Journal of Services Marketing

The determinants of consumer attitude toward service innovation – the evidence of ETC system in Taiwan
Bruce C.Y. Lee,
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 The determinants of consumer attitude toward
service innovation – the evidence of ETC
system in Taiwan
Bruce C.Y. Lee
Finance and International Business Department, Fu Jen Catholic University, Hsin Chuang, Taiwan

Abstract
Purpose – Innovation has attracted considerable interest in recent years in improving competitive advantage for both profit and nonprofit
organizations. Service innovation offers the potential for substantially improving the performance, but performance gains are often obstructed by users’
unwillingness to accept and use available systems. This research aims to use the concept of Reasoned Action Theory to further examine consumer
attitudes toward service innovation and its antecedents.
Design/methodology/approach – By focus group discussion and literature review, a conceptual model with six postulated hypotheses is proposed.
The Electronic Toll Collecting (ETC) system launched by the Taiwanese government is selected as the service innovation to test the model. A structured
Downloaded by UNIVERSITE CATHOLIQUE DE LILLE At 06:18 14 May 2018 (PT)

questionnaire is designed to collect field data. The structural equation model with LISREL VIII program is used to estimate the structural coefficients and
to test the hypotheses.
Findings – The results show that perceived ease of use, perceived price fairness, risk averseness and satisfaction with existing service significantly
influence consumer attitude, and then influence consumer’s intention to adopt service innovation.
Practical implications – Before introducing a service innovation, the service provider must seriously consider the possible difficulties of usage and
risk from the consumer’s perspective.
Originality/value – Compared with product innovation, research focusing on service innovation is relatively scarce. Services have specific
characteristics of intangibility, inseparability, heterogeneity and perishability. Hence, the factors influencing the consumer adoption of service
innovation may be different from those of product innovation.

Keywords Service innovation, Consumer’s adoption, Consumer attitude, Attitudes, Consumer behaviour, Taiwan

Paper type Research paper

An executive summary for managers and executive
readers can be found at the end of this article.
1. Introduction
Innovation has attracted considerable interest in recent years
to improve competitive advantage, for both profit and
nonprofit oriented organizations. Innovation is an idea,
practice, or object that is perceived as new by an individual
or other unit of adoption (Rogers, 1995). In other words,
a product, service, or process can be the subject of innovation
(Bhoovaraghavan and Vasudevan, 1996). As technological
capabilities expand, businesses are turning more and more to
computer-assisted methods to increase efficiency and provide
a competitive edge. Firms are continually reminded that
innovations within the firm and for its customers are the keys
to their success and survival in a competitive environment
(Ellen et al., 1991). With no exception, nonprofit
organizations, like government, are increasingly introducing
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/0887-6045.htm
Journal of Services Marketing
26/1 (2012) 9–19
q Emerald Group Publishing Limited [ISSN 0887-6045]
[DOI 10.1108/08876041211199689]
innovation to serve citizens and improve efficiency (Carter
and Belanger, 2005).
Even though innovation offers the potential for substantial
performance improvement, performance gains are often
obstructed by users’ unwillingness to accept and use the
available systems (Davis, 1989). The theory of diffusion
(Rogers, 1995) is a well-established theoretical framework
that explains how technological innovations spread across
individuals within a social system (Lee et al., 2003). Diffusion
models have been successfully used to forecast sales, to direct
pricing and advertising strategies, and to time launches of
successive generations of new products (Moreau et al., 2001).
Diffusion research is fairly matured. However, most studies
have focused on organizational rather than consumer
adoption of innovations (Lee et al., 2003). Research on
diffusion/adoption of innovations is more extensive in
industrial markets relative to consumer markets (Carter and
Belanger, 2005; Davis, 1989; Moreau et al., 2001; Rogers,
2003).
The source of innovation resistance and suitable strategies
varied across different product and service (Ram, 1989).
Since each product category has its specific characteristics
and functions, innovative product design may cause added
risk and cost for consumers, raising innovation resistance
from consumers. In service industries, the specific
The author appreciates the financial support of National Science Council
(NSC) of Taiwan.

9
 The determinants of consumer attitude toward service innovation
Bruce C.Y. Lee
characteristics of intangibility, inseparability, heterogeneity,
and perishability have caused some problems in service
marketing (Zeithaml et al., 1985) and have been discussed in
the literature. At the same time, these characteristics of
service may cause different innovation resistance from
different goods. Before introducing service innovation, the
service provider needs to understand these characteristics and
their influence on consumer’s resistance to innovation
(Eriksson and Nilsson, 2007). However, compared with
product innovation, research focusing on service innovation is
relatively scarce (Bagozzi and Lee, 1999; Ellen et al., 1991;
Lee and Lee, 2000; Shih and Venkatesh, 2004).
According to Reasoned Action Theory, behavior is
determined by intentions, which are in turn determined by
attitudes and subjective norms (Ajzen and Fishbein, 1972).
This research is based on the concept of Reasoned Action
Theory to further examine the antecedents of consumer
attitude toward service innovation. By focus group discussion
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(FGD) and investigation on the characteristics of service
industry, various factors related to consumer attitude toward
service innovation were raised and discussed. A model with
six postulated hypotheses are proposed and tested by field
data. The Electronic Toll Collection (ETC) system launched
by the Taiwanese government is selected as a service
innovation to test the model. After a field survey on car
drivers (consumers who need the service), the structural
equation model with LISREL VIII program is used to
estimate the structural coefficients and to test the hypotheses.
