Available online at www.sciencedirect.

com

Procedia - Social and Behavioral Sciences 65 (2012) 397 – 403

International Congress on Interdisciplinary Business and Social Science 2012

(ICIBSoS 2012)

Continued Usage Intention of E-Filing System in Malaysia:

The Role of Optimism Bias
T. Santhanamerya*, T. Ramayahb
a
Faculty of Business Administration,
Universiti Teknologi MARA Malaysia,
13500 Permatang Pauh, Penang, Malaysia
santha190@ppinang.uitm.edu.my / santhana_1@yahoo.com
b
School of Management,
Universiti Sains Malaysia,
11800 Gelugor, Penang, Malaysia
ramayah@usm.my / ramayah@gmail.com
+604 653 3888 (Ext: 3889)

Abstract
E-Filing which was introduced by the Malaysian government in 2006 is gaining its popularity in the past
5 years. However, an information system implementation can be considered a great success only when the
users move beyond the initial adoption to a long term usage. Previous studies in Malaysia have found a
significant relationship between perceived risk and intention to use e-filing system. However the current
trend shows that the number of taxpayers using e-filing is increasing year by year regardless of the
existence of perceived risk. Thus this paper is a conceptual paper proposed to investigate the role of
optimism bias on this phenomenon. The self administered survey will be carried out on the individual
salaried taxpayers who have used the e-filing system atleast once in five main cities in Malaysia.
© 2012
© 2012The Authors.by
Published Published
ElsevierbyLtd.
Elsevier Ltd. Open
Selection access under CC BY-NC-ND license.
and/or peer-review under responsibility of JIBES University
Selection and peer-review under responsibility of JIBES University, Jakarta
Jakarta
Keywords: E-Filing; Optimism Bias; Continued Usage; E-Government; Perceived Risk

1. Introduction

The increasing number of internet users has actually led many private organizations in utilizing
the Internet as a new way of conducting business, known as e-commerce . The speedy growth in the use
of the internet and the emergence of e-commerce has eventually increased the pressure on the government
to administer to citizens needs via this new medium which is known as e-government (Vathanophas et
al. [1].

1877-0428 © 2012 The Authors. Published by Elsevier Ltd. Open access under CC BY-NC-ND license.
Selection and peer-review under responsibility of JIBES University, Jakarta
doi:10.1016/j.sbspro.2012.11.140
398 T. Santhanamery and T. Ramayah / Procedia - Social and Behavioral Sciences 65 (2012) 397 – 403

