‘Watch Out’ for Wearables – Factors that influence the purchase intention of smartwatches in Germany MASTER DEGREE PROJECT THESIS WITHIN: Business Administration NUMBER OF CREDITS: 15 PROGRAMME OF STUDY: International Marketing AUTHOR: Mark M. Afrouz, Tobias Wahl JÖNKÖPING May 2019 Master Thesis in Business Administration Title: Wearable technologies: Factors that influence the purchase intention of smartwatches in Germany Authors: Mark M. Afrouz and Tobias Wahl Tutor: Adele Berndt Date: 2019-05-20 Key terms: Wearables, Smartwatches, TAM, TPB Acknowledgements The authors would like to thank everyone who supported them throughout the process of writing this Master Thesis. Most importantly, they wish to express their special appreciation and profound gratitude to their supervisor Adele Berndt (Associate Professor in Business Administration) for her extensive and valuable support as well as her constructive criticism on this thesis during the last five months. Furthermore, the authors would like to thank the members of their seminar group (Laura Grabowski, Maes Paauw, Henrik Svensson & Pontus Möller) who provided valuable and constructive feedback in each of the sessions. Lastly, the authors do not want to miss the chance to thank all of their numerous research respondents for filling out the questionnaires as without them this study could not have been conducted. Mark M. Afrouz Tobias Wahl ______________ ______________ i Abstract Background: The rapid growth and increased competition in today’s technology industry leads to a growth in consumers’ expectations on new presented products. One of the growing markets within the technology sector are wearable devices – especially smartwatches. Almost all major IT and electronic giants such as Apple, Samsung, Microsoft and Google offer smartwatches – competition is increasingly growing. Consumers benefit from the wide variety of choices while selecting a smartwatch – but what are the factors that influence them to purchase such a device? Purpose: This thesis investigates the intention of German consumers to purchase smartwatches and examines the influencing factors. Method: In order to meet the purpose of this thesis, the authors conducted a quantitative study. The data was collected by means of an online questionnaire among German consumers and was distributed via the messenger application WhatsApp. To ensure the collection of enough responses the authors chose to apply a non-probability snowball sampling approach. Beside demographical questions and two introductory questions concerning the knowledge and the usage of smartwatches, the questionnaire consisted of eight question blocks that have been developed based on two well-established models to predict human behavior and technology adoption: Theory of Planned Behavior (TPB) and Technology Acceptance Model (TAM). Conclusion: The results of this study provide empirical evidence that the attitude towards using was the strongest predictor for the intention to purchase smartwatches. The outcomes further show that the attitude is influenced by the two hedonic factors perceived enjoyment and design aesthetics as well as by the utilitarian factor perceived usefulness. Out of those three factors perceived enjoyment was found to exert the strongest influence on attitude. Contrary to previous research, the results of this study could not reveal a significant influence of subjective norms on purchase intention. However, beside the attitude, perceived behavioral control was also found to influence purchase intention. The findings of this research allowed to draw a variety of theoretical and managerial implications as well as to develop possible research opportunities for future studies. ii FIGURES ................................................................................................................................ VI TABLES .................................................................................................................................. VI 1 INTRODUCTION ................................................................................................................. 1 1.1 Background ................................................................................................................ 1 1.2 Problem Formulation .................................................................................................. 2 1.3 Purpose ....................................................................................................................... 4 1.4 Delimitations .............................................................................................................. 4 1.5 Contribution to Theory & Practice ............................................................................. 4 2 LITERATURE REVIEW ................................................................................................ 6 2.1 Approach to Literature review ................................................................................... 6 2.2 Overview of Wearable Technologies ......................................................................... 6 2.2.1 Benefits for Consumers ...................................................................................... 7 2.2.2 Benefits for Society ............................................................................................ 8 2.3 Smartwatches.............................................................................................................. 8 2.4 Smartwatches on the German Market ........................................................................ 9 2.5 Theoretical Background & Research Model ............................................................ 11 2.5.1 Introduction ...................................................................................................... 11 2.5.2 Technology Acceptance Model (TAM) ........................................................... 11 2.5.2.1 UTAUT & UTAUT2 .................................................................................... 12 2.5.2.2 TAM’s need for Extension – Hedonic Aspects ............................................ 13 2.5.3 Theory of Planned Behavior (TPB).................................................................. 14 2.5.4 Research Framework and Hypotheses Development ....................................... 16 2.5.4.1 Perceived Usefulness (PU) ........................................................................... 17 2.5.4.2 Perceived Ease of Use (PEU) ....................................................................... 18 2.5.4.3 Perceived Enjoyment (PE) ........................................................................... 18 2.5.4.4 Design Aesthetics (DA)................................................................................ 19 2.5.4.5 Attitude towards Using ................................................................................. 19 2.5.4.6 Subjective Norm (SN) .................................................................................. 20 2.5.4.7 Perceived Behavioral Control (PBC) ........................................................... 21 2.5.4.8 Behavioral / Purchase Intention ................................................................... 22 3 METHODOLOGY ......................................................................................................... 24 3.1 Research Philosophy ................................................................................................ 24 3.2 Research Approach................................................................................................... 25 3.3 Research Purpose ..................................................................................................... 26 3.4 Research Design and Research Strategy .................................................................. 26 3.5 Data Collection Method ........................................................................................... 27 iii 3.6 Survey Design .......................................................................................................... 28 3.7 Population and Sampling.......................................................................................... 31 3.8 Analyses of Data ...................................................................................................... 31 3.9 Limitations of Methodology ..................................................................................... 32 3.10 Reliability and Validity ............................................................................................ 33 3.10.1 Reliability ......................................................................................................... 33 3.10.2 Validity ............................................................................................................. 33 3.10.3 Pilot Testing ..................................................................................................... 33 3.11 Ethical Considerations .............................................................................................. 34 4 EMPIRICAL FINDINGS .............................................................................................. 35 4.1 Demographic Sample ............................................................................................... 35 4.2 Descriptive Statistics ................................................................................................ 36 4.3 Reliability Analysis .................................................................................................