Web 2.0 Service Adoption and Entrepreneurial

Serv Bus (2010) 4:197–207 DOI 10.1007/s11628-010-0097-z ORIGINAL PAPER

Web 2.0 service adoption and entrepreneurial Orientation

Seongbae Lim • Silvana Trimi • Hong-Hee Lee

Received: 21 January 2010 / Accepted: 16 September 2010 / Published online: 7 October 2010 Springer-Verlag 2010

Abstract The purpose of this study is to investigate the relationship between Web 2.0 service adoption and entrepreneurial orientation (EO). For this purpose, this article conducted multivariate analysis of variance (MANOVA) using Web 2.0 service adoption groups (high and low adopters) as an independent variable and EO as dependent variable, measured with four variables: innovativeness, risk taking, autonomy, and competitive aggressiveness. The results show that there are significant differences in EO, overall and for each dimension, between the two groups (high adopters/low adopters of Web 2.0). High adopters of Web 2.0 have a stronger EO in terms of all the four of the individual EO dimensions.

Keywords Web 2.0 ∙ Service adoption ∙ Entrepreneurial orientation ∙ Social networking ∙ Innovativeness

1 Introduction

Web 2.0 that emphasizes ‘‘collaboration,’’ ‘‘participation,’’ and ‘‘openness’’ has been recently expanded, and related services have been broadly adopted worldwide

S. Lim Bill Greehey School of Business, St. Mary’s University, One Camino Santa Maria, San Antonio, TX 78228, USA e-mail: slim1@stma r ytx.edu

S. Trimi (&) Management Department, University of Nebraska- Lincoln, Lincoln, NE 68588-0491, USA e-mail: strimi@unln o tes.unl.edu

H.-H. Lee School of Business and Economics, Dankook University, 126, Jukjeon-dong, Suji-gu, Yongin-si, Gyeonggi-do 448-701, Korea e-mail: honglee@da n kook.ac.kr 198 S. Lim et al. not only by individuals but also by organizations. Companies are deploying Web 2.0 technologies, such as microblogging, social networking, wikis, and internal blogging, because they can dramatically improve decision cycle times, organizational effectiveness, innovation, etc. Web 2.0, and soon Web 3.0, appears to have become the new paradigm which brings fundamental changes to the internal corporate value chain and their relationship with customers. Furthermore, it is also changing the nature of competition by restructuring the industry value chain. For example, the traditional framework that assumes clearly demarcated roles between producers and consumers can no longer be used to analyze the industry value chain since a consumer can simultaneously be also a producer. App Store, Linux, Wikipedia, and youtube.com are good examples. On the other hand, entrepreneurship education for college students has been built to emphasize as a venue for educating young people who can create their new ventures to boost the national economy in the future. Entrepreneurial orientation (EO) has been identified as a fundamental factor that influences how entrepreneurship translates into action (Lee and Peterson 2000). While entrepreneurship is related to ‘‘desire’’ for launching a venture firm, EO is directly related to actual behavior and can be a critical factor for successful venture creation. Previous studies regarding the individual adoption of information technology (IT) have focused on such non-personal, non-intrinsic factors as ‘‘ease of use, perceived usefulness, benefits, social norms,’’ and so on. Considering that Web 2.0 is a new paradigm of voluntary collaboration, participation, and openness by individuals, it would be appropriate and meaningful that we look at Web 2.0 adoption related to the adopters’ personal characteristics, such as EO. Thus, in this study we proposes that there is a relationship between adoption of Web 2.0 service and EO because both Web 2.0 and EO function based on a strong ‘‘bottom up’’ rather than ‘‘top down’’ type structure.

