Keywords

1 Introduction

With the introduction of smartphones to consumers, various intelligent technologies have been rapidly spread into consumers’ daily life. Recently intelligent services such as voice assistant and biometric authentication have been released in the consumer market, and intelligent products such as autonomous vehicle and smart home devices are on the verge of market launch. Intelligent products and services are expected to bring consumers convenience and efficiency that they have never experienced. However, intelligent products and services are not widely used among consumers. According to the 2018 Survey on Information Security in Korea, only 18.7% of internet users used AI services and only 3.8% used IoT products and services.

The benefits of intelligent products and services may be enjoyed by those segments of the population who have the requisite ability to use them. The ability to use ICT has been ‘the indispensable grammar of modern life [1]. So called, digital capabilities increasingly have become part of the toolkit necessary to participate and prosper in a ICT based society [2]. They help consumers to use a variety of technologies, appropriately and effectively in different spaces and situations.

This study examined the effects of digital capabilities on the demand for intelligent products such as autonomous vehicle and smart home, and for intelligent services such as voice assistant and biometric authentication. Intelligent products and services are defined as those with the intelligence to take autonomous action and make decisions based on interactions with the environment. This study distinguishes between intelligent products and services in the form of existence: intelligent products exist in the form of physical objects and intelligent services are provided in the form of softwares.

In general, digital capability is defined as the skills, knowledge and understanding which help people to live, learn and work in a digital society [3]. This study seeks to broaden the concept of digital capability beyond the cognitive components such as knowledge and skills following the classical concept of consumer competencies. According to Moshes & Roy [4], consumer competencies that contribute to the individual’s effectiveness as a consumer in the marketplace include specific behavioral acts and attitudes as well as cognitive components. Consumer scientists define consumer capability as a combination of knowledge, attitude, and behavior necessary to make sound market decisions [5].

Selwyn [2] argued that developing and sustaining an individual’s use of ICT depend in large parts on an individual’s network of relevant social contacts who can offer advice, encouragement and practical support. Individual’s ability to draw upon social capital from the networks of friends, relatives, neighbors, other significant others, membership of groups and organizations, and technological expertise has been recognized as an important element of individuals’ ability to effectively engage with ICT and become a critical factor in people’s sustained use of ICT [2, 6, 7]. In the era of hyper connected society, being a consumer who is ‘connected’ or who remains ‘disconnected’ from technology makes difference in the ability of individuals to make meaningful use of ICTs [2].

Finally, incorporating the behavioral and attitudinal aspects, this study defines digital capability as a combination of attitude, behavior, and skills which help people to live, learn, and work in an ICT environment. The behavioral aspect of digital capability refers to actual uses of ICT for various digital activities including shopping, social networking, and productive activities. The attitudinal aspect refers to psychological confidence on ICT as many previous research has shown that the confidence is an important predictor of acceptance of new technologies. Skills reflect the social context of digital capability which refers to problem solving ability in relation with social network which works as a source of help to solve problems in using ICT.

2 Methods

2.1 Sample

Data from the 2018 Survey on Digital Divide conducted by National Information Society Agency was used for the analysis. The Survey on Digital Divide is designed to track the digital divide index in Korea and collects information about access to digital devices and services, use of ICT. This study used a nationally representative sample of general Korean population aged more than or equal to 7 years old. Among 7,000 subjects participated in the survey the sample for analysis was restricted to 6,245 internet users. The descriptive characteristics of the sample are shown in Table 1.

Table 1. Descriptive statistics of sample, N = 6,245 (Weighted)
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2.2 Measures and Analysis

The dependent variables were consumers’ demand for intelligent products and services. The dependent variables were measured with four dummy variables of which each was coded as 1 if respondents answered “necessary” to the question that how much the intelligent products and services such as voice assistant, biometric authentication, autonomous vehicle, and smart homes were necessary in their lives, and coded as 0 for the answers of “not necessary”.

The independent variables included consumers’ digital capabilities and sociodemographic variables. Digital capabilities were measured in terms of three aspects: behavior, attitude, and problem solving abilities in the social context. The behavioral aspects were measured with uses of ICT for digital shopping & consumption, social participation, economic activities, and public administration. Use of ICT for shopping and consumption was measured with 10 items in which responses were given on a 4-point Likert scale, with 1 = totally disagree and 4 = totally agree. We had 4 items to measure the use of ICT for social participation, 3 items for economic activities, and 2 items for public administration. Responses to the questions were given on a 4-point Likert scale, with 1 = totally disagree and 4 = totally agree. Attitudinal aspects of digital capability reflected consumers’ confidence on dealing with ICT and consisted with two sub dimensions- confidence on using new technology and confidence on the protection of information privacy. Confidence on using new technology was measured with 5 items and confidence on the protection of information privacy was measured with 1 item in which item responses were given on a 4-point Likert scale, with 1 = totally disagree and 7 = totally agree. Problem solving abilities in the social context were measured with three dummy variables of which each was coded as 1 if respondents were able to obtain advice or help from oneself, intimate social network, and professional experts for problem solving in their using ICT, and coded as 0 if not.

