information to fraudulent websites. Mobile phones are searching over new procedures
specifically related to this matter, the billing system of the dominant mobile companies are now permitting
WAP enabled transactions and billing to be applied towards a subscriber's bill. Hence, this hypothesis
explained:
H6: Development in the m-commerce sector ofPakistan and policies towards its implementation
lead to a positive influence on the adoption ofm-commerce

Chapter 3: Methodology
Methodology canbe termed asone of the most essential elements in any form of research.Research
methodology is referred to the various steps incorporated by a researcher in studying an issue or a problem
with particular object in perspective. According to Blaxter, "All research involves the collection and
analysis of data, whether through reading, observation, measurement, asking questions or combination of
these or other strategies" (Blaxter et al, 2002). This chapter amalgamates the information on the research
methods implemented along with the importance of those methods being applied to practically conduct this
research. Additionally this section also provides the research techniques that would be applied for the study
and how these techniques will be specifically utilized for approving or falsifying the hypothesis. This
research is a combination of quantitative and qualitative methods with the former ones being predominant
in the study, and both methods are employed for the purpose of data collection. The circulation of
questionnaires along with survey conduction incurred to extract outcomes based on the statistical facts. The
methodology chosen helped in gathering data and relevant content to achieve the objectives specified in the
research.
3.1 Sampling Unit
The unit of measurementused in this researchpapercomprises of individuals. The target population
for the purpose of gathering data was picked from the sampling frame of educational institutions,
corporations and households limited within Lahore – one of the major metropolitan hubs of Pakistan.
3.2 Sampling frame
The population that was mainly under consideration were the people from universities, colleges
and households of Lahore which formed an integral part of the sampling frame. Furthermore, the collection
of data also incurred from business personnel as they are the people directly usually involved in m-
commerce activities. As the research aims to set focus on the six mentioned factors leading to the adoption
of m-commerce hence, the main appropriate option becomes selecting people as a sample for the research
to be conducted. The sample size fell around 240 question respondents to attain accurate results and to
maintain neutrality in the information. Because customers range from varying age groups thus the
respondents constituted of customers comprised in age brackets ranging from 16-40 or above, with a mean
age of 26.23 whereas a median age of 25. Adding to that, the sample constituted of 50.4% males and 49.6%

females. Through selecting a vast-ranging age bracket,all age group’s responses were gathered that could
interestingly aid in the observation of how the trends in age brackets can influence the particular consumer
of these services along with their incomes in order to determine further relationships such as responses in
the perceived cost variable linked with the income of person.
3.3 Sampling method and type
The probability sampling method was adopted for this research under its genuine form which is
random sampling that was specifically applied on the research. Random sampling evolves out as the best
choice for conducting the research as the populace of customers is high in amount hence,for avoiding bias
and maintaining neutrality this study would apply random sampling to keep an equal opportunity for
everyone to get chosen. This technique was also used to collect data through self-administered as well as
online questionnaire mediums such as Google forms. Other sampling methods were not employed since it
is a convenient method to approachaccessthe respondentseasily. Furthermore, severalsampling techniques
have downgraded to becoming either obsolete or outdated. Relatively, the random sampling method can be
characterized as the most popular method because of these reasons.
3.4 Type of Respondents
The type of respondents for this study comprised of both the genders and respondents constituted
of both m-commerce users in the general public as well as important business personnel that have been
working in the provision of m-commerce services in the corporate world. This aided in acquiring the
perspective of both the providers and the users of the m-commerce services to keep a balance of neutrality
in the study. Focus was highlighted on individuals who had some kind of prior online shopping experience
through Facebook, shopping websites, apps or any other medium. The respondents were initially inquired
whether they had ever used any social media platform for online shopping.