2 Theoretical background and research model

2.1 Web 2.0

Web 2.0 is a new trend of creative utilization of web technologies rather than a specific technology or service. It does not coincide with any brand new or revolutionary technical innovation (Kim et al. 2009), but instead uses a broad range of different technologies, applications, and functions for interactivity, networking, or user integration (Mrkwicka et al. 2009). Depending on the domain under investigation, previous studies have defined Web 2.0 differently. Hoegg et al. (2006) believed that Web 2.0 is a philosophy that emphasizes collective intelligence, collaboration, and community services. Ander- son (2007) suggested individual production and user generated content, harnessing power of the crowd, data on epic scale, architecture of participation, network effect, and openness, as the ideas behind Web 2.0. Brynjolfsson and McAfee (2007) introduced improved collaboration, innovation, and connectivity as main benefits of using Web 2.0 services. Castelluccio (2008) suggested the collaborative Web 2.0 service adoption and entrepreneurial orientation 199 environment and dependence on user created content as characteristics of Web 2.0. Cooke and Buckley (2008) viewed Web 2.0 as a set of tools that allows individuals to publish, share, and collaborate. Kim et al. (2009) suggested participation, collaboration, rich user experience, social networking, semantics, and interactivity as characteristics of Web 2.0. Mrkwicka et al. (2009) also viewed Web 2.0 as an enabling platform for user participation that focuses on philosophy of mutually maximizing collective intelligence, dynamic information sharing, and creation. Since Web 2.0 has been defined in diverse ways and often as a collection of new phenomena, there is no measurement for Web 2.0 acceptance or adoption. This study attempts to use individuals’ adoption behavior of Web 2.0 services as a measurement for Web 2.0.

2.2 Entrepreneurial orientation

Miller (1983) introduced the original framework of EO which included as dimensions of measuring entrepreneurship: innovation, proactiveness, and risk- taking. Several subsequent studies used these three dimensions (Covin and Slevin 1989; Lumpkin and Dess 1996; Lee and Peterson 2000; Kreiser et al. 2002; Tarabishy et al. 2005). In a later study, Lumpkin and Dess (1996) distinguished EO as the process, practice, and decision making activity that lead to new venture entry. In addition to the previous three dimensions of EO (innovativeness, risk taking, and proactiveness), they introduced two other dimensions: autonomy and competitive aggressiveness. These five dimensions of EO can be defined as follows: (1) Innovativeness Tendency to engage in, and support new ideas, novelty, experimentation, and creative process which may result in new products, services, or technological processes. (2) Proactiveness Taking initiatives by anticipating and pursuing new opportunities and by participating in emerging markets. (3) Risk taking Willingness to incur heavy debt or make large resource commitments for the purpose of seizing opportunities in the market place for high returns. (4) Autonomy The independent action in bringing forth an idea or a vision and carrying it through to completion. (5) Competitive aggressiveness Propensity to directly and intensely challenge its competitors to achieve entry into or improve positions in the marketplace and outperform industry rivals. Lee and Peterson (2000), adopting the same five dimensions introduced by Lumpkin and Dess (1996), characterized EO as the process in which entrepreneurship is undertaken in terms of the methods, practices, and decision making processes for new entry into the market. In this study, we adopt Lumpkin and Dess’ (1996) definition of EO. However, Covin and Slevin (1989) used the same items to measure both proactiveness and competitive aggressiveness since the characterization of these dimensions significantly overlaps. We also agree with this approach, thus in 200 S. Lim et al. this study we excluded ‘‘proactiveness’’ and used only four dimensions to measure EO: autonomy, innovativeness, risk taking, and competitive advantage.

2.3 Web 2. 0 and relationship of entrepreneurial orientation

Castelluccio (2008) emphasized that Web 2.0 has restructured the vertical structure of the traditional client–server/consumer–provider universe into a horizontal structure, where any consumer of content/information can also be a provider. In an organizational environment, Chui et al. (2009) compared the adoption behaviors of Web 2.0 technologies and enterprise systems application (ERP, CRM, and SCM), as summarized in Table 1. As shown in the table, while the adoption of enterprise systems is the result of top-down decision making, the adoption of Web 2.0 service is voluntary, bottom-up, that engages a broad base of workers. Thus, adoption of Web 2.0 services is a result of strong horizontal culture. Horizontal culture encourages entrepreneurial behaviors. This means that there could be a relationship between Web 2.0 adoption and EO, which is the intention of this study.

