A trust-privacy model of customers' willingness to be profiled and to transact online theoretical model and empirical estimation

Abstract: Privacy concerns are cited to be on the rise due to intense personalization efforts by online firms. Alongside, trust placed in stores has been identified as a key component behind consumer willingness to transact online. In this paper we examine the concepts of trust, risk perceptions, privacy concerns and consumer willingness to disclose information online with the consumer willingness to transact online as the desired outcome. Based upon the literature review, the thesis is divided into two parts and follows a multistage research methodology. Study A adopts a qualitative research approach using in-depth interviews and analyses respondent data using a cognitive mapping tool to chart the decision flow of participants. The results confirm the presence of several antecedents in individual customers' willingness to disclose information online. It also identifies the presence of an additional variable as a possible antecedent to trust formation. Based upon the theoretical foundation laid down and the results obtained from Study A, the latter part of the thesis (Study B) proposes and empirically tests a theoretical model aimed at holistically examining the factors behind consumers' willingness to be profiled online and their willingness to partake in transactions. A survey was conducted among users of a popular voice over internet protocol service, and hypothesized relationships within a proposed model was tested for fit using structural equation modeling. Results further confirm the presence of the locational variable suggested by study A, as well as indicate that privacy concerns is not a uni-dimensional factor as suggested by earlier research, but rather a bi-dimensional factor - involving willing and unwilling disclosure scenarios. Perceived risk and three categories of trust are found to be the more important criteria when faced with a transaction scenario. Also, notably, reputation is found to be a surrogate of familiarity in case of an online firm. Furthermore, no significant relationship was found between willingness to disclose information and willingness to transact, indicating that while assuring customers about privacy concern related factors can lead to potential customers becoming willing to disclose their data online, the same may not be enough to influence their willingness to transact.