Information Privacy Concerns, Government Involvement, and Corporate Policies in the Customer Relationship Management Context

ABSTRACT This study attempts to find how consumer's attitudes (trust, social exchange, knowledge about CRM, and procedural fairness), government involvement, and corporate policies influence their information privacy concerns in the context of Customer Relationship Management (CRM). Path analysis was used to examine the theoretical basis of information privacy concerns. The results found that information privacy concerns are driven by consumers' internal experience, attitude, and external social environment. With efficient government involvement or corporate policies supervising fair use of personal information, consumers can trust companies, and build long-term relationships with them. More social exchanges make customers trust companies. Finally, consumer's trust and correct knowledge about CRM significantly influence their information privacy concerns. INTRODUCTION Customer Relationship Management (CRM) includes customer service management, relationship building, and electronic shopping (Fletcher, 2003). CRM has evolved as a business strategy to sustain a profitable customer relationship. Organizations can gather a vast amount of personal information from customers, especially online, and use it to improve sales and service effectiveness. The final goal of CRM is to maximize customer relationships with the firm. Consequently, this will increase customer satisfaction, customer retention, and customer revenue. However, as businesses have become more interested in gathering and using customer data, consumers have begun to be more concerned with how much of their personal information is contained in databases and how it is being used. They do not want computers to disclose their private information without their permission. This situation has created a fundamental struggle between an individual's right to privacy and an organization's legitimate business interests (Culnan, 1994). Marketing technologies have the potential to be intrusive and influence consumers' perceptions of marketing strategies (Dolnicar & Jordaan, 2007). Consumers refuse to buy products through risky channels or provide information (Dinev & Hart, 2006). Based on the above reasons, this research focuses on how government involvement, corporate policies, and consumers' attitudes (social exchange, procedural fairness, trust, and knowledge about CRM) influence consumers' information privacy concerns in the CRM context. The study will build a framework describing the primary dimensions associated with individuals' information privacy concerns in the CRM context. LITERATURE REVIEW Customer Relationship Management Customer Relationship Management (CRM) has been growing in the past few years. It includes customer service management, relationship building, and electronic shopping (Fletcher, 2003). Greenberg (2000) argued that CRM is a business strategy to build and sustain a long-term customer relationship. Furthermore, Winer (2001) argued that CRM is an integration of information technology and business processes. It makes marketers implement the relationship marketing at an enterprise-wide level. However, the issue of privacy is a big problem in CRM. Strong database and data mining techniques help marketers easily find consumers' personal information (Franzak et al., 2001). Most CRM systems just focus on the benefit and technology of companies rather than on perception and attitude of customers. It is necessary to consider both sides. People should understand how customers view their relationships with companies because customers are not just passive buyers ignoring relationships with companies (Culnan & Armstrong, 1999). Information Privacy Concerns Information privacy means the ability of the individual to control his personal information (Stone, et al., 1983). Furthermore, information privacy concerns include people's attitudes, toward certain privacy risks, their perception of the nature of privacy, and their thoughts about privacy protection (Hsu, 2003). …