3 Research methodology

3.1 Research design and methodology

The proposed research model of this study is shown in Fig. 1. This study investigates the relationship between Web 2.0 adoption and EO. For the independent variable, Web 2.0 adoption, we divided the respondents into two groups: high and low adopters based on the average adoption score of five selected social networking services (SNS). As for the dependent variables, EO, we used the four previously discussed dimensions: autonomy, innovation, risk taking, and competitive aggressiveness. In this study, we could not include all kinds of Web 2.0 services, especially when even its definition is not clear, among many types of Web 2.0 services. Thus, we focused on only one, SNS which is the most popular Web 2.0 service and used by both individuals and organizations. We used SPSS 15.0 for the statistical analysis of this study.

Table 1 Adoption behaviors of enterprise systems and Web 2.0 Enterprise systems application Web 2.0 service

Adoption decision Users assigned by management User groups can be formed unexpectedly Mindset expected Users must comply with rules Users engage in a high degree of participation Degree of technology Often complex technology Technology investment often a light complexity investment weight overlay to existing infrastructure Web 2.0 service adoption and entrepreneurial orientation 201

Entrepreneurial Orientation

I nnovativeness

Risk Tak ing W eb 2.0: High Group Low Group Autonomy

Com petitive A ggressiveness

Fig. 1 Research model for MANOVA analysis

3.2 Instrument design and sample group

Data were collected from college students in South Korea, since the country is the world leader in terms of the Internet infrastructure and its applications to ubiquitous life and e-business (Lee 2003). Because data collection from students was administrated during the class, we had 100% response rate: we gave out and collected 223 questionnaires. The questionnaire items for measuring EO dimensions and SNW were developed based on a thorough review of previous studies and interviews with ten practitioners involved in Web 2.0 services. The first draft of the questionnaire was developed as a mixture of items: to measure EO dimensions, items were taken from Lumpkin and Dess (1996); and to measure Web 2.0 usage focusing on SNS, items were developed by authors of this study. Then, we conducted three pilot tests and significantly revised the questionnaire. The final version of the questionnaires was distributed to the sample groups.

3.2.1 Independent variable: Web 2.0 adoption

Since the five questions to measure SNS adoption were developed by the researchers, an exploratory factor analysis, and reliability analysis were conducted to confirm the unidimensionality of variables. As shown in Table 2, no problem was found in terms of construct validity. Cronbach’s a value was .85 satisfying the reliability test. We used the average score of the five questions about SNS adoption which was used to divide the respondents into two groups: high and low adopters of Web 2.0.

3.2.2 Dependent variable:entrepreneurial orientation ( EO)

The questionnaire included 16 questions, based on previous studies, to measure: (1) innovativeness (2) risk taking (3) autonomy, and (4) competitive aggressiveness. 202 S. Lim et al.

Table 2 Result of factor analysis for Web 2.0

Factor Eigen Variable Factor Operational value loading definition

1 3.132 I like to make friends through SNS .806 Web 2.0 I am actively involved in a web-based virtual .769 service adoption community which is built around common interest such as games, sports, music, health, and life style I am actively involved in a web-based virtual .832 community which is built around the same affinity such as religion, ethnicity, gender, sexual orientation, and geographical location I like to upload my own stories, pictures, and .815 videos on the web sites to share them with online friends I enjoy sharing my own writings with online .731 friends

Table 3 Result of factor analysis for EO

Factor Eigen Variable Factor Operational value loading definition

1 4.604 I often think about inventing new products .803 Innovation I like to work where new ideas that I suggest .735 will be acted upon by decision makers

I consider myself as a creative person .614 2 1.341 I don’t like conformists .734 Risk taking I would choose to invest money in an .704 entrepreneurial business as opposed to a more well-known business I would say that I am rather adventurous .580 and daring

3 1.094 I am persistent about completing projects .545 Autonomy I generally feel I am in charge of my own .857 fate My family and friends tend to see me .867 as taking the initiatives

4 1.042 I want to be near the top of my class .528 Competitive I enjoy playing sports or games with people .807 aggressiveness who are little better than I am I enjoy competing and doing things better .789 than someone else Web 2.0 service adoption and entrepreneurial orientation 203

For each question, a five point Likert type scale was used (1. strongly disagree, 2. disagree, 3. neither agree nor disagree, 4. agree, and 5. strongly agree). We ran exploratory factor analysis where four factors were extracted and used to measure the dimensions of EO as shown in Table 3. 204 S. Lim et al.

