Skip to main content
SpringerLink
Log in

Privacy concern and online personalization: The moderating effects of information control and compensation

  • Published:
Electronic Commerce Research Aims and scope Submit manuscript

Abstract

Firms have at their disposal an increasing amount of personal information about consumers gathered through various means. Studies find that personalizing online interactions improves customer relationships and increases desirable behaviors, such as positive word-of-mouth and increased purchase intent. However, other research suggests that the use of personal information stimulates privacy concern, which has a negative effect on behavior. This study examines potential moderators of the negative effects of privacy concern on behavioral intentions in the context of personalized online interactions. Results show that increasing perceived information control reduces the negative effect of privacy concern on intentions to engage in positive behaviors. In contrast, the offer of compensation has no effect on the relationship between privacy concern and these behavioral intentions. However, compensation increases the salience of trust to privacy concern.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

References

  1. Acquisti, A., & Grossklags, J. (2005). Privacy and rationality in individual decision making. IEEE Security & Privacy, 3(1), 26–33.

    Article  Google Scholar 

  2. Altman, I. (1975). The environment and social behavior: Privacy, personal space, territory, crowding. Monterey: Brooks/Cole.

    Google Scholar 

  3. Bagozzi, R. P., & Yi, Y. (1988). On the evaluation of structural equation models. Journal of the Academy of Marketing Science, 16(1), 74.

    Article  Google Scholar 

  4. Bowlby, J. (1969). Attachment and loss: Vol. I. Attachment. New York: Basic Books.

    Google Scholar 

  5. Castañeda, J., & Montoro, F. (2007). The effect of internet general privacy concern on customer behavior. Electronic Commerce Research, 7(2), 117–141.

    Article  Google Scholar 

  6. Chellappa, R. K., & Sin, R. G. (2005). Personalization versus privacy: An empirical examination of the online consumer’s dilemma. Information Technology and Management, 6(2–3), 181–202.

    Article  Google Scholar 

  7. Coner, A. (2003). Personalization and customization in financial portals. Journal of American Academy of Business, Cambridge, 2(2), 498.

    Google Scholar 

  8. Coviello, N., Milley, R., & Marcolin, B. (2001). Understanding it-enabled interactivity in contemporary marketing. Journal of Interactive Marketing, 15(4), 18–33.

    Article  Google Scholar 

  9. Cranor, L. F. (2004). ‘I didn’t buy it for myself’: Privacy and ecommerce personalization. In C.-M. Karat, J. O. Blom, & J. Karat (Eds.), Designing personalized user experiences in ecommerce. Norwell: Kluwer Academic.

    Google Scholar 

  10. Culnan, M. J., & Armstrong, P. K. (1999). Information privacy concerns, procedural fairness, and impersonal trust: An empirical investigation. Organization Science, 10(1), 104–115.

    Article  Google Scholar 

  11. De Laat, P. B. (2005). Trusting virtual trust. Ethics and Information Technology, 7, 167–180.

    Article  Google Scholar 

  12. Dinev, T., & Hart, P. (2005). Internet privacy concerns and social awareness as determinants of intention to transact. International Journal of Electronic Commerce, 10(2), 7–29.

    Article  Google Scholar 

  13. Dinev, T., & Hart, P. (2006). Privacy concerns and levels of information exchange: An empirical investigation of intended e-services use. E-Service Journal, 4(3), 25–57.

    Article  Google Scholar 

  14. Doney, P. M., & Cannon, J. P. (1997). An examination of the nature of trust in buyer-seller relationships. Journal of Marketing, 61(2), 35–51.

    Article  Google Scholar 

  15. Dunfee, T. W., Smith, N. C., & Ross Jr., W.T. (1999). Social contracts and marketing ethics. Journal of Marketing, 63(3), 14–32.

