PRIVACY CONCERNS IN INTERNET APPLICATIONS

Moshe Zviran, Seev Neumann, Diego Hocksman

Management of Technology and Information Systems Department

Faculty of Management, Te

l Aviv University

P.O.Box 39010, Tel Aviv 69978, ISRAEL

Keywords: Internet, privacy, secrecy

Abstract: Privacy is defined as “freedom

from unauthorized intrusion”. While privacy has been a sensitive issue

before the advent of computers, the concern has been further exacerbated by the fact that the Web makes it

easy for data to be automatically collected and added to databases and analyzed by sophisticated data

mining tools and personalized marketing services. This study explores the nature of the privacy concern in

the online environment. The objective of this study is to get a better understanding of the factors that can

affect online privacy and how this concern could affect users’ behavior.

1 INTRODUCTION

Privacy is defined in the Merriam-Webster

Dictionary (2000) as “freedom from unauthorized

intrusion”, and is related to solicitude, secrecy, and

autonomy. It was a sensitive issue long before the

advent of computers. Concerns have been

magnified, however, by the existence and

widespread use of large computer databases that

make it easy to compile a dossier about an individual

from many different data sources.

Privacy issues are further exacerbate

d now that

the World Wide Web makes it easy for new data to

be automatically collected and added to databases.

As data mining tools and personalized marketing

services become more widely available, privacy

concerns are likely to further increase.

line privacy concerns often arise through a

web site operator’s collection and dissemination of

personally identifiable information about an

individual consumer who has visited a particular

web site (Hatch, 2000). Specifically, privacy

concerns arise when consumers’ personally

identifiable information is collected online without

the consumer’s consent or knowledge and/or is sold

to third parties without the consumer’s consent or

knowledge. Thus, online privacy relates to

affirmative conduct of the web site visited by the

consumer.

2 PRIVACY CONCERNS

In cyberspace, because both purchases and browsing

are recorded, not only are organizations able to

record traditional consumer interactions such as

purchases or explicit requests for information, but

because online systems provide the capability to

record a consumer's "mouse tracks," organizations

are also able to record how consumers move through

their web sites and to profile what was formerly a

passive, private activity. This practice of tracking the

browsing behavior of individuals as they "surf" the

pages of various web sites, without disclosing to the

consumer what information is being collected, how

it will be used or communicating how the consumer

benefits from their disclosures, can affect how

consumers behave.

Adopting a certain behavior depends on the

degree of consum

er’s privacy concern (Bartel &

Grubbs, 1999). For example, as privacy concerns

increase, consumers are more likely to provide

incomplete information to web sites, to notify

Internet Service Providers about unsolicited e-mail,

to request removal from mailing lists, and to send a

“flame” to online entities sending unsolicited e-mail.

Additionally, as privacy concerns increase,

consumers are less likely to join web sites requesting

information.

592

Zviran M., Neumann S. and Hocksman D. (2004).

PRIVACY CONCERNS IN INTERNET APPLICATIONS.

In Proceedings of the Sixth International Conference on Enterprise Information Systems, pages 592-595

DOI: 10.5220/0002592905920595

 SciTePress

3 RESEARCH MODEL AND

HYPOTHESES

This study attempts to explore two research issues:

1. Which variables from the online environment

affect the degree of online privacy concern? In

order to study this issue, the relationships

between the degree of online privacy concerns

and the following variables were measured:

usage of privacy enhancing mechanisms, Web

usage, being a victim of previous online privacy

invasions, Web experience and the user’s skills

with the Web.

2. How does the degree of online privacy concern

affect user’s behavior?

Measures such as cancelled user online spending

and refraining from Web surfing for privacy

reasons, together with the volume of online

spending were used to study this issue. By doing

so, it was possible to verify to what extent online

privacy is a real or a perceptual problem in Web

commerce.

These two questions were operationalized using

eight research hypotheses, as follows.

To bridge the gap between the need for privacy

on the one hand and the lack of regulatory protection

on the other hand, a plethora of privacy enhancing

mechanisms has been introduced (Bennett, 2000;

Wayner, 1999). The first hypothesis focuses on the

effect of the use of privacy enhancing technologies

(Huaiqing, et al., 1998), on the level of online

privacy concern:

H1: There is a positive relationship between the use

of privacy enhancing technologies (privacy policy,

anonymizers and privacy seals of approval) and the

degree of privacy concern.