3.5 Research Design
A total of 420 questionnaires were circulated to the respondents, randomly, out of which 240 usable
questionnaires were received. Prior to the survey conduction, respondents were advised to answerquestions
at their natural pace,in the order presented,carefully, and honestly. A brief definition of M-Commerce was
also provided to the respondents so that they were properly informed of what M-Commerce is. Online
survey development software called Google Forms was employed to construct the research questionnaire.
Users can rapidly create professional online surveys through a user-friendly medium in an interactive way.
Post-creation of the questionnaire, it was distributed in around ten Pakistani websites and forums while
some were personally sent to relevant personnel. Some of the websites were relevant to the
telecommunications field whereas the others were general websites for the common public. The
questionnaire was posted in these websites as a hyperlinked address (URL) that can also be considered as
one of the benefits offered by Google Forms in lieu of posting the complete survey as a whole. Next, the
respondents will be required to open this link comprising of the list of survey questions. The major reason
behind selecting chosen survey instead of conducting a practical experiment is due to a limitation of
resources that comprise of financial limitations et cetera. Furthermore,a time constraint is attached to this
research as well therefore questionnaires serve a better purpose in this case of scenario.
3.6 Questionnaire Design
The questionnaire consists of 40 items in order to gather data relevant to the variables and to avoid
diverting the study only to a single direction and instead covering all sorts of aspects. These 40 items have
been acquired and compiled from mainly 4 sourcesin order to ensure that all the aspectsfalling under every
variable are taken into consideration. The items present in the scale are acquired from well-experienced
research sources instead of being self-generated to aid in attaining authentic outcomes.
The questionnaire initiates with some general information regarding the m-commerce subscribers
such as their demographics and by what period of time have they remained a mobile phone user, to name a
few. Questions such as these aid in evaluating which gender makes more use of mobile phones, what
average age group these users classify into. It also comprehends questions about the type of services and
their pricing in order to attain the customer’sperception in reference tothese services.Also, this part details
whether the customers incur any issues or limitations which may be a hindrance in adopting m-commerce
services. The final part of this section aims to collect the user’s general point of view in reference to the
future prospects of m-commerce development in Pakistan and its framework of implementation in different

constructs. User’s original ideas and insights are significant as they are the primary users of this service and
they are knowledgeable about what they need and through what issues they are suffering from.

3.7 Development of Survey Instrument
A survey questionnaire, comprising of a total number of 40 items, was formulated to measure
proposed constructs, based on the existing theories of reference. A “5 points” Likert-type measurement
scale was used to measure the items where “1 = Strongly Agree/Satisfied” and “5 = Strongly
Disagree/Dissatisfied”. All the variables were measured through established, multiple-item scales, by
researchersinpreviously published researchstudies. The table below provides a summary of the conceptual
model variables, studies of the authors whose scales have been adopted and the number of items in each
adopted scale.
Variable Name No. ofitems in the scale Source
Perceived Usefulness 5 Min et al., 2008
Ease ofUse 6 Islam et al., 2010
Trust/Privacy 5 Mamari, 2007
Perceived Cost 6 Yu, 2012
Development in Pakistan 6 Islam et al., 2010
Attitudes towards using M-Commerce 5 Mamari, 2007
Adoption ofM-Commerce 5 Mamari, 2007
Table 1: Sources of Survey Instrument