4 Result and discussion

4.1 Demographic characteristics of respondents

Regarding demographic characteristics of the sample group, 65% of the respondents were male students and 62% were majoring in business. As shown in Table 4, a majority of the respondents were junior level students.

4.2 MANOVA analysis

4.2.1 Correlation among factors

Before conducting MANOVA, correlation analysis was conducted among the dependent variables to check whether MANOVA was a proper tool for analyzing the data. As shown in Table 5, MANOVA can be used since the four dependent variables showed significant relationships among them.

4.2.2 Equality of covariance and error variance

Box’s M test was conducted to test the equality of covariance matrices between the two groups of low and high Web 2.0 service adopters. As seen in Table 6, the result (.058) was not significant, meaning that covariance matrices of the dependent variables are equal across the groups, and therefore MANOVA analysis is acceptable.

Table 4 Student class of Class Frequency Percent Cumulative respondents percent

Freshman 38 17.0 17.0 Sophomore 38 17.0 34.1 Junior 104 46.6 80.7 Senior 31 13.9 94.6 Graduate 12 5.4 100.0 Student

Total 223 100.0

Table 5 Correlation among dependent variables Innovativeness Risk taking Autonomy Competitive aggressiveness

Innovativeness 1 .474* .405* .466* Risk taking .474* 1 .306* .416* Autonomy .405* .306* 1 .650* Competitive aggressiveness .466* .416* .650* 1

* P \ . 05 Web 2.0 service adoption and entrepreneurial orientation 205

Table 6 Box’s test of equality Box’s M 18.174 of covariance matrices F 1.782 df1 10 df2 221533.3 Sig. .058

4.2.3 Web 2.0 and EO (overall)

First, we tested the relationship between EO as a single factor (not divided into the four dimensions) and Web 2.0 adoption (divided into two groups: high and low adopters). As shown in Table 7, all the relevant values including Pillai’s Trace, Wilks’ Lambda, Hotelling’s Trace, and Roy’s Largest Root were significant at the .01 level meaning that there is a significant difference in terms of EO between the two groups, the high and low Web 2.0 adopters. To see if there was any violation of this MANOVA test, we used Levene’s test of equality of error variances. The results of the test, presented in Table 8, show that the assumption of the equality of the error variance of the two groups of the dependent variable was violated in two of the EO dimensions, autonomy, and competitive aggressiveness (P \ .05). However, the failure to meet the assumption of equality of error is not critical to this MANOVA test, since the score was not very low and the sample size of the two groups was similar.

4.2.4 Web 2.0 and EO in each dimension

The univariate test was conducted to measure the difference between the two adoption groups of Web 2.0 and each of the four dimensions of EO. As presented in

Table 7 Result of MANOVA test Effect Value F Hypothesis df Error df Sig.

Web 2.0 Pillai’s Trace .070 4.125 4.000 218.000 .003** Wilks’ Lambda .930 4.125 4.000 218.000 .003** Hotelling’s Trace .076 4.125 4.000 218.000 .003** Roy’s Largest Root .076 4.125 4.000 218.000 .003**

** P \ .01

Table 8 Levene’s test of equality of error variance Levene statistic df1 df2 Sig.

Innovativeness .048 1 221 .826 Risk taking .008 1 221 .927 Autonomy 4.753 1 221 .030* Competitive aggressiveness 3.942 1 221 .048*

* P \ 0.05 206 S. Lim et al.

