Purchase Intention to Undertake e-Commerce Transactions in Developing Countries Application of Theory of Planned Behavior in Indonesia Ainur Rofiq School of Accounting, Economics and Finance University of Southern Queensland Toowoomba, Australia Email: ainur.rofiq@usq.edu.au Joseph M Mula and Albert Scott School of Accounting, Economics and Finance University of Southern Queensland Toowoomba, Australia Email: joseph.mula@usq.edu.au, albert.scott@usq.edu.au Abstract— The purpose of this paper is to provide empirical evidence of an examined model of purchase intentions on business to consumer e-commerce transactions in developing countries using Indonesia as a case study. Adopting the theory of planned behavior, data from an Indonesia Internet discussion group was analyzed using structural equation modeling. The main finding is that purchase intention of business to consumer e-commerce transactions in developing countries such as Indonesia is able to be predicted by theory of planned behavior. Limited numbers of previous studies accommodate some proof of the theory of planned behavior and its application to explain consumers’ purchase intentions in developing countries. This empirical study has provided evidence that the model is applicable in this context. Keywords- planned behavior; purchase intentions; e- commerce; developing country; Indonesia I. INTRODUCTION The number of Internet users has rapidly evolved around the globe. It is reported that Internet world usage reached 361 million in 2000 and will hit 1.97 billion by 2010. The world- wide Internet growth in the last decade has been 445%. Indonesia as a developing country also has a high rate of Internet usage. Internet users in this country attained two million in 2000 and 30 million by 2010 [1]. Extensive uses of the Internet affect business models, such as e-commerce. E-commerce is the use of the Internet for buying, selling, transferring, or exchanging products, services, and/or information [2]. It has increased in popularity and has been adopted by businesses [3]. Businesses believe that using e-commerce technology provides some advantages as business operations can be undertaken faster, reduce inventory space required as well as minimize advertising and delivery costs [4]. Therefore, firms can save time and be more cost effective [5]. As a result, e-commerce systems have a positive effect on increasing a business operations’ effectiveness as well as improving financial performance. From a consumer perspective, e-commerce provides some benefits in transactions including ease of comparing product prices, time savings, and transactions can be performed whenever and wherever. Previous studies have examined consumers’ purchase intentions using e-commerce in developed countries, but there are limited studies for developing countries. Hence, this study intends to validate the model of purchase intentions on business to consumer e- commerce transactions in Indonesia by adopting the theory of planned behavior. II. LITERATURE REVIEW AND HYPHOTHESES Theory of planned behavior (TPB) is derived from the theory of reasoned action (TRA) [6]. TPB stated that attitude, subjective norm and perceived behavioral control influence intention [7]. In this context, intention indicates people effort to conduct an activity; attitude is the individual preference to the object [5]; subjective norm reflects the degree of people affection due to some significant referents’ perception [8]; and perceived behavioral control reflects to the perception of resource availabilities and behavior development opportunities. Associated with the intention to purchase using e- commerce by adopting TPB, attitude has important role as a predictor. Previous study undertaken in Spain found that attitude positively affect intention to purchase using e- commerce [8]. Other studies conducted in US reveal that attitude is the most important factor to influence purchase intention on the Internet [6, 9]. So, it is hypothesized that: H1: Attitude has a positive impact on consumers’ intentions to purchase using Internet-based e- commerce. TPB has been adopted to predict online consumer intentions in Sweden and Denmark. This study finds that subjective norm positively affect intention to purchase using e-commerce [10]. Similar results are also reported by other studies in different countries [8, 9]. Therefore, it is hypothesized that: H2: Subjective norm has a positive impact on consumers’ intentions to purchase using Internet-based e- commerce. Regarding perceived behavioral control, one study found that this predictor does not significantly influence purchase 978-1-4244-6581-1/11/$26.00 ©2011 IEEE