*
Corresponding author. Tel.: +6012-5283521; fax: +604 540 2444
. E-mail address: santhana_1@yahoo.com.
According to Fang [2] the term e-government or electronic government refers to the use of
information technology by government agencies, such as web-based Networks, the Internet, and mobile
computing, that have the ability to transform relations with citizens, businesses, and other arms of
government. Like many other developing countries, Malaysian government also has been investing in e-
government (Lean et al. [3]). Malaysia s strategic shift into the information and knowledge era offers the
country and the world an attractive global multimedia environment where the unique elements and
attributes of information, ideas, people, service and technology are able to fuse, grow and deliver a
globally replicable chain of innovative products, services and best practices (Muhammad Rais and
Nazariah, [4]). Guided by the Vision 2020, Malaysia has embarked on an ambitious plan by launching
Multimedia Super Corridor (MSC) in August 1996 to accelerate the country s entry into Information Age
which will be executed in three phases from 1996 2020. Seven specific flagship applications were
identified as the pioneering MSC projects which includes e-government flagship. Under the e-government
flagship, seven pilot projects of E-Government Flagship Application was identified such as Electronic
Procurement (EP), Project Monitoring System (PMS), Electronic Services Delivery (E-Services), Human
Resource Management Information System (HRMIS), Generic Office Environment (GOE), E-Syariah
and Electronic Labor Exchange (ELX) (Muhammad Rais & Nazariah, 2003). Apart from this, various
government agencies also have taken initiatives to introduce online services to the public with one of the
most popular online services is e-filing of income tax (Ambali [5]).
A useful indicator to determine the status of e-government in developing countries is by
comparing its e-government readiness index with the other countries (Bhatnagar, [6]). Malaysia s ranking
for e-government development index has improved from the ranking of 43 (2005) to 34 (2008) to 32
(2010) (UNPAN (7]). In South East Asia Category, Malaysia s ranking has also improved from 3rd
ranking (2005) to 2nd raking in 2008 and 2010 but with an improved index (UNPAN [7]). In terms of e-
Participation Index, there has been a tremendous improvement for Malaysia where its ranking improved
from the placing of 41 (2008) to 12 (2010) (UNPAN [7]). In reality, all these rankings actually show the
initiatives and technology developments made by the Malaysian Government in making sure that the e-
government services reach the citizens. These initiatives truly resemble the supply side of the e-
government development delivery (Gauld et al. [8]). What about the demand side ? To what extend the
citizens are going to use or continually use these particular services?, remains as an important question to
be answered because countries can be high in e-government rankings which focus more on technology
developments but a system is still considered a failed system if the intended recipients do not use or
continually use them (Gauld et al.[8]). Thus the underlying problem now is not the problem of design but
utilization. The key to successful e-government depends very much on the utilization of the implemented
systems (Economist [9]).
Past researches in examining the continuance usage intention have acknowledged various factors
that affect technology adoption and its continued usage such as usefulness, ease of use, self efficacy,
quality, loyalty, voluntariness and subjective norm in either e-commerce or e-government environment.
Recent studies have found linkages between technology adoption and optimism bias (Carter et al., [10];
Schaupp et al. [11], Schaupp and Carter [12], Carter et al. [13]. Indicating that optimism bias does have
an effect on technology adoption. Several researches found that despite the existence of perceived risk
many people still utilize the e-government services (McLeod et al. [14]; Belanger and Carter [15]). In
Malaysia, earlier studies (Azmi and Bee [16]; Ambali [5]; Ramayah et al. [17]) on e-filing system found a
significant relationship between perceived risk and intention to use e-filing system which means that the
higher the perceived risk, the lower the intention to adopt the e-filing system. However, the current
situation shows that the number of tax payers adopting e-filing system is gradually increasing year by
year regardless of the existence of perceived risk. Thus optimism bias may have an effect on this
phenomenon. Further, a survey by Nielson company found that although online security is a top concern
among the online shoppers in Malaysia but Malaysians spent RM1.8 billion shopping via the Internet in
2010 (Ho [18]). So, the question that needs to be raised are Malaysians optimistically biased on the risk
of online transactions ? This is something that should be tackled carefully in order to avoid any
 T. Santhanamery and T. Ramayah / Procedia - Social and Behavioral Sciences 65 (2012) 397 – 403 399

vulnerability of taxpayers information online and to avoid tax payers from giving up in submitting
their online tax filing in the case of any security breach (Ambali [5]). As such, this paper will explore the
effect of optimism bias on the continuance usage intention. The proposed research model will be tested on
the tax payers and their continuance usage intention of e-filing system to file their tax online in Malaysia

2. Background

2.1. E-Filing System in Malaysia

The e-Filing system in Malaysia which was introduced in 2006 by the IRB is receiving much
attention and there has been an upward trend in the adoption of the system among taxpayers in the first
four years (Annual Report [19]). The last two years income tax submission also shows a further increase
in e-filing submission to 1.5 million in 2010 (Mohd Shukor [20]) and 1.7 million in 2011 (Lai [21]). The
E - filing system as a whole integrates tax preparation, tax filing and tax payment, which serves as a
major advantage over traditional manual procedure (Ambali [5]). Since its introduction in 2006, e-filing
has evolved each year in order to provide better service to the taxpayers. Hasmah [22], the CEO of Inland
Revenue Board of Malaysia (IRBM) has highlighted the various advantages that the e-filing system can
provide for both the parties. Among them are time saving, cost effective, accurate, easy and available,
increase productivity and secure. However, according to Bhattacherjee [23], while initial acceptance of
information system (IS) is very important toward realizing IS success but its eventual success depend on
its continued use rather than first-time use.