    Article  Google Scholar 

  16. Eastlick, M. A., Lotz, S. L., & Warrington, P. (2006). Understanding online b-to-c relationships: An integrated model of privacy concerns, trust, and commitment. Journal of Business Research, 59(8), 877–886.

    Article  Google Scholar 

  17. Fishbein, M., & Ajzen, I. (1975). Belief, attitude, intention, and behavior: An introduction to theory and research. Reading: Addison-Wesley.

    Google Scholar 

  18. Fornell, C., & Larcker, D. F. (1981). Evaluating structural equation models with unobservable variables and measurement error. Journal of Marketing Research (JMR), 18(1), 39–50.

    Article  Google Scholar 

  19. Garbarino, E., & Johnson, M. S. (1999). The different roles of satisfaction, trust, and commitment in customer relationships. Journal of Marketing, 63(2), 70–87.

    Article  Google Scholar 

  20. Goodwin, C. (1991). Privacy: Recognition of a consumer right. Journal of Public Policy & Marketing, 10(1), 149–166.

    Google Scholar 

  21. Graeff, T. R., & Harmon, S. (2002). Collecting and using personal data: Consumers’ awareness and concerns. The Journal of Consumer Marketing, 19(4/5), 302.

    Article  Google Scholar 

  22. Greenberg, P. A. (2000). E-shoppers choose personalization over privacy. e-Commerce Times, January 4 edition.

  23. Gwinner, K. P., Gremler, D. D., & Bitner, M. J. (1998). Relational benefits in services industries: The customer’s perspective. Academy of Marketing Sciences Journal, 26(2), 101–114.

    Article  Google Scholar 

  24. Ha, H.-Y. (2004). Factors influencing consumer perceptions of brand trust online. The Journal of Product and Brand Management, 13(4/5), 329.

    Article  Google Scholar 

  25. Hoffman, D. L., Novak, T. P., & Peralta, M. (1999). Building consumer trust online. Communications of the ACM, 42(4), 80–85.

    Article  Google Scholar 

  26. Horrigan, J. (2008). Internet users like the convenience but worry about the security of their financial information. www.pewinternet.org. Accessed July 17, 2008.

  27. Jacobs, R. S., Hyman, M. R., & Mcquitty, S. (2000). Exchange-specific self-disclosure, social self-disclosure, and personal selling. In American marketing association. Conference proceedings (Vol. 11, p. 261).

  28. Jarvenpaa, S. L., Knoll, K., & Leidner, D. E. (1998). Is anybody out there? Journal of Management Information Systems, 14(4), 29–64.

    Google Scholar 

  29. Kim, M.-S., & Ahn, J.-H. (2006). Comparison of trust sources of online market-maker in the e-marketplace: Buyer’s and seller’s perspectives. Journal of Computer Information Systems, 47(1), 84–94.

    Google Scholar 

  30. Koballa, T. R. (1988). The determinants of female junior high school students’ intentions to enroll in elective physical science courses in high school: Testing the applicability of the theory of reasoned action. Journal of Research in Science Teaching, 25, 479–492.

    Article  Google Scholar 

  31. Langenderfer, J., & Cook, D. L. (2004). Oh, what a tangled web we weave: The state of privacy protection in the information economy and recommendations for governance. Journal of Business Research, 57(7), 734.

    Article  Google Scholar 

  32. Laudon, K. C. (1996). Markets and privacy. Communications of the ACM, 39(9), 92–104.

    Article  Google Scholar 

  33. Lewicki, R. J., & Bunker, B. B. (1996). Developing and maintaining trust in work relationships. In R.M. Kramer, T.R. Tyler (Eds.), Trust in organizations: Frontiers of theory and research (pp. 114–139).

  34. Liu, C., Marchewka, J. T., & Ku, C. (2004). American and Taiwanese perceptions concerning privacy, trust, and behavioral intentions in electronic commerce. Journal of Global Information Management, 1(1), 18–40.