According to Foxman and Kilcoyne (1993),

consumers’ perceptions of privacy (and its

violations) also depend on their unique social and

personal experience. The following hypothesis is

aimed at empirically testing this:

H2: There is a positive relationship between

previous experiences with online privacy invasions

and the degree of privacy concern.

People who start to navigate the Internet and

don’t have prior web experience, or have few web

skills, or posses low web usage, may have a higher

degree of online privacy concerns. In order to verify

this, the following hypotheses were postulated:

H3: There is a negative relationship between the

degree of privacy concern and the level of Web

usage.

H4: There is a negative relationship between the

degree of privacy concern and the user’s Web skills.

H5: There is a negative relationship between the

degree of privacy concern and the user’s experience

with the Web.

Novak et al. (2000) express their belief that

consumers do not trust most Web providers enough

to engage in relationship exchanges involving

money and personal information. Moreover, online

privacy concerns cannot only inhibit purchasing

activity on the Internet, but also inhibit surfing

activities. Based on the above, the following

hypotheses were formulated:

H6: A high degree of privacy concern implies

higher numbers of users canceling online spending

for privacy reasons.

H7: A high degree of privacy concern implies

higher numbers of users refraining from surfing onto

certain Web sites for privacy reasons.

H8: There is a negative relationship between the

degree of privacy concern and the volume of online

spending.

4 RESEARCH DESIGN

Data for this study were collected by means of a

Web-based online questionnaire. The questionnaire

included seven parts.

• Part A – Degree of online privacy concern,

consisted of 16 scenarios that were derived

from previous studies and represented the

five dimensions of online privacy concern

(awareness of information collection,

information usage, information sensitivity,

familiarity with entity and compensation)

(Bartel & Grubbs, 1999, 2000).

• Part B – Web usage, measured by a construct

adopted from Igbaria (1990), and comprised of

two items: actual daily usage and frequency of

use.

• Part C – Usage of privacy enhancing

technologies, included six items adopted from

Igbaria (1990), focusing on the existence of

anonymizers.

• Part D – Experience with the Web, consisted of a

set of constructs adopted from Igbaria (1990) and

Novak, Hoffman & Yung (2000), taking into

consideration the following online activities: e-

mail, navigation, online purchases, newsgroups

and chats.

• Part E – Web skills, comprised of a set of

items for the skill construct (Novak et al.,

2000), where the respondents were asked to

express their assertions about their Web

skills.

• Part F – Factors affected by the degree of

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593

online privacy concern, focused on possible

influences of privacy concerns in the user’s

behavior, including cancelled online

spending, volume of online spending and

refraining from Web surfing for privacy

reasons.

• Part G – Demographic information captured

information regarding respondent’s gender,

age and education.

The instrument was designed as a Web fill-out

form and was posted on the Internet. A request to

fill the questionnaire, along with the URL of the

survey was sent by e-mail to 950 graduate business

students at Tel Aviv University. The request was

also distributed to 200 computer users in a major

international company in the communication sector.

In total, 1150 requests were distributed by email and

217 responses (159 students and 58 practitioners)

were received. The total response rate was 18.9%.

No demographic differences (gender, education

and age groups) were found between the students

and the company respondents.

5 FINDINGS

(a) Degree of online privacy concern

Online privacy concern was measured using five

dimensions: awareness of information collection,

information usage, information sensitivity,

familiarity with entity and compensation (Bartel &

Grubbs, 1999, 2000; Cranon, et al., 1999). Table 1

depicts the means and standard deviation of each of

the five dimensions (1-7 scale) and a meta-variable

representing the degree of online privacy concern

(aggregation of the five dimensions).

Inter-correlations between each of the five

individual dimensions as well as correlation

coefficients between these dimensions and this

meta-variable, representing the degree of online

privacy concern, were found to be significantly

correlated (p<0.001).