This study extends the causal links of Reasoned Action
Theory to improve our understanding on consumer attitude
toward service innovation. Managerial implications and
suggestions for further research are presented.
2. Theory development and hypotheses
Accompanying the increasing importance of innovation,
consumer acceptance of, as well as resistance to innovation
has evoked significant attention. Parthasarathy et al. (1995)
proposed a holistic model to explain consumers’ innovation-
decision process. Many causes, such as external influence,
interpersonal informative, interpersonal normative, and
personal, social, and cultural reasons will influence
consumers’ innovation-decision process at various stages.
The variables determining the rate of adoption of innovations
can be classified into five types, which are perceived attributes
of innovations, type of innovation-decision, communication
channels, nature of the social system and the extent of change
agents’ promotion efforts (Rogers, 2003). However, the five
types of variables that determine the rate of adoption of an
innovation did not receive equal attention from diffusion
scholars (Rogers, 2003, p. 222). In a model of innovation
resistance, Ram (1987) classified the causes of innovation
resistance of a consumer into three sets: perceived innovation
characteristics, consumer characteristics, and characteristics
of propagation mechanisms. Shih and Venkatesh (2004)
proposed and tested a use-diffusion model, and the
determinants of use-diffusion were classified into four
dimensions:
1 the household social context in which the user works;
2 the technological dimension (characteristics associated
with the innovation);
3 the personal dimension (for example, use innovativeness);
and
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Journal of Services Marketing
Volume 26 · Number 1 · 2012 · 9 –19
4 external factors (external communication and media
exposure).
Parasuraman (2000) proposed the construct of technology
readiness (TR) of people and discussed its conceptualization.
Lin et al. (2007) further integrated the technology readiness
into the technology acceptance model and obtained
technology readiness and acceptance model (TRAM).
These studies aimed to explore possible factors that
influence consumer’s decision on technological innovation.
Adoption is usually defined to include the first evaluation of
an innovation and a commitment to use the innovation on all
following occasions. Adoption is a decision to make full use of
an innovation as the best course of action available (Olshavsky
and Spreng, 1996; Rogers, 1995). According to Fishbein’s
extended model, known as the theory of reasoned action,
behavior is determined by intentions, which are in turn
determined by attitudes and subjective norms (Ajzen and
Fishbein, 1980). “Attitude” denotes a learned predisposition
to respond to an object in a consistently favorable or
unfavorable way (Wilkie, 1994). Attitudes are tendencies to
respond in a particular way signaling their relationship with
consumer behavior. Most behavioral models trace causal links
from attitude, through intention, to actual behavior, implying
that behavioral intentions must be understood to predict
behavior from attitudes (Kim and Hunter, 1993). These
evidences suggest the importance of consumer attitude in
understanding consumer’s adoption of service innovation.
By focus group discussion and investigation on the
characteristics of service industry, many factors may relate
to consumer attitude toward service innovation, as well as
consumer’s adoption of it. In present study, we focus on
personal and service related factors and discuss their possible
influences on consumer attitude.
2.1 Perceived ease of use
Complexity is the degree to which an innovation is perceived
as relatively difficult to understand and use (Rogers, 2003).
For product innovation, perceptions of usage difficulty have
caused a significant number of consumers to delay purchases,
and usage difficulty has caused them to return previously
bought products. Ellen et al. (1991) pointed out that a
person’s perceived ability to use a product successfully affects
their evaluative and behavioral response to the product. Wood
and Moreau (2006) further found that a consumer’s
expectations about the difficulty he or she would experience
in using a new product could be influenced by both marketer-
directed communications and by his or her own prior
experience.
The complexity of an innovation arises from two
dimensions: complexity of the idea (is it easy to
understand?), and complexity of execution (is it easy to
implement?) (Ram, 1987). From the consumer’s perspective,
the meaning of complexity may be mixed. For example, the
internet is easy to use, but the mechanism behind it is not easy
to understand. A service system includes many components,
said hardware (service equipment), software (data processing
system), service process, and people (service providers). For
service innovation, consumers should care more on the
complexity of execution (ease to use?) than complexity of the
idea (ease to understand?).
Consumer perceived ease of use (PEOU) had been seen as
an important factor to influence consumer’s adoption of
 The determinants of consumer attitude toward service innovation
Bruce C.Y. Lee
innovation. Davis (1989) defines PEOU as “the degree to
which a person believes that using a particular system would
be free of effort”. This construct reflects users’ subjective
assessments of a system, which may be representative of
objective reality. System acceptance will suffer if users do not
see a system as easy to use (Davis, 1989; Carter and Belanger,
2005).
Most service, which involves the simultaneous production
and consumption, is inseparable. Since the customer must be
present during the production of many services, inseparability
forces the buyer into intimate contact with the production
process (Zeithaml et al., 1985). Thus, consumer’s ability to
learn and use the new system becomes another doubt for the
success of service innovation. From the consumer’s view, the
higher perceived ease of use will cause a more positive attitude
toward service innovation, thus increasing consumer
adoption:
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H1. Consumer PEOU of service innovation is positively
related to consumer attitude toward service innovation.