Chapter 4: Analysis
A descriptive analysis on the gathered data was conducted through the proficient usage of IBM
SPSS Statistics software. From a total figure of 420 questionnaires that were circulated, 240 usable
responses were accumulated making the response rate equal to 57% which was greater than the desirable
response rate that should be higher than 20% (Yu and Cooper, 1983).
The interpretation and analysis of the results generated from SPSS and AMOS software allowed
severalimplications to be recognized. Initiating with the analysis of the hypothesis, the main variable was
“adoption of m-commerce” which was dependent upon “attitudes towards usage of m-commerce” that was
finally dependent on 5 independent variables or ‘items’ comprising of Usefulness,Ease-of-use,Trust,Cost
and Development. Most out of the five items proved to be acceptable with the main variable i.e. attitudes.
The calculated T-test result is based on a benchmark of the p-value being lower than 0.05. The
study’s T-test presented the p-value of .000 which is significant according to the scale. The reliability tests
require the cronbach’s alpha figure to be greater than 0.7 to be considered significant. Referring to the
model Usefulness, Ease-of-Use and Development proved to have the most significant reliability.
4.1 Measurement Model - Confirmatory Factor Analysis
The confirmatory analysis that was conducted on the data was kept one-dimensional. In order to
deduce the factor structure of latent variables CFA had restricted the variables that were measured to load
on their latent variables such that any way through which the measured variables provided correlation.
Table 4.1 provides the every item’s individual standardized loading. The tests that were conducted
for validity and reliability comprised of average variance extracted (AVE),discriminant validity (DV) and
construct reliability (CR).
Almost all of the measures in the model met the criteria of standardized coefficient, by values lying
between 0.572 and 0.947. Items which resulted in values falling below the benchmark 0.5 were omitted
from the model. The depicted results have shown that almost all the latent variables that have met the
requirement AVE being greater than 0.5 and construct reliability being more than 0.7 can be termed
acceptable (Fornell et al., 1982). The AVE and construct reliability were also tested with standardized
coefficients. As suggested by Bagozzi and Yi (1988), the standardized coefficient should be greater than
0.5 and lesser than 0.95 (K.S. Kim, 2008). Furthermore, values of AVE and CR were tested with
standardized coefficients. The next step constituted of testing the discriminant validity. It has been noted
that the squared correlation coefficients of eachconstruct with other constructsshould be less than the AVE
of each construct (D.U. Kim,2008; K.S. Kim, 2008). The results have depicted that all latent variables with
the exclusion of Adoption have fulfilled the requirement of both the AVE being more than 0.5 and also the
CR being greater than 0.7.

Variable AVE CR DV Variable Item Standardized
Loadings
Adoption - - 0.016
AD1 0.587
AD2 -
AD3 -
Attitudes 0.511 0.712 0.042
ATT1 -
ATT2 -
ATT3 0.507
Usefulness 0.633 0.911 0.080
USE1 0.736
USE2 0.876
USE3 0.856
USE4 0.612
USE5 0.824
USE6 0.736
Ease-of-use 0.758 0.939 0.144
EAS1 0.749
EAS2 0.959
EAS3 0.924
EAS4 0.775
EAS5 0.925
Trust 0.510 0.770 0.116
TRU1 -
TRU2 0.969
TRU3 0.636
TRU4 0.642
TRU5 0.658
Cost 0.500 0.824 0.095
COS1 0.555
COS2 0.629
COS3 0.874
COS4 0.691
COS5 0.798
Development 0.624 0.907 0.097
DEV1 0.567
DEV2 0.745
DEV3 0.716
DEV4 0.940
DEV5 0.854
DEV6 0.862
Table 4.1: Confirmatory Factor Analysis Results

The CMIN p-value extracted from the results is 0.00. Kim (2008) proposed the CMIN p-value near
to 0 because the p-value is responsive to the sample size. The range for CMIN/DF ratio is revealed out to
be approximately 3.62 which is an acceptable fit to the data. CFI reveals to be greater than the conventional
benchmark of 0.3 (Holtz, 2012) by being equivalent to 0.734. These generated values can be concluded as
entirely an acceptable fit to data and therefore can also be implemented in practice. The RMSEA value that
should be lesser than 0.05 comes out to be 0.042 that proves to be an adequate level of fit and thus a
reasonable figure to be quoted.
4.2 Structural Model - Path Analysis
When talking in reference tothe Structural Equation Model (or SEM), it illustrates the relationships
that exists between the latent variables with the use of directional arrows. Path analysis allows the
significance of these relationships to be tested based on whether the formulated hypotheses are accepted or
rejected. However path analysis cannot be made use of in order to establish causality or even interpreting
whether a model is correct; it only aids in determining whether the data is consistent with the model. The
P-value aids in identifying the significance of the results. P-values below the value of 0.05 are deemed
noteworthy whereas those greater than 0.05 are deemed immaterial. The following table 4.2 summarizes
the hypotheses of this study and the relationship between the variables with beta coefficients and their
significance values that were extracted from path analysis of the structural model.
Hypothesis Relationships Estimate (β) P Accepted/Rejected
H1 Attitudes ← Usefulness .287 .010 Accepted
H2 Attitudes ← Ease-of-use .230 .107 Rejected
H3 Attitudes ← Trust -.326 .108 Rejected
H4 Attitudes ← Cost .515 .018 Accepted
H5 Attitudes ← Development .633 *** Accepted
H6 Adoption ← Attitudes .752 *** Accepted
*** indicates p < 0.05
Table 4.2: Path Analysis Results
The hypothesis of this study are all positively relatedwith the exception of cost.The beta coefficient
of H6 can be used to evaluate that Attitudes have a positive significant relationship with Adoption and
hence a one unit increase in Attitudes will result in a degree of 0.752 increase in units in the variable
Adoption. The beta coefficients extracted also demonstrate that the Attitudes towards m-commerce have a
strong impact on the Adoption of m-commerce with a positive sign and therefore the hypothesis is accepted.
Development and Cost also prove to have a significant impact on Attitudes with a positive relationship and
hence both hypothesis become acceptedin the research. Overall,four out of six hypothesis resulted in being
accepted with a significant positive relationship while the remaining two with a negative sign or values
being below the benchmark values were rejected in the model.