(b)

Hypotheses testing

H1 suggests that there is a positive relationship

between the use of enhancing privacy technologies

and the degree of privacy concern. A Pearson

correlation test supports this hypothesis (r=0.182,

p=0.007), indicating that when the degree of online

privacy concerns increases, the use of privacy

enhancing technology also increases.

H2 suggests that there is a positive relationship

between previous experience with online privacy

invasions and the degree of online privacy concern.

The results indicate that respondents who

experienced previous online privacy invasions

exhibited higher levels of online privacy concerns

(mean=4.73, compared to 4.05 for respondents who

did not encounter online privacy invasions in the

past). An ANOVA test further supported this

hypothesis (F=22.7, p=0.001).

H3 suggests that there is a negative relationship

between the degree of online privacy concern and

the level of Web usage (that is, the more the user

uses the Internet, the less he/she is concerned with

online privacy). However, when testing H3, the

relationship was found to be on the opposite

direction than expected - the more the user uses the

Internet, the more he or she is concerned with online

privacy (r=0.189, p=0.005).

Table 1: Descriptive statistics of the five dimensions of

online privacy concern construct

Average Standard

Deviation

Awareness of

information

collection

4.12 1.38

Usage of

information

4.44 1.52

Compensation

4.14 1.52

Sensitivity of

information

4.63 1.59

Familiarity with

the entity

3.98 1.56

Degree of

privacy concern

4.26

H4 asserts that the more Web-skilled the user is,

the less he or she is concerned with online privacy.

H4 could not be accepted since no significant

relationship between the degree of privacy concern

and the user’s Web skills was found (r=0.032,

p=0.636).

H5 suggests that there is a negative relationship

between the degree of privacy concern and the

user’s experience with the Web (the more

experienced the user is, the less he or she is

concerned with online privacy). Correlation test

results provided no evidence for such a relationship

(r=0.079, p=0.249), so this hypothesis could not be

accepted.

H6 stated that a high degree of online privacy

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concern implies higher volumes of user cancelled

online spending. A Pearson correlation test did not

reveal significant results (p=0.735, r= -0.157). Thus,

this hypothesis was not supported and could not be

accepted.

H7 suggests that a higher degree of online

privacy concern implies a higher level of refraining

from surfing to certain Web sites. A Pearson

correlation revealed a significant correlation

between the two variables (r=0.663, p=0.001), thus

hypothesis H7 was accepted.

H8 states that there is a negative relationship

between the degree of privacy concern and the

volume of online spending (the more the user is

concerned with privacy, the less he or she is going to

spend in e-commerce). Based on a correlation test

(r=-0.024, p=0.735), hypothesis H8 could not be

accepted.

6 CONCLUSIONS

This study attempted to gain a better understanding

of the privacy concern. Among its findings, the

novelty of the Internet environment by itself was

found not to affect the degree of online privacy

concern, meaning that web skills and experience

with the web were not related to the degree of that

concern. On the other hand, web usage and the

degree of online privacy concern were found to be

positively related.

The study found that people who suffered

previous online privacy invasions were likely to

purchase much less than persons who didn’t suffer

any previous online privacy invasion. Also, people

with a high degree of online privacy concern were

more likely to refrain from surfing in specific sites

for privacy reasons, and to purchase less products

and services online.

The results of this study imply some efforts that

should be taken by governments, businesses and

individuals in order to protect privacy and enable

online transactions. These include:

• Voluntary observance of fair information

practices including the role of trade

associations:

Since persons with previous experience of online

privacy invasions have higher levels of online

privacy concern, the observance of fair information

practices is vital..

• Technological approaches:

Today’s privacy enhancing technologies are

primitive in nature. Such technologies are often

cumbersome to use, unfriendly and require a degree

of knowledge exceeding that of the common Internet

consumer. The low level of usage of privacy

enhancing technologies found in this study evidence

this fact. Consequently, new, user-friendly,

technology-based approaches should be developed

to provide consumers with a greater control over the

disclosure of their personal information.

• Government as a customer:

The government can impact privacy concerns

through market forces, promoting strong privacy

laws for both the public and private sectors,

establishing independent privacy commissions to

oversee the implementation of these laws, educating

the public about privacy issues and encouraging

business self-regulation. In addition, the

government is also a major customer and has an

opportunity to influence the private sector through

its e-procurement policies.

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