2.2 Perceived price fairness
For service innovation, due to the characteristics of
intangibility, consumers are difficult to evaluate the benefits
and relative advantage before using it. This characteristic
causes marketing problems for service providers (Zeithaml
et al., 1985). Cost includes all types of financial and
nonfinancial burdens the adopters will be subject to. Among
the burdens related to a new service, price is most apparent
that consumer can perceive and evaluate. For instance,
consumers are difficult to evaluate the cost of long waiting
time, but they can easily perceive the price level. Brucks et al.
(2000) showed that consumers use price and brand name
differently to judge the quality dimensions. According to
Range Theory:
People use the range of remembered price experiences to set a lower and
upper bound of price expectations, and attractiveness of a market price is a
function of its relative location within this range.
Janiszewski and Lichtenstein (1999) showed that variance in
the width of the evoked price range affects price-attractiveness
judgments without any variance in the internal reference
price. So, change in context can bring about changes in the
evoked price range and opinions of the attractiveness of a
market price (Janiszewski and Lichtenstein, 1999).
According to the price-expectancy model of consumer
choice, consumers evaluate products by comparing the price
with a reference or expected price determined from product’s
quality and the price-quality correlation of the product
category (Ordonez, 1998). In consumer choice, expectation
about prices are often examined as the “expected” or “fair”
price, the market price, the historical price, or the expected
future price. Empirical evidence shows that consumers form
and use reference prices when making choices (Ordonez,
1998). Because services are performance, rather than objects,
they cannot be seen, felt, tasted, or touched. The intangibility
of service makes price difficult to set (Zeithaml et al., 1985).
However, if the consumer feels that the price of service
innovation is reasonable (or fair), then he or she will have a
more positive attitude toward it, thus the likelihood of
adopting it will be higher:
11
Journal of Services Marketing
Volume 26 · Number 1 · 2012 · 9 –19
H2. Consumer perceived price fairness of service
innovation is positively related to consumer attitude
toward service innovation.
2.3 Satisfaction with existing service
Most service innovations imply change. Behaviors that are
comfortable, based on “habit” (Sheth, 1981) are resistant to
change. If the consumer is quite content with the current
routine and the willingness to change is low, then he/she is
likely to resist the innovation (Ram, 1987). Ellen et al. (1991)
show that the satisfaction experienced with an existing
behavior increases resistance to and reduces the likelihood
of adopting an alternative. Olshavsky and Spreng (1996)
suggest that satisfaction with old behaviors is a critical reason
influencing consumer’s innovation evaluation process. To
successfully use service innovation and enjoy the
accompanying benefits, consumers need to learn the
necessary skills to use the new system and change his/her
behavior. Thus, consumer’s satisfaction with the existing
service system becomes a negative factor in adopting a service
innovation. So, the more the consumer is satisfied with the
existing service, the less necessary the consumer will see the
new service innovation. Consumer’s satisfaction with the
existing service will negatively influence consumer attitude
toward service innovation:
H3. Consumer’s satisfaction with the existing service is
negatively related to consumer attitude toward service
innovation.
2.4 Fashion consciousness
Fashion consciousness refers to the degree to which
consumers like new and innovative products and gain
excitement from seeking out new things. Consumers with a
high score on this characteristic are fashion-conscious and
seemingly novelty-conscious (Sproles and Kendall, 1986).
Fashion-conscious consumers keep up-to-date with styles,
and being in style is important to them.
Service innovation means that service is provided by new
and innovative equipment, method, technology or process. In
most cases, new hardware and software are necessary to enjoy
the service innovation, and the hardware itself can become
another type of fashion, like cell phone, PDA and notebook.
From user’s perspective, using service innovation means that
he/she is able to catch up new information, keep up-to-date
with styles and enjoy new service by a more efficient system.
The service innovation may have a special appeal for fashion-
conscious consumers. Therefore, consumer’s fashion
consciousness is predicted to relate positively to consumer
attitude toward service innovation:
H4. Consumer’s fashion consciousness is positively related
to consumer attitude toward service innovation.
2.5 Risk averseness
Ram (1989) showed that behavioral resistance to an
innovation is caused mostly by two reasons: perceived risk
and cognitive resistance. Moreau et al. (2001) defined net
benefits as the gap between relative advantage and risk.
Consumers’ opinions of relative advantage and risk are based
on inferences about how the new product will or will not
satisfy specific goals. If the product is seen as satisfying
a positive goal or failing to satisfy a negative goal, it has a
 The determinants of consumer attitude toward service innovation
Bruce C.Y. Lee
relative advantage; conversely, if the product is seen as
satisfying a negative goal or failing to satisfy a positive goal, it
has a risk (Moreau et al., 2001).
“Risk” in relation to choosing brands is the probability of
occurrence of a problem with a particular product of a certain
brand multiplied by the negative consequences of that
problem (Peter and Ryan, 1976). Risk can be
conceptualized as an objective characteristic of a given
situation, but the assessment of risk involves an individual
bringing his or her own characteristics to the situation and the
accurate appraisal of risk (Conchar et al., 2004). Following
from subjective expected utility theory, risk is modeled by
reflecting the decision-maker’s response to uncertain
outcomes defined by the specific chances of risk (Mitchell,
1999). When a consumer makes a purchase decision, “risk”
implies “greater consequences of making a mistake” and
“degree of inconvenience of making a mistake” (Batra and
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Sinha, 2000). Mitchell (1992) argued that perceived risk
influenced the five stages of consumer decision process:
problem recognition, prepurchase information search,
evaluation of alternatives, purchase decision and post-
purchase behavior.