Assessing Model Fit
The model’s p-value is 0.000 which proves significance (Dreze et al., 2009). CMIN/df= 3.78 which
is slightly greater than 3 however overall a good model fit can be indicated according to the scale proposed
by Barret,2007. The acceptable range for CMIN/df ratio is between 2.0 (Tabachnick and Fidell, 2007) and
5.0 (Wheaton et al, 1977). The RMSEA value=.118 which is closer to 0 than 1 and thus is an indicator of
good fit (MacCallum et al, 1996).
Segars and Grovers (1998) have stated in their study that a good model fit is characterized by the
values of NFI, IFI, CFI being greater than 0.7. Hence, the closer the value is to 1 and further from 0, the
better the model. The value of CFI=.713, NFI=.65 and IFI=.716. All three values therefore demonstrate
closeness to a good model fit.

Chapter 5: Discussion
5.1 Interpretation offindings
The acceptance ofH6should provide an insight to Pakistani m-commerce marketersand companies
that positive attitudes developed towards their products would play a highly significant role in the general
public adopting these mobile devices for m-commerce activities. For marketers,it’s not merely significant
to form positive attitudes with the target consumers, but their family and friends as well to overall form a
general positive attitude towards it.
The support for H1 was also in coordination with what was expected. From the Technology
Acceptance Model, statements were borrowed for testing the variable Usefulness in the adoption model of
M-Commerce which affirmed to be an acceptable measure. As in today’s world the modern consumer
desires faster, smaller, and greater reliable devices to complement his or her fast paced life style with the
addition of more efficiency and some form of value to it. Hence, the findings for H1 prove that having a
mobile device at hand which is useful creates a significant impact in the formation of positive consumer
attitudes that will lead to the eventual adoption of m-commerce.
The study rejected the relationship between perceived ease-of-use and attitudes (H2) which might
be due to several potential reasons. Firstly, the literal interpretation can be evaluated that any difficulty
level faced in the usage of mobile services simply carries no influence on the attitudes of consumers.
Secondly, the questionnaire had a sample mean age of 26.23 and median age of 25 possibly leading to the
results getting skewed as several consumers in their age of 20’s have a greater chance of already being
equipped with an acceptable level of general knowledge on using the m-commerce services along with
other relevant electronic devices. Therefore this construct could specifically have little to no influence of
attitudes for the consumers that already perceive mobiles as simple and user friendly technology.
Surprisingly this data also failed in supporting the relationship between the role of trust or privacy
with attitudes towards adopting M-Commerce technology (H3). This could possibly signal a growing trust
in m-commerce technology with the introduction of new and improved online brands such as Daraz.pk that
are also trust-worthy. Another significant reason is that in Pakistan usually the procedure for making
payments is through “cash on delivery” (COD) that already eliminates the involvement of credit card
transactions through a mobile phone hence the ongoing threat created by hackers, scammers and snoopers
is omitted through the COD system. However this will still have no impact on the user’s purchase decision
and adoption of m-commerce. Therefore, Pakistani mobile users are also less concerned in general about
any safety measures directed towards raising the security in mobiles along with the protection of
confidential information of consumers as its storage and transmission occurs through wireless channels.
This research approved the relationship between the costs of using m-commerce and the attitudes
towards using M-Commerce (H4) which should signal mobile companies to keep the costsof these services
low and continue the introduction of severalpackages and bundles for 3G/4G internet and other services so
that more Pakistanis can be encouraged to adopt them with a major level of affordability too as majority
population of Pakistan is close or under the poverty line. Many consumers also believe that the usage of m-