Figure 1 Submission via E-Filing (Adapted from Annual Report IRBM)

2.2 Optimism Bias

Optimism Bias has received a great attention from scholars in different field earlier such as
Chapin and Pierce [24], Son and Rojas [25], Cho et al. [26], Lapsley and Hill [27], Ackerson and Preston
[28], Bracha and Brown [29], Dalziel and Job [30], Moen and Rundmo [31], Branstrom et al., [32].
Optimism bias is defined as systematic error in perception of an individual s own standing relative to
group averages, in which negative events are seen as less likely to occur to the individual than average
compared with the group, and positive events as more likely to occur than average compared with the
group (Weinstein [33]). Besides, it is also defined as tendency for people to report that they are less
likely than others to experience negative events and more likely than others in positive events (Larsen
and Shepperd [34]).
Optimism bias is actually a belief that one s abilities are better or more competent than the
average Internet user in using the e-services despite risk, which will consequently lead to increased in the
400 T. Santhanamery and T. Ramayah / Procedia - Social and Behavioral Sciences 65 (2012) 397 – 403

usage of the services (Schaupp and Carter [12]). The role of optimism bias has been explored in the pre
adoption environment of e-filing research previously but a mixed result was found. Carter et al. [10],
Schaupp et al. [11], Schaupp and Carter (12) and Carter et al. [13]) found that optimism bias has a
positive impact on e-filing usage intention, however study by Schaupp et al. [35] disagree with previous
findings and found that optimism bias has no significant relationship towards electronic tax filing
adoption. Therefore this study will attempt to identify the effect of optimism bias on the continuance
usage intention of e-filing system in Malaysia.

3. RESEARCH METHODOLOGY

To test these proposals, taxpayers will be surveyed to collect data using a set of questionnaire
which will be distributed by using self-administered survey upon those taxpayers who are easily
reachable. The unit of analysis chosen for this study is the individual salaried taxpayers who have used
the e-filing system to file their tax online at least once. The reason individual salaried taxpayer is chosen
due to the fact that they are the pioneering group who used the e-filing system since 2006 .The study will
employ a sample of 1000 taxpaying citizens in five different main cities in Malaysia such as Penang,
Perak, Selangor, Kuala Lumpur and Johor. Data collected will be analyzed using Partial Least Square
(PLS) method. Data will be analyzed using a two step approach whereby the measurement models are
assessed for adequate validity and unidimensionality before commencing to structural model effects and
interaction modeling to test the research hypotheses.

4. DISCUSSION

The e-Filing system in Malaysia which was introduced in 2006 by the IRB is receiving much
attention and there has been an upward trend in the adoption of the system among taxpayers every year.
However, according to Bhattacherjee [23], while initial acceptance of information system (IS) is very
important toward realizing IS success but its eventual success depend on its continued use rather than
first-time use. Ambali [5] revealed that although electronic tax filing are gaining popularity among tax
payers but most people use the system to try to get the feel of submitting tax electronically with poor
navigability and a sense of uncertainty about the functionality, security and concern for their sensitive
information, which may lead the users to give up the idea in despair.
Many of the existing studies on the individual adoption of information technology (IT) have
focused on investigating the intention to use or to adopt an IT, while less attention is paid to the post
adoption environment where individuals decides whether to continue or discontinue using an IT (Thong
et al. [36]). It is observed that in most cases after initial usage of e-government services many users
revert to traditional ways of acquiring information and services, therefore engaging and retaining citizens
for continued usage are a challenge faced by most government agencies providing online public
services (Teo et al. [37]).
Practically, this study will emphasize on the estimation of risk by taxpayers when engaging in
the e-filing system. By identifying the level of optimism bias in engaging in e-filing system among
Malaysian taxpayers, it will actually create awareness among taxpayers on the level of concern that they
have on the privacy and security of personal information infringement. Thus, encourage them to be more
cautious in providing their personal information online. People can easily argue that the taxpayers will not
have any hesitation in trusting the system provided by the Malaysian federal and state government in
transmitting their income tax information, however, taxpayers can still be doubtful in the way the agency
is going to transmit and store their information provided (Ambali [5]).
 T. Santhanamery and T. Ramayah / Procedia - Social and Behavioral Sciences 65 (2012) 397 – 403 401