The intangibility of service increases consumer perceived
risk. Perceived risk is the risk a consumer feels in adopting an
innovation (Ram, 1989). For service innovation, there are
many doubts within the service process. Consumers usually
cannot detect and evaluate the service quality before
consumption, so a higher perceived risk would be expected.
Risk aversion is defined as “the extent to which people feel
threatened by ambiguous situations, and have created beliefs
and institutions that try to avoid these” (Hofstede and Bond,
1984). People with higher risk aversion are inclined to feel
threatened by risky and ambiguous situations (Hofstede,
1991; Gupta et al., 2004). So, consumer’s risk averseness is
predicted to be negatively related to consumer attitude toward
service innovation:
H5. Consumer’s risk averseness is negatively related to
consumer attitude toward service innovation.
2.6 Behavioral intention
Mathur (1999) showed that adoption of an innovation
involved both cognitive (awareness and interest) and
behavioral (trial and adoption) steps. According to
Reasoned Action Theory, behavior is determined by
intentions, which are in turn determined by attitudes and
subjective norms (Ajzen and Fishbein, 1980). The
relationship between attitude and behavioral intentions has
been widely examined and supported. Meta-analysis,
combining samples of over 10,000 participants, supports the
strong attitude-intention-behavior linkage (Kim and Hunter,
1993). Hence, consumer attitude toward service innovation
will positively influence consumer’s intention to use service
innovation:
H6. Consumer attitude toward service innovation is
positively related to consumer’s intention to use
service innovation.
Based on the above discussion, Figure 1 shows the
antecedents and consequence of consumer attitude toward
service innovation as a conceptual model.
12
Journal of Services Marketing
Volume 26 · Number 1 · 2012 · 9 –19
3. Methodology
The Electronic Toll Collection (ETC) system, which was
launched in Taiwan, is selected as a service innovation. After
30 years of operation, the car flow on the super highway
in Taiwan is six hundred millions units a year, with a seven-
percent growth rate, contributing tolls of 24 billion NT
dollars (about USD 730 million) a year. Before year 2006, the
super highway toll was collected manually. The government
had to hire many employees to carry out the collecting work,
and drivers need to stop and line up when passing each
tollgate. Starting in January of 2006, the government
authorized FETC (a private company) to collect a super
highway toll by ETC system. The new ETC system works in
parallel with the existing one. So, the drivers can choose the
traditional manual method or ETC system to pay the super
highway toll. In case the driver decides to use ETC, he or she
must apply for and install an on board unit (OBU) machine
and buy a value-storage card. The OBU is a detecting
machine that costs drivers about 40 US dollars. When passing
the ETC tollgate, the OBU is detected by infrared rays and a
toll is deducted from the value-storage card. Once the value in
the value-storage card is low, drivers can save credit at service
stations. By using ETC, the drivers can take the ETC tollgate
which is quicker. They do not need to prepare small change,
line up and stop in front of traditional tollgate to pay the toll
fee.
To examine the model and the postulated hypotheses, a
structured questionnaire was designed to collect consumers’
(drivers’) data, including demographic data, attitude toward
ETC, adoption of ETC, and possible antecedents of
consumer attitude toward ETC (e.g., PEOU, perceived
price fairness et al.). Questionnaires were delivered in person.
Six undergraduate students from a management college were
trained to complete the field survey. After introducing the
research purpose and gaining respondent’s agreement, each
respondent was given a questionnaire and asked to answer the
questions. After data collection, exploratory factor analysis,
item-to-total correlation, Cronbach alpha and confirmatory
factor analysis were used to screen and purify the
measurement items of latent factors (Fornell and Larcker,
1981; Gerbing and Anderson, 1988; Tian et al., 2001). The
structural equation modeling technique with LISREL VIII
program was used to estimate the structural coefficients and
test the hypotheses.
3.1 The measurement scale
Some measurement scales are adopted from the literature
with appropriate revision. The perceived ease of use measures
are drawn and revised from Davis (1989), the fashion
consciousness measures are taken and revised from Sproles
and Kendall (1986), and the risk averseness measures are
taken and revised from Burton et al. (1998). Measures
originally in English were translated into Chinese and back-
translated into English to ensure equivalent meaning (Brislin,
1980). Similar scales of attitude measure in the literature were
reviewed and modified to develop the scales of consumer
attitude toward service innovation (e.g., consumer attitude
toward technology and consumer attitude toward foreign
goods). Other measurement scales of constructs are created
by focus group discussion (Churchill, 1979), such as
perceived price fairness and satisfaction with the existing
service. After creating the initial item pool, a pilot study was
 The determinants of consumer attitude toward service innovation
Bruce C.Y. Lee
Figure 1 The conceptual model
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conducted to screen and purify the measurement scales. The
consumer’s intention to use service innovation is measured by
asking his/her possibility of installing ETC, from zero to
100 percent.