commerce helps them save costs as going physically to a business retail outlet can in some situations be
more costly than getting it delivered home, especially when several mobile retailers also offer free home
delivery within certain cities of operation.
Analyses also supported H5 that development of m-commerce sector in Pakistan reveals to be a
major factor in adopting M-Commerce technology as with the investment by the government in m-
commerce implementation and development, the general population would consider it a more secure and
reliable medium. New wave of technology giving options like ‘eGovernment’ can also help bridge
communication gaps between the Government and its citizens. With the introduction of educating and
creating awareness on these services, the government can help in formulating a general positive attitude
towards the acceptance and adoption of m-commerce widely.
5.2 Limitations
As this is a study of the adoption of M-Commerce in Pakistan, the 240-subject sample size of this
research is extremely small for such a large population. The sample might not be considered an accurate
representation of Pakistan because despite the research being conducted through random sampling,
undergraduate students at a single university made up a major chunk of the respondents’ data. When
combining classroom and online surveys simultaneously, 93% of the respondents reside in the city of
Lahore. Despite there was a Google form survey distributed solely through the Internet, there was a
convenient possibility of acquiring a more accurate and greater representative sample through collecting
responses from all the 4 provinces of Pakistan. Through this option, it becomes interesting to recognize
whetherany important geographical differences play a significant role in all the provinces of Pakistan when
referring to the adoption of M-Commerce technology.
Moreover, despite a majority chunk of the existing researches popularly use online or physical
surveys, their validity of self-reported responses is rarely questioned. It can be questioned whether it could
be a possibility to in lieu carry out the distribution for such a research through mobiles or tablets to allow
verification to be made about whether the respondents are in reality are m-commerce users or not. The
beginning of the survey provides a definition of mobile commerce to make the respondents knowledgeable
enough to fill the survey carrying an assumption that these services are available currently, therefore the
study becomes limited to the perceptions of M-Commerce in the respondent’s mind.

5.3 Guidelines for future research
Since mobile commerce is relatively a rapidly progressing industry, the opportunities and
possibilities to carry out future research relevant to this particular industry remain limitless. Even during
the writing process of this paper and when the distribution of the survey was done, mobile phone features
such as 3G/4G internet, GPS navigational directions, streaming videos, and music playback were relatively
common among the masses and could be found readily available too. Future research can include a focus
on how consumers exchange useful and beneficial product/service information through a mobile phone. It
can be significant to find out if there are any contrasts in the measurement of results from the respondents
who completed their surveys solely on their own perceptions of mobile commerce with those respondents
who actually tried and tested M-Commerce usage and further made the decision of whether to actually
adopt the technology or not.
Since M-Commerce is predicted to become the upcoming major phase in the advancement of
technology, it can be interesting to point out whether M-Commerce can be an accurate and effective
alternative in place of E-Commerce. Very limited research is currently conducted to determine whether any
important differences exist in the consumer acceptance as well as the usage of both the industries.
As M-Commerce continues to steadily expand throughout major cities of Pakistan, it will be
noteworthy to witness how can the consumers accept and make use of mobile technology and focus on the
point that whether it can be relatively as effective and beneficial as it has emerged in other locations of
Pakistan and also in the world.