REFERENCES
[1] Vathanophas V, Krittayaphongphun N, Klomsiri C. Technology acceptance toward e-government
initiative in royal Thai navy. Transforming Government: People, Process and Policy 2008; 2(4):
256-282.
[2] Fang Z. E-government in digital era: concept, practice and development. International Journal of the
Computer, the Internet and Management 2002; 10(2): 1-22.
[3] Lean OK, Zailani S, Ramayah T, Fernando Y. Factors influencing intention to use e-government
services among citizens in Malaysia. International Journal of Information Management 2009;
29(6): 458-475.
[4] Muhammad Rais AK, Nazariah MK. E-government in Malaysia. Pelanduk Publications (M) Sdn Bhd
2003.
[5] Ambali AR. E-government policy: ground issues in e-filing system. European Journal of Social
Sciences 2009; 11(2): 249-266.
[6] Bhatnagar S. Unlocking E-government potential: concepts, cases and practical insights. 1st ed. SAGE
Publications India Pvt Ltd 2009.
[7] United Nations E-Government Survey (UNPAN). Leveraging e-government at a time of financial and
economic crisis 2010. Retrieved from the web on January 11, 2011.
http://unpan1.un.org/intradoc/groups/public/documents/un/unpan038851.pdf
[8] Gauld R, Goldfinch S, Horsburgh S. Do they want it? Do they use it? The Demand-Side of e-
government in Australia and New Zealand. Government Information Quarterly 2010; 27(2):
177-186.
[9] Economist. The god, the bad and the inevitable: the pros and cons of e-government 2008. Retrieved
from the web on April 28th, 2011.
http://www.economist.com/node/10638105?story_id=10638105
[10] Carter, L., Schaupp, L. C., Hobbs, J., & Campbell, R. E-Government Utilization: Understanding the
Impact of Reputation and Risk. International Journal of Electronic Government Research
(IJEGR) 2012, 8(1), 83-97.

[11] Schaupp LC, Carter L, McBride ME. E-file adoption: a study of US. taxpayers intentions.
Computers in Human Behavior 2010; 26(4): 636-644.
[12] Schaupp LC, Carter L. The impact of trust, risk and optimism bias on e-file adoption. Information
Systems Frontiers 2010; 12(3): 299-309.
[13] Carter L, Schaupp LC, Evans A. Antecedents to e-File Adoption: The U.S. Perspective. Proceedings
of the 41st Hawaii International Conference on System Sciences 2008; 1-7.

[14] McLeod A, Pippin S, Catania V. Using Technology Acceptance Theory to Model Individual
Differences in Tax Software Use. Proceedings of the Fifteenth Americas Conference on
Information Systems (AMCIS) 2009;San Francisco, California, 6-9 August: Paper 811.
[15] Belanger F, Carter L. Trust and risk in e-government adoption. Journal of Strategic Information
Systems 2008; 17(2): 165-176.
[16] Azmi AC, Bee NL. The acceptance of the e-filing system by Malaysian taxpayers: a simplified
model. Electronic Journal of e-Government 2010; 8(1): 13-22.
402 T. Santhanamery and T. Ramayah / Procedia - Social and Behavioral Sciences 65 (2012) 397 – 403