    Google Scholar 

  35. Liu, C., Marchewka, J. T., Lu, J., & Chun-Sheng, Y. (2005). Beyond concern a privacy-trust-behavioral intention model of electronic commerce. Information & Management, 42(2), 289–304.

    Article  Google Scholar 

  36. Loehlin, J. C. (1992). Latent variable models: An introduction to factor, path, and structural analysis. Mahwah: Lawrence Erlbaum Associates.

    Google Scholar 

  37. Luhmann, N. (2000). Familiarity, confidence, trust: Problems and alternatives. In D. Gambetta (Ed.), Trust: Making and breaking cooperative relations (pp. 94–107). London: University of Oxford.

    Google Scholar 

  38. Luo, X. (2002). Trust production and privacy concerns on the internet a framework based on relationship marketing and social exchange theory. Industrial Marketing Management, 31(2), 111.

    Article  Google Scholar 

  39. Malhotra, N. K., Kim, S. S., & Agarwal, J. (2004). Internet users’ information privacy concerns (iuipc): The construct, the scale and a causal model. Information Systems Research, 15(4), 336–355.

    Article  Google Scholar 

  40. Mangalindan, M. (2003). Web ads on the rebound. Wall Street Journal, August 25 edition.

  41. Mascarenhas, O. A. J., Kesavan, R., & Bernacchi, M. D. (2003). Co-managing online privacy: A call for joint ownership. Journal of Consumer Marketing, 20(7), 686–702.

    Article  Google Scholar 

  42. Meinert, D. B., Peterson, D. K., Criswell, J. R., & Crossland, M. D. (2006). Privacy policy statements and consumer willingness to provide personal information. Journal of Electronic Commerce in Organizations, 4(1), 1–17.

    Google Scholar 

  43. Milne, G. R. (2000). Privacy and ethical issues in database/interactive marketing and public policy: A research framework and overview of the special issue. Journal of Public Policy & Marketing, 19(1), 1–6.

    Article  Google Scholar 

  44. Milne, G. R., & Gordon, M. E. (1993). Direct mail privacy-efficiency trade-offs within an implied social contract framework. Journal of Public Policy & Marketing, 12(2), 206–215.

    Google Scholar 

  45. Milne, G. R., & Boza, M.-E. (1999). Trust and concern in consumers’ perceptions of marketing information management practices. Journal of Interactive Marketing, 13(1), 5–24.

    Article  Google Scholar 

  46. Moon, Y. (2000). Intimate exchanges: Using computers to elicit self-disclosure from consumers. Journal of Consumer Research, 26(4), 323–339.

    Article  Google Scholar 

  47. Moorman, C., Deshpande, R., & Zaltman, G. (1993). Factors affecting trust in market research relationships. Journal of Marketing, 57(1), 81–101.

    Article  Google Scholar 

  48. Morgan, R. M., & Hunt, S. D. (1994). The commitment-trust theory of relationship marketing. Journal of Marketing, 58(3), 20–38.

    Article  Google Scholar 

  49. Nowak, G. J., & Phelps, J. (1995). Direct marketing and the use of individual-level consumer information: Determining how and when “privacy” matters. Journal of Direct Marketing, 9(3), 46–60.

    Article  Google Scholar 

  50. Peter, J. P. (1981). Construct validity: A review of basic issues and marketing practices. Journal of Marketing Research (JMR), 18(2), 133–145.

    Article  Google Scholar 

  51. Peterson, R. A. (2001). On the use of college students in social science research: Insights from a second-order meta-analysis. Journal of Consumer Research, 28(3), 450–461.

    Article  Google Scholar 

  52. Phelps, J. E., D’souza, G., & Nowak, G. J. (2001). Antecedents and consequences of consumer privacy concerns: An empirical investigation. Journal of Interactive Marketing, 15(4), 2–17.

    Article  Google Scholar 

  53. Postma, O. J., & Brokke, M. (2002). Personalisation in practice: The proven effects of personalisation. Journal of Database Marketing, 9(2), 137.