Table 9 Result of univariate test Source Dependent variable Type III sum df Mean square F Sig. of squares

Web 2.0 Innovativeness 2.601 1 2.601 4.744 .030* Risk taking 1.274 1 1.274 2.768 .098* Autonomy 4.017 1 4.017 7.696 .006** Competitive aggressiveness 8.808 1 8.808 16.519 .000**

* P \ 0.05, ** P \ 0.01

Table 10 Descriptive statistics Groups Mean Std. N deviation

Innovativeness Low adopter 3.6472 .76529 103 High adopter 3.8639 .71856 120 Total 3.7638 .74672 223 Risk taking Low adopter 3.1650 .66972 103 High adopter 3.3167 .68579 120 Total 3.2466 .68112 223 Autonomy Low adopter 3.4919 .78222 103 High adopter 3.7611 .66692 120 Total 3.6368 .73324 223 Competitive Low adopter 3.3625 .78951 103 aggressiveness High adopter 3.7611 .67527 120 Total 3.5770 .75531 223

Table 9, the results show that significant differences are found in all the four dimensions of EO (the risk taking dimension was at the .1 level of significance). As shown in Table 10, the high adopter group showed higher mean values than the low adopter group consistently across all the four dimensions of EO. The gap between the two groups was larger for autonomy and competitive aggressiveness as expected according to the MANOVA test results. These results suggest that high adopters of Web 2.0 have higher EO than low adopters. Furthermore, high Web 2.0 adopters showed a stronger mindset for innovation, risk taking, autonomy, and competitive aggressiveness than low adopters.

5 Discussion and conclusions

The purpose of this study was to investigate the relationships between EO and Web 2.0 service adoption. For this purpose, we measured the students’ adoption of Web 2.0 service by focusing on SNS and measured their EO in four dimensions. The result of this study showed that there were significant differences in EO, overall, and Web 2.0 service adoption and entrepreneurial orientation 207 for each dimension, between the high adopters and low adopters of Web 2.0. We 208 S. Lim et al. can therefore conclude that students who adopt Web 2.0 are more entrepreneurial than those who do not. This result provides important implications for practitioners and managers. Since the advent of Web 2.0 technologies and services, organizations have focused mainly on consumers’ adoption of Web 2.0 services and their behavior on the social networking sites. These approaches have provided organizations with new insights for understanding consumer behavior in the virtual space. Thus, they have been able to leverage social networking sites for more effective customer relationship management, marketing and public relations. On the other hand, organizations have been much more resistant in adopting and allowing usage of SNS by their employees. Reasons for this are often cited as: reduced productivity, security issues, reputational risk, wasted bandwidth (cost), to mention just a few. However, the benefits from internal SNS usage for the organization can be far greater. SNS can effectively connect employees and knowledge workers, and organizations can use SNS as a tool for innovation and business process improvement. Web 2.0 tools can improve organizational performance by expediting the internal flow of knowledge and help generate innovative ideas much faster, because they effectively link employees across the organization (departments and geography), as well as with external collaborators. IBM, for example, has created an internal social networking site, Beehive, which encourages communication within the organization. In Beehive, 60,000 employees exchange their ideas to create knowledge. Furthermore, it provides valuable mentorship connections for employees who need new knowledge by analyzing contents, human networks, and many other topics in the site (Businessweek 2009). As in the IBM case, an internal social networking site can become an effective tool for internal collaboration and innovation. Thus, the issue for organizations should not be if but how can they encourage their employees to participate in the organization’s internal social networking sites. Traditional adoption factors for enterprise information systems, such as ease of use and perceived usefulness, would not work as effectively for SNS adoption because those factors were validated for adoption of information systems based on management decisions. SNS adoption is an individual and voluntary decision by each employee, not a managerial decision, and it supports horizontal communication across the organization. Thus, we need to find other meaningful factors influencing employees’ decision to participate in internal SNS. The results of this study strongly suggest that adoption of internal SNS, among other benefits, can be an important factor for improving organizations’ entrepreneurial culture. Encouraging employees for active participation in SNS can strengthen horizontal communication and collaboration culture in the organization, thus boosting EO (in all its dimensions: innovation, risk taking, autonomy, and competitive aggressiveness). This in turn will shorten innovation life cycles and decision making and increase the competitiveness of the organization. Creating extensive internal and external networks will bring not only more opportunities but also more risk which will require real entrepreneurial skills, thus further intensifying the importance of developing EO culture by organizations. Web 2.0 service adoption and entrepreneurial orientation 209

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