Academic journal article Academy of Marketing Studies Journal

The Effects of Information Privacy and Online Shopping Experience in E-Commerce

Academic journal article Academy of Marketing Studies Journal

The Effects of Information Privacy and Online Shopping Experience in E-Commerce

Article excerpt

INTRODUCTION

For a decade information privacy has been one of the central issues in e-commerce research across many disciplines. Extensive research has shown that due to a different nature of shopping environment, consumers perceive online transactions as risky, form heightened privacy concerns and such concerns become the main barrier for electronic commerce (Hoffma, Novak & Peralta, 1999). In marketing, information privacy has been linked to online trust (Bart et al., 2005; Eastlick et al., 2006; Hoffman et al., 1999; Pan & Zinkhan, 2006), e-service quality (Zeithaml et al., 2002), and online purchasing (Malhotra et al., 2004). Some researchers have examined the antecedents of e-shoppers' privacy perceptions, advocating various privacy management strategies such as opt-in/opt-out tactics, monetary compensation for customer information, and third-party privacy seals (Culnan, 1995; Goodwin, 1991; Rifon et al., 2005). In this study we will investigate yet another privacy management strategy that focuses on the transparency of the e-tailer's consumer information practices.

The supporters of the transparency strategy argue that customers would be more willing to trust the e-tailer with their personal information if the e-tailer explained the intended uses of customer information (Hoffman et al., 1999; Pan & Zinkhan, 2006). This view suggests that the mere transparency of the e-tailer's information practices can reduce customers' privacy concerns and enhance their perceptions of the e-tailer trustworthiness. However, research shows that many consumers either do not read or do not fully comprehend e-tailers' information privacy policies thus raising questions about their effectiveness in reducing customers' information privacy concerns (Cranor et al., 2006; Meinert et al., 2006; Milne & Culnan, 2004; Milne et al., 2006; Vail et al., 2008, Nehf, 2007; Proctor et al., 2008). Furthermore, little if anything is known about the effect of customers' previous online shopping experience on their reactions to the e-tailer's information privacy policy. Is it effective for all customers regardless of whether they are novice or experienced online shoppers? While Bart et al. (2005) show that both a consumer's Internet shopping experience and the website privacy policy have a positive influence on e-trust, we have not found any research that looked at the interaction between these two variables. This study will attempt to address these issues by specifying a structural equation model where customers' perceptions of e-tailer's information privacy policy, their online shopping experience, and the interaction of these two variables are explicitly linked to their privacy concerns and their perceptions of e-tailer trustworthiness.

THEORETICAL FRAMEWORK

This section is organized as follows. First, we will define online trust and explain conceptual underpinnings of e-tailer trustworthiness, which is the focal dependent variable in this study. Then we will discuss the hypothesized relationships among customers' perceptions of e-tailer information privacy policy, their online shopping experience, their privacy concerns, and their perceptions of e-tailer trustworthiness. Figure 1 depicts the research model.

[FIGURE 1 OMITTED]

Online Trust vs. Trustworthiness

Online trust has been defined in literature as a person's willingness to accept vulnerability based on positive expectations about the e-tailer's intentions and behaviors (Rousseau et al., 1998). These positive expectations encompass the customer's perceptions of the website's competence in performing required functions and his or her perceptions of the firm's good intention behind the "online storefront" (Bart et al., 2005). In other words, online trust is a behavioral outcome of a customer's belief in the e-tailer trustworthiness. It is important to distinguish between trust (behavior: i.e., willingness to depend) and perceived trustworthiness (cognition: i. …

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