3.2 The pilot study
A convenient sample of 182 students enrolled in the
marketing course of the business college was invited to
participate in the pilot study. A total of 156 questionnaires
were completed and returned, representing a response rate of
86 percent. Of the respondents, 45.4 percent were male, and
had an average age was 21.3 years. An exploratory factor
analysis was used to screen the measurement items
(Churchill, 1979). Items with factor loading lower than 0.6
were deleted (Sharma, 1996). The coefficient alpha, the item-
to-total correlation and the confirmatory factor analyses
suggested by Churchill (1979), Fornell and Larcker (1981),
Gerbing and Anderson (1988), and Tian et al. (2001) were
used to screen and purify the measurement items. The latent
constructs and items were measured using a five-point Likert-
type scale. The Appendix lists the measurement scales of
latent factors which are used in the main study.
3.3 The main study
Convenience sampling, instead of random sampling, is
applied to collect field data. Theoretically, random selection
offers the best chance of minimizing the selection effects
because each individual in the population has an equal chance
of being sampled. Hultsch et al. (2002) argued that in
13
Journal of Services Marketing
Volume 26 · Number 1 · 2012 · 9 –19
practice, a sample drawn at random is not necessarily
representative of the population because not all people who
are approached will agree to participate and refusal rates may
vary across different types of individuals. Their study shows
that the pattern of relationships is markedly similar across
random and convenience samples. Of 69 pairs of correlations,
only three were significantly different (Hultsch et al., 2002).
Thus, we decide to use convenience sampling, which is by far
the most common sampling strategy in psychological research
(Hultsch et al., 2002).
The qualified sample must meet some criteria. First, he or
she must have a driver’s license. Second, he or she must own a
private car and use car as major traffic tool. Third, he or she
must know what ETC is. Before handing out the
questionnaire, each respondent was asked these three
questions to be sure of his or her qualifications. The survey
was conducted in Northern Taiwan (Taipei area), which is the
political and economic center and owns almost one-third of
population in Taiwan. After two weeks’ survey, 300 real
drivers were approached and asked to fill out the
questionnaire. The returned questionnaires with obvious
bias are then deleted (e.g. give the same answer all the lines).
Among the respondents, 279 questionnaires were well
finished and returned. Table I shows the profile of the
returned sample. In terms of gender, the distribution of the
sample is similar with that of all drivers in the Taipei area. The
percentage of younger drivers of the sample is a little higher
than that of all drivers in Taipei.
 The determinants of consumer attitude toward service innovation Journal of Services Marketing
Bruce C.Y. Lee Volume 26 · Number 1 · 2012 · 9 –19

Table I Profile of the sample Table III Squared correlation matrix of constructs
Distribution/percentage Construct EU Price Sati FC RA Attitude
Sample no. Percentage of all drivers in Taipeia
EU 0.72
Gender Price 0.27 0.74
Male 160 57.3 59.1 Sati 0.09 0.03 0.61
Female 119 42.7 40.9 FC 0.02 0.02 0.02 0.72
Total 279 100 100 RA 0.00 0.04 0.00 0.06 0.50
Attitude 0.50 0.22 0.15 0.03 0.01 0.69
Age
Under 29 64 22.9 18.4 Note: Numbers in diagonal indicate the average variance extracted (AVE) of
30 , 39 76 27.2 24.8 constructs
40 , 49 74 26.5 27.0
50 , 59 48 17.2 19.2
Above 60 17 6.1 10.6 The consumer perceived ease of use has a positive effect on
Total 279 100 100 consumer attitude toward service innovation, and it is
significant at the a ¼ 0:01 level (t-value ¼ 8:38). Thus, H1
Source: aMotor Vehicles Office, Taipei City Government, Taiwan is strongly supported. Consumer perceived price fairness has
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a positive effect on consumer attitude, and it is significant at

4. Result
4.1 Reliability and validity
Before testing the postulated hypotheses, the reliability and
validity of latent constructs are examined. Table II lists the
indicators of reliability and validity. The Cronbach alpha
shows good internal consistency of constructs, ranging from
0.71 to 0.89 (Nunnally and Bernstein, 1994). The reliability
coefficient is acceptable, ranging from 0.75 to 0.90 (Fornell
and Larcker, 1981). After confirmatory factor analysis, high
factor loadings and Lambda values appeared only between
each construct and its indicating items and t-value ranged
from 8.38 to 17.70, supporting the construct validity
(Gerbing and Anderson, 1988). The last column of Table II
shows the average variance extracted (AVE) of constructs, all
of them meet the criterion (0.5) proposed by Fornell and
Larcker (1981), supporting convergent validity (Gerbing and
Anderson, 1988). For discriminant validity, all the AVE values
listed in Table II exceeded the squared correlations between
constructs (Table III), supporting discriminant validity
(Fornell and Larcker, 1981).
4.2 Hypotheses test
Model parameters were estimated using the LISREL VIII
program to test the postulated hypotheses. Table IV presents
the results. From the model fitness indexes, GFI is 0.92
and AGFI is 0.89, showing the collected data fits the
postulated model (Figure 1). The estimated structural
coefficients and t-values are used to test each hypothesis.
the a ¼ 0:05 level (t-value ¼1.99). Therefore, H2 is
supported. Consumer’s satisfaction with the existing service
has a negative effect on consumer attitude, and it is significant
at the a ¼ 0:01 level (t-value ¼ 25:84). So, H3 is strongly
supported. Consumer’s fashion consciousness is expected to
have a positive effect on consumer attitude. The result shows
that the relationship is not significant, so, H4 is not supported
in this study. Consumer’s risk averseness is expected to have a
negative effect on consumer attitude. The study result shows
that it is significant at the a ¼ 0:1 level (t-value ¼ 21:86), so,
H5 is weekly supported. Finally, consumer attitude positively
influences consumer’s intention to adopt service innovation.