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Appendix II: Questionnaire
This questionnaire will be used solely foracademic purposes. The objective of this study is to determine m-
commerce usage rate, adoption factorsplus limitations, and related attitudesin Pakistan. Respondentsare
requestedto fillin the answerswith a strongfocusand honesty forthe maintenance of accuracyin research
findings.
Adoption of M-Commerce (Mamari, 2007)
Which one of the following do you prefer more to use for commerce transaction?
□ PC
□ Mobile
From how long have you made use of a mobile phone?
□ 0-1
□ 2-4
□ 5 above
Which of the following mobile services do you use frequently?
□ Messaging (SMS/MMS)
□ Mobile Banking
□ Chat & Messenger
□ Internet browsing
□ In-app mobile payments (eg. purchasing a premium feature in an app or game)
□ GPS/Navigation
□ Mobile Marketing
□ Information services (eg. News, sports scores, emergency alerts, stock quotes, weather)
□ Shopping
Other:
Do you incur any problems while using m-commerce?
□ Often
□ Sometimes
□ No

Attitudes towards using M-Commerce (Mamari, 2007)
Are you satisfied with the m-commerce services provided in Pakistan?
Strongly satisfied Strongly dissatisfied
Which of these factors makes you hesitant about using M-Commerce?
□ Safety of user data
□ Security control
□ Limited knowledge about technology
□ Not getting technical support when needed
Normally you receive advertisements in your mobile like shopping centers sales or offers. Do you
want to keep receiving these advertisements in your mobile?
□ Yes
□ Sometimes
□ Some advertisements only
□ No
Perceived Usefulness (Min et al., 2008)
I feel productive with the use of M-Commerce services
Strongly agree Strongly disagree
M-Commerce services aid me in achieving my set targets and goals.
Strongly Agree Strongly Disagree
It gives me more control over the activities in my life.
Strongly agree Strongly Disagree
It saves me time when I use it.
It does everything I would expect it to do.
Perceived usefulness plays a vital role in M-Commerce adoption.

Ease of Use (Islam et al., (2010)
I generally find m-commerce services easy to use
It requires the fewest steps possible to accomplish what I want to do with it.
I can use most services without looking for instructions.
I learned to use most m-commerce services quickly.
It is convenient to memorize the usage method of these services.
Trust (Mamari, 2007)
Choose one of the following numbers according to your degree of satisfaction
To enter your confidential details on a mobile platform.
To pay your bills by using mobile phone.
To buy from the Internet by the mobile phone.
To use mobile banking.
Posting privacy policy of the m-commerce providers would facilitate your comfort in sharing
personal information online through a mobile.

It is important to know the details about what kind and what amount of your information will be
shared even if you know that the procedure is safe.
Perceived Cost (Yu, 2012)
I am satisfied with the general M-Commerce services pricing
M-Commerce provides cheaper prices than the traditional business outlets
Mobile Banking helps me save costs
High costing services are a hindrance for me to adopt some M-Commerce services
Usually premium-priced services have greater value attached
Development in Pakistan (Islam et al., (2010)
eGovernment is the use of information and communication technologies (ICTs) to improve the
activities of public sector organisations. Do you agree with the implementation of e-government
system in Pakistan?
In the new wave of the e-government, the users will use Internet to complete their transactions
and later the government will enter that data to the e-government plane. Do you want to use
mobile in something like this?
The Government should invest more in m-commerce implementation and development

Subscribers should be educated on the added value in consuming M-Commerce services
Appropriate policy frameworks are necessary for dealing with the complexities of enhanced m-
commerce services, stakeholder interrelatedness and enabling payment mechanisms.
Existence of regulatory mechanisms and agencies are vital for m-commerce adoption.
Personal Information
What is your gender?
□ Male
□ Female
What is your age?
□ 16-20 years
□ 21-30 years
□ 31-40 years
□ Above 40 years
Please select your monthly income
□ Less than Rs. 50,000
□ Rs. 50,000 – Rs.250,000
□ Rs. 250,000 – Rs. 500,000
□ Above than Rs. 500,000

Appendix III: Outputs
CFA
Path Analysis

Regression Weights Standardized RegressionWeights

Confirmatory Factor Analysis (CFA) – Amos Diagram

Path Analysis – Amos Diagram

ReliabilityAnalysis
Usefulness
Ease ofUse
T-Test
Trust
Cost
Development

Appendix IV: Graphs

Factors Affecting the Acceptance & Adoption of M-Commerce in Pakistan

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