We included whether consumers had perceived or known the four types of intelligent products and services as a control variable. Gender, age, education, household income, and region were included as covariates in the model. Seemingly unrelated probit analysis was applied because the dependent variables may be correlated. We used statistical package for STATA 14 to analyze that data.

3 Results

3.1 Digital Capabilities of Consumers

The level of the use of ICT for shopping and consumption was relatively high as the mean usage score of digital shopping and consumption was 2.88 out of 4. However, the mean scores of usages of ICT for social networking, economic activities, and public administration were less than 2 indicating that, on average, consumers had rarely used ICT for these activities. Except for digital shopping and consumption, ICT had not yet seemed to be penetrated in humans’ daily life in Korea.

Table 2. Digital capability of the sample, N = 6,245 (Weighted)
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The mean score for consumers’ psychological confidence on the use of new technology was relatively high approaching 3 out of 4. Regarding the protection of information privacy, consumers might not feel confident, as of which the means score was 2.44.

Regarding the consumers’ problem solving capability in the use of ICT in the social context, about 77% of the sample solved the problem with a help from the intimate social relationship such as family, friends, and colleagues, 55% solved the problem by oneself. Only 17% of the sample responded that they depended on the professional experts. Digital Capability of the sample are shown in Table 2.

3.2 Demand for Intelligent Products and Services

As presented in Table 3, about two thirds of the sample responded that they needed biometric authentication and smart homes. The demand for voice assistant was relative low in that slightly more than half of the respondents indicated that it was necessary in their lives. About 61% of the sample responded that autonomous vehicles were necessary.

Table 3. Consumer demand for intelligent products and services, N = 6,245 (Weighted)
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The results of the seemingly unrelated probit analysis of the demand for intelligent services, i.e., voice assistant and biometric authentication were presented in Table 4. Those who used ICT for digital shopping and consumption and economic activities and those who were confident on using new technology were more likely, but those who used ICT for public administration were less likely to have demand for voice assistant. Those who solved problems in using ICT by oneself and with the help from the intimate social network were more likely, but those who solved the problems with the employment of the experts were less likely to think voice assistant necessary. In addition, those who perceived voice assistant, whose age were in 10 s or 50 s + than whose age in 30 s, and who had higher education were more likely to have demand for voice assistant.

Table 4. The effects of digital capability on demand for intelligent services
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The effects of digital capabilities on demand for biometric authentication were similar to those on demand for voice assistant except for a few points. Those who used ICT for social participation were less likely to have demand for biometric authentication. The effect of using ICT for public administration and digital shopping and consumption did not significant for the demand for biometric authentication. Youngsters were more likely to demand for biometric authentication than the elders.

The results of the seemingly unrelated probit analysis of the demand for intelligent products such as autonomous vehicles and smart homes were presented in Table 5. Those who used ICT for social networking and economic activities were more likely but who used for ICT for public administration were less likely to demand for autonomous vehicles. Those who solved problems in using ICT by oneself and with help from the intimate social network were more likely but who solved the problem by employing experts were less likely to demand for autonomous vehicles.

Table 5. The effects of digital capability on demand for intelligent products
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Regarding the demand for smart home, those who used ICT for digital shopping and consumption were more like to have demand for smart homes. The modes of problem solving by oneself and with helps from social network had a positive effect on demand for smart homes. Confidence did not show a significant effect on demand for intelligent products considered in this study. The effects of perceiving the intelligent products, age and education of the respondents were significant.

4 Conclusion

This study investigated the effects of consumers’ digital capabilities on demand for intelligent services and products in Korea using data from the 2018 Survey on Digital Divide collected by National Information Society Agency. Digital capabilities consisted of three dimensions: ability to use ICT, confidence, and ability to solve problems in using ICT. Ability to use ICT was operationally defined as the use of ICT for digital shopping and consumption, social networking, economic activities, and public administration; Confidence was measured as psychological confidence on the use of new technology and protection of information privacy. Problem solving ability was defined in the social context and focused on three sources of help, by oneself, intimate social network, and professional expert.

The major results were as follows. First, ICT had been used most for digital shopping and consumption, and not been frequently used for social networking, economic activities, and public administration in Korea. Korean consumers were relatively confident on the use of new technology, but the confidence level on protection of information privacy was not high enough. More than three-fourths of the respondents gained help from the intimate social network when they had problems using ICT. More than half of the samples were able to solve problems in using ICT by oneself. Less than one fifth needed professional experts in solving problems of using ICT. Second, there existed significant demand for intelligent products and services as at least more than half of the sample needed intelligent products and services considered in this study. Third, those with higher education and aged in 10 s and 50 s tended to be more likely to demand for intelligent products and services. Fourth, the effects of the sources of help in using ICT were consistent across the different types of intelligent products and services: self-problem solving and having someone to provide help in the intimate social network were positively associated with having a demand for intelligent products and services. The effect of use of ICT for various activities did not show a consistent result. It may be partly because the levels of ICT usage were not high enough to generate a significant difference.

This study confirmed the important role of social network and social capital as a part of digital capability of individuals and as a stimulus to enhance the demand for intelligent products and services.