This is significant at the a ¼ 0:01 level (t-value ¼ 9:71) and,
therefore, strongly supports H6 and the Reasoned Action
Theory (Ajzen and Fishbein, 1980).
To remove unnecessary interference from insignificant
antecedents, we remove fashion consciousness and get a
reduced model. Again, model fitness is good, GFI is 0.93 and
AGFI is 0.89. Each structural coefficient is significant (Table
IV), further supporting our findings.
5. Conclusion and discussion
The study results provide theoretical insights for service
innovation and management implications for service
innovation providers. First, study result shows that
consumer perceived ease of use has a positive effect on
consumer attitude toward service innovation. The findings
support the importance of ease of use in consumer’s
acceptance of innovation (Davis, 1989). In service industry,

Table II Reliability and validity of constructs

Average variance
Construct Item no. Cronbach a Reliabilitya extracted (AVE)a
Perceived ease of use (EU) 2 0.82 0.83 0.72
Perceived Price fairness (Price) 3 0.89 0.90 0.74
Satisfaction with existing service (Sati) 3 0.81 0.82 0.61
Fashion consciousness (FC) 3 0.87 0.88 0.72
Risk averseness (RA) 3 0.71 0.75 0.50
Consumer attitude toward ETC (Attitude) 4 0.89 0.90 0.69
Source: a Fornell and Larcker (1981)

14
 The determinants of consumer attitude toward service innovation
Bruce C.Y. Lee
Table IV Estimation results of models
EU Price
t-value t-value
Full modela
Attitude 0.60 8.38 * 0.13 1.99 * * 20.37
Intention
Reduced modelb
Attitude 0.61 8.50 * 0.13 2.09 * * 20.28
Intention
Notes: aModel fitness: x2 ¼ 208:74 (df ¼ 135); GFI ¼ 0:92; AGFI ¼ 0:89; CFI ¼ 0:86; bModel fitness: x2 ¼ 161:71 (df ¼ 93); GFI ¼ 0:93; AGFI ¼ 0:89;
CFI ¼ 0:84; *significant at a ¼ 0:01; * *significant at a ¼ 0:05; * * *significant at a ¼ 0:1
ease of use relates to service process and interface system.
Downloaded by UNIVERSITE CATHOLIQUE DE LILLE At 06:18 14 May 2018 (PT)
A user-oriented process design and friendly interface system
will be helpful for the diffusion of service innovation. If the
service system cannot be simplified, then service assistance
should be considered. By a national mail survey, Mathur
(1999) found that the adoption of innovation by the elderly is
influenced by assistance from family members and non-family
personal sources. Before introducing a service innovation, the
service provider must seriously consider the possible
difficulties of usage the consumer will meet.
Second, consumer perceived price fairness has a positive
effect on consumer attitude toward service innovation. Due to
the characteristic of intangibility, setting a price is not easy for
service provider (Zeithaml et al., 1985). In addition to cost
and profit, service provider must consider target consumers’
price perception. Consumer research may help find out
feasible price range of new service.
Third, consumer’s satisfaction with the existing service has
a negative effect on consumer attitude toward service
innovation. The result complies with the findings of Ellen
et al. (1991). Sometimes, change is good, but is not easy.
Before asking consumers to change, the new service provider
needs to provide good reasons for consumers. Educating
consumers, showing the benefits of new service and
comparing with existing service are possible ways to cause
consumers’ dissatisfaction with the existing service. In
addition, the result highlights the importance of background
when service innovation is introduced. The best time to
introduce new service is when service failures occur with the
existing service (e.g., long waiting time and mistake caused by
people). The innovative service provider should consider the
timing of launch new service seriously.
Furthermore, risk averseness has a negative effect on
consumer attitude toward service innovation, which is
expected. Risk perception always follows change, as well as
innovation. Due to the characteristics of intangibility and
heterogeneity, service failure might occur anywhere. Service
providers should design service process seriously to reduce the
possibility of service failure. Once service failure occurs,
service recovery program will be very important. Before
launching a service innovation, the service provider needs to
examine possible risk from the consumer’s perspective and
design fitting relievers to reduce consumer’s risk, hence
improving consumer adoption.
Finally, according to reason action theory, consumer
attitude is included in our adoption model of service
Journal of Services Marketing
Volume 26 · Number 1 · 2012 · 9 –19
Gamma Beta
Sati FC RA Attitude
t-value t-value t-value t-value
25.84 * 0.03 0.53 20.11 21.86 * * *
0.63 9.71 *
24.79 * – – 20.10 21.84 * * *
0.65 10.06 *
innovation. Study result shows that its influence on
consumer’s adoption of service innovation is significant.
This finding complies the meta-analysis conducted by
Kim and Hunter (1993), which supports the strong
attitude-intention-behavior linkage. Berger et al. (1994)
recommended that managers’ efforts should be focused on
altering consumer attitudes before guiding their behavioral
decisions. In innovation researches, Mathur (1999) also
indicated that the adoption of innovation involves both
cognitive (awareness and interest) and behavioral (trial and
adoption) steps. Before pushing consumer to adopt service
innovation, the service provider should change consumer
attitude in advance.