    Article  Google Scholar 

  54. Sackmann, S., Struker, J., & Accorsi, R. (2006). Personalization in privacy-aware highly dynamic systems. Communications of the ACM, 49(9), 32–38.

    Article  Google Scholar 

  55. Sheehan, K. B. (2002). Toward a typology of internet users and online privacy concerns. Information Society, 18(1), 21–32.

    Article  Google Scholar 

  56. Sheehan, K. B., & Hoy, M. G. (2000). Dimensions of privacy concern among online consumers. Journal of Public Policy & Marketing, 19(1), 62–73.

    Article  Google Scholar 

  57. Sheppard, B. H., Hartwick, J., & Warshaw, P. R. (1988). The theory of reasoned action: A meta-analysis of past research with recommendations for modifications and future research. Journal of Consumer Research, 15(3), 325–343.

    Article  Google Scholar 

  58. Shneiderman, B. (2000). Designing trust into online experiences. Communications of the ACM, 43(12), 57–59.

    Article  Google Scholar 

  59. Smith, R., & Shao, J. (2007). Privacy and e-commerce: A consumer-centric perspective. Electronic Commerce Research, 7(2), 89–116.

    Article  Google Scholar 

  60. Solove, D. J. (2002). Conceptualizing privacy. California Law Review, 90, 1087–1156.

    Article  Google Scholar 

  61. Spiekermann, S. (2007). Perceived control: Scales for privacy in ubiquitous computing environments. In A. Acquisti, S. di Vimercati, S. Gritzalis, & C. Lambrinoudakis (Eds.), Digital privacy: Theory, technologies and practices. New York: Taylor and Francis.

    Google Scholar 

  62. Student Monitor. (2004). Spring 2004 lifestyle & media report. Proprietary marketing study of college students’ activities and interests.

  63. Van Dyke, T. P., Vishal, M., & Nemati, H. (2007). The effect of consumer privacy empowerment on trust and privacy concerns in e-commerce. Electronic Markets, 17(1), 68–81.

    Article  Google Scholar 

  64. Van Slyke, C., Shim, J. T., Johnson, R., & Jiang, J. (2006). Concern for information privacy and online consumer purchasing. Journal of the Association for Information Systems, 7(6), 415–443.

    Google Scholar 

  65. Vandenberg, R. J., & Lance, C. E. (2000). A review and synthesis of the measurement invariance literature: Suggestions, practices, and recommendations for organizational research. Organizational Research Methods, 3(1), 4–70.

    Article  Google Scholar 

  66. Warren, S. V., & Brandeis, L. D. (1890). The right to privacy. Harvard Law Review, 4(5), 193–220.

    Article  Google Scholar 

  67. Westin, A. F. (1997). Legal safeguards to insure privacy in a computer society. Communications of the ACM, 10, 533–537.

    Article  Google Scholar 

  68. Zucker, L. G. (1986). Production of trust: Institutional sources of economic structure: 1840–1920. In B. M. C. Staw & L. Larry (Eds.), Research in organizational behavior (pp. 53–111). London: JAI Press.

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Department of Marketing & Logistics, College of Business Administration, University of North Texas, Denton, TX, 76201, USA

    David G. Taylor

  2. Texas Tech University, Lubbock, TX, 79409, USA

    Donna F. Davis

  3. Texas State University, San Marcos, TX, 78666, USA

    Ravi Jillapalli

Authors
  1. David G. Taylor
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Donna F. Davis
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Ravi Jillapalli
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to David G. Taylor.

Rights and permissions

Reprints and permissions

About this article

Cite this article

Taylor, D.G., Davis, D.F. & Jillapalli, R. Privacy concern and online personalization: The moderating effects of information control and compensation. Electron Commer Res 9, 203–223 (2009). https://doi.org/10.1007/s10660-009-9036-2

Download citation

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s10660-009-9036-2

Keywords

Search

Navigation