[17] Ramayah T, Ramoo V, Ibrahim A. Profiling online and manual tax filers: results from an exploratory
study in penang, Malaysia. Labuan e-Journal of Muamalat and Society 2008; 2: 1-8.
[18] Ho S. Malaysians spent RM1.8bil shopping online in 2010. The STAR, Nation, N3. (2011, April 22).
[19] Annual Report Inland Revenue Board of Malaysia. (2009). Retrieved from the web April 5th, 2011.
http://www.hasil.gov.my/pdf/pdfam/AR2009_2.pdf
[20] Mohd Shukor HM. Effectively delivering government services at LHDN 2010. Retrieved from the
web June 3rd, 2010.
http://www.ibm.com/smarterplanet/global/files/us_en_us_government_dr_mohd_final_6-3-
2010.pdf
[21] Lai I. 136,000 who filed returns in march get tax refund (2011, May 1). The STAR, Nation, N4.
[22]Hasmah A. e-Filing pays 2009. Retrieved from the web April 12, 2010.
http://www.intanbk.intan.my/i-
portal/nict/nict/DAY1/SESSION3PARALLEL1(SESSION3A)/Dato_hasmah_e-filing_Pays.pdf
[23] Bhattacherjee A. Understanding information systems continuance: an expectation-confirmation
model. MIS Quarterly 2001; 25(3): 351-370.
[24] Chapin JR, Pierce M. Optimistic Bias, Sexual Assault and Fear. The Journal of General Psychology
2012; 139(1): 19-28.
[25] Son JW, Rojas EM. Impact of optimism bias regarding organizational dynamics on project planning
and control. Journal of Construction Engineering and Management 2011; 137(2): 147-157.
[26] Cho H, Lee JS, Chung S. Optimistic bias about online privacy risks: testing the moderating effects of
perceived controllability and prior experience. Computers in Human Behavior 2010; 26(5): 987-
995.
[27] Lapsley DK, Hill PL. Subjective invulnerability, optimism bias and adjustment in emerging
adulthood. Journal of Youth and Adolescence 2010; 39(8):847 857.
[28] Ackerson K, Preston SD. A decision theory perspective on why women do or do not decide to have
cancer screening: Systematic Review. Journal of Advanced Nursing 2009; 65(6): 1130-1140.
[29] Bracha A, Brown DJ. Affective Decision Making: A Behavioral Theory of Choice. Cowles
Foundation Discussion Paper, Yale University 2007.
[30] Dalziel JR, Job RFS. Motor Vehicle Accidents, Fatigue Optimism Bias In Taxi Drivers. Accident
Analysis and Prevention 1997; 29(4): 489-494.
[31] Moen B, Rundmo T. Predictors of Unrealistic Optimism: A Study of Norwegian Risk Takers.
Journal of Risk Research 2005; 8(5): 363-382.
[32] Branstrom R, Kristjansson S, Ullen H. Risk Perception, Optimistic Bias, And Readiness To Change
Sun Related Behaviour. European Journal of Public Health 2005; 16 (5): 492 497.
[33] Weinstein ND. Unrealistic optimism about future life events. Journal of Personality and Social
Psychology 1980; 39(5): 806-820.
[34] Larsen MH, Shepperd JA. Do moderators of the optimistic bias affect personal or target risk
estimates? a review of the literature. Personality and Social Psychology 2001; 5(1): 74 95.
[35] Schaupp LC, Carter L, Hobbs J. Electronic tax filing: the impact of reputation and security on
adoption. Proceedings of the 43rd Hawaii International Conference on System Sciences 2010; 1-
10.
 T. Santhanamery and T. Ramayah / Procedia - Social and Behavioral Sciences 65 (2012) 397 – 403 403

[36] Thong JYL, Hong SJ, Tam KY. The Effects of Post-Adoption Beliefs on the Expectation-
Confirmation Model for Information Technology Continuance. International Journal of Human
Computer Studies 2006; 64(9): 799-810.
[37] Teo TSH, Srivastava SC, Jiang L. Trust and Electronic Government Success: An Empirical Study.
Journal of Management Information Systems 2008; 25(3): 99-131.