For innovation research, most researchers focused on
product innovation with a high level of technology (Ellen et al.,
1991; Lee et al., 2002, 2003; Lin et al., 2007; Mathur, 1999;
Moreau et al., 2001). However, services have specific
characteristics of intangibility, inseparability, heterogeneity
and perishability (Zeithaml et al., 1985). A good service
system includes good hardware, software, service process and
service providers (people). In the present study, a good ETC
system includes good OBU, infrared ray detector, information
system, payment process and well-trained service providers.
Service innovation means that service is provided by new and
innovative equipment, method, technology or process. Hence,
the factors influencing the consumer adoption of service
innovation become more complex than tangible product. This
research focuses on service industry. It is based on Reasoned
Action Theory to propose a conceptual model to examine
consumer attitude toward service innovation and its
determinants. The research findings extend the causal links
of Reasoned Action Theory to improve our understanding of
service innovation from the consumer’s point of view. By
linking traditional consumer theory and the innovation field,
this article reveals a new direction for future research on
service innovation.
6. Managerial implications
Attitude influences behavior; hence, the determinants of
consumer attitude toward service innovation are key factors
influencing consumer’s adoption of service innovation, as well
as the success of new service. In the present study, four factors
are shown to influence significantly consumer attitude toward
service innovation. They include perceived ease of use, risk
averseness, perceived price fairness and satisfaction with
15
 The determinants of consumer attitude toward service innovation
Bruce C.Y. Lee
existing service. When designing a service innovation,
managers should consider the ease of use of target
consumers, including the service process and operation of
necessary facilities. Better understanding of target consumers
and user-oriented process design will be very helpful. In
addition, risk perception always follows innovation. Managers
should design service recovery system or risk relievers to
reduce consumer’s risk, thus fostering consumer’s adoption of
service innovation. When introducing a service innovation,
serious consideration should be given to the price and timing
of launch. Compared with the benefit of service innovation,
the price of using new service must be perceived as fair. To
achieve that, the obvious value and benefit of service
innovation should be highlighted. Another issue is the
timing of service innovation launch. Failure of existing
service will cause customer dissatisfaction, which provides the
best opportunity for the launch of service innovation. If this
opportunity does not appear, managers may need to find ways
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to decrease customer’s satisfaction with existing service, such
as highlighting the defect of existing service, thereby forcing
consumers to switch to new service.
7. Limitations and suggestions
There are some limitations in this study, which point out
directions for further research. First, to prevent the
questionnaire from becoming too lengthy, only some of the
personal and service-related factors are included in this study.
Further research could incorporate other external factors to
examine their effects. For instance, when a new service system
is launched, the operation process may not be stable; the
possibility of error occurrence will thus be high. Hence, the
degree of maturity in the service system may influence user’s
trust in it, which would in turn affect consumer attitude
toward it (Sultan, 1999). In addition, with service being
intangible, it is difficult for consumers to evaluate the service
quality before using it. Word of mouth may become important
information source for consumers, influencing their attitude
toward service innovation. In addition, consumers may rely
on corporate image (or brand image) when making decisions.
Hence, the influence of corporate image of service provider on
consumer’s adoption of service innovation will also be of
interest. Second, although several service industries exist, the
service type and process may differ across industries. The
ETC system was selected as the service innovation in the
present study to test the conceptual model empirically. Car
drivers are selected as samples since they are potential users of
ETC. For different services (e.g., education, health care), the
target group may differ; hence, consumer adoption of service
innovation as well as its determinants may differ across
industries. Further research could choose different services
for comparison to extend the findings. Third, convenience
sampling is used in the present study. When comparing the
driving population in the Taipei area in terms of age, we did
over-sample younger drivers and under-sample older ones.
More structured sampling in further research will be helpful
to reduce the interference of age. Finally, when introducing a
service innovation, a service provider usually needs to design a
promotion program to speed up the diffusion of innovation.
Owing to varied characteristics of service, different promotion
strategies may have different influence on consumer’s
adoption of service innovation. Answering these questions
will be helpful for practitioners.
16
Journal of Services Marketing
Volume 26 · Number 1 · 2012 · 9 –19
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Appendix. Measurement scales
(Respondents are requested to answer the following questions
with answers from strongly agree to strongly disagree on a
Likert five-point scale, “ 2 ” in parentheses means a negative
statement.)
Perceived ease of use (Davis, 1989)
.
The operation of ETC is easy.
.
ETC is flexible in use.
 The determinants of consumer attitude toward service innovation
Bruce C.Y. Lee
Perceived price fairness
.
The price of installing ETC is reasonable.
. The price of using ETC is reasonable.
.
The value of ETC exceeds the price paid.
Satisfaction with existing service
.
I am satisfied with the current manual system.
.
It is inconvenient to stop at each station (2).
.
The current manual system wastes my time (2 ).
Fashion consciousness (Sproles and Kendall, 1986)
.
Being fashionable is very important to me.
.
Using stylish goods makes me trendy.
.
It is fun to buy something new and exciting.
Risk averseness (Burton et al., 1998)
.
I don’t like to take risks.
.
I have no desire to take unnecessary chances on things.
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.
I do my best to avoid taking risks.
Consumer attitude toward ETC
. I think ETC is a good system.
.
The ETC makes me feel good.
. I prefer to use ETC.
.
I like ETC.
About the author
Bruce C.Y. Lee is an Associate Professor in Finance and
International Business Department at Fu Jen Catholic
University in Taiwan. He had been the sales manager of
Exxon Corporation Taiwan Branch. He received his PhD
degree in Management Science from National Chiao Tung
University in Taiwan. His primary research interests include
innovation management, electronic commerce, marketing
channel, and international marketing. His research appears in
International Marketing Review, Total Quality Management and
Business Excellence, International Journal of Electronic Business
Management, Australasian Marketing Journal, Journal of
Retailing and Consumer Services, International Journal of
Revenue Management and Tourism Management. Bruce C.Y.
Lee can be contacted at: bchome@ms18.hinet.net
Executive summary and implications for
managers and executives
This summary has been provided to allow managers and executives
a rapid appreciation of the content of the article. Those with a
particular interest in the topic covered may then read the article in
toto to take advantage of the more comprehensive description of the
research undertaken and its results to get the full benefit of the
material present.
In a praiseworthy attempt to make life simpler for its patients,
and more efficient for itself, a medical center introduced a
new, automatic “sign-in” facility, meaning patients did not
have to queue up at a counter to say they had arrived for their
appointments. A web-based appointments system was also
introduced to avoid patients having to telephone several times
because they kept getting the “line busy” tone at peak periods.
Result? Many patients continued their “old ways” of doing
things, for a variety of reasons – either they did not trust the
internet to result in a doctor’s appointment being made, or
they felt more confident that staff knew they had arrived if
18
Journal of Services Marketing
Volume 26 · Number 1 · 2012 · 9 –19
they spoke to them face-to-face rather than keyed their details
into a machine.
Moral of the tale? That, while service innovation offers the
potential for substantially improving performance, both for
profit and nonprofit organizations, performance gains are
often obstructed by users’ unwillingness to accept and use
available systems. Maybe they find them difficult to use, at
least initially, or see no benefit to themselves in changing from
the “tried and trusted” system they have got used to.
It is a worry that needs to be addressed as businesses are
turning more and more to computer-assisted methods to
increase efficiency and provide a competitive edge. Firms are
continually reminded that innovations within the firm and for
its customers are the keys to their success and survival in a
competitive environment. Before introducing service
innovation, the service provider must seriously consider the
possible difficulties of usage and risk from the consumer’s
perspective. Before pushing consumers to adopt service
innovation, the service provider should try to change
consumer attitudes in advance.
In “The determinants of consumer attitude toward service
innovation – the evidence of ETC system in Taiwan” Bruce
C.Y. Lee studies the usage of the electronic toll collecting
(ETC) system launched on a super highway in Taiwan.
Previously many employees were needed to collect tolls and
drivers had to stop at each tollgate. The ETC requires drivers
to apply for and install an on board unit which is detected and
charged automatically, without stopping, at the tollgate.
Drivers can choose to use the new, more efficient, system or
stick with the old one.
Attitude influences behavior; hence, the determinants of
consumer attitude toward service innovation are key factors
influencing consumers’ adoption of service innovation, as well
as the success of a new service. Four factors are shown to
significantly influence consumers’ attitude toward service
innovation:
1 perceived ease of use;
2 risk averseness;
3 perceived price fairness; and
4 satisfaction with existing service.
When designing a service innovation, managers should
consider the ease of use of target consumers, including the
service process and operation of necessary facilities. Better
understanding of target consumers and user-oriented process
design will be very helpful. In addition, risk perception always
follows innovation. Managers should design service recovery
systems or risk relievers to reduce consumers’ risk, thus
fostering consumers’ adoption of service innovation. When
introducing a service innovation, serious consideration should
be given to the price and timing of launch.
Compared with the benefit of service innovation, the price
of using a new service must be perceived as fair. To achieve
this, the obvious value and benefits should be highlighted.
Another issue is the timing of service innovation launch.
Failure of an existing service will cause customer
dissatisfaction, which provides the best opportunity for the
launch of service innovation. If this opportunity does not
appear, managers may need to find ways to decrease
customers’ satisfaction with the existing service, such as
highlighting defects, thereby encouraging consumers to
switch.
 The determinants of consumer attitude toward service innovation Journal of Services Marketing
Bruce C.Y. Lee Volume 26 · Number 1 · 2012 · 9 –19

The study findings show that consumer perceived ease of
use has a positive effect on consumer attitude toward service
innovation. A user oriented process design and friendly
interface system will be helpful for the diffusion of service
innovation. If the service system cannot be simplified, then
assistance should be considered. Before introducing a service
innovation, the service provider must seriously consider the
possible difficulties of usage the consumer will meet.
Second, consumer perceived price fairness has a positive
effect on consumer attitude toward service innovation. In
addition to cost and profit, service providers must consider
target consumers’ price perception. Consumer research may
help find the feasible price range of a new service.
Downloaded by UNIVERSITE CATHOLIQUE DE LILLE At 06:18 14 May 2018 (PT)
Third, consumers’ satisfaction with the existing service has
a negative effect on consumer attitude toward service
innovation. Before asking consumers to change, good
reasons must be provided. Educating consumers, showing
the benefits of a new service and comparing it with the
existing service are possible ways to cause consumers’
dissatisfaction with the existing service. The best time to
introduce a new service is when service failures occur within
the existing service (e.g., long waiting times).
(A précis of the article “The determinants of consumer attitude
toward service innovation – the evidence of ETC system in
Taiwan”. Supplied by Marketing Consultants for Emerald.)

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