Consumers' Privacy Concerns and Willingness to Provide Marketing-Related Personal Information Online

1This research was supported by the MIC(Ministry of Information and Communication), Korea, under the ITRC(Information Technology Research Center) support program supervised by the IITA(Institute of Information Technology Assessment). INTRODUCTION The Internet has triggered revolutionary changes in our lives. People consider it to be a reliable source of information on products and services (Gervey and Lin, 2000). However, the use of the Internet for consumer purchasing has not been growing as fast as its other uses as an information source. One explanation for this disparity in growth rates may be consumers’ reluctance to provide personal information on the Internet. For example, Ernst and Young’s survey (1999) indicated that the most important reason why consumers do not make purchases on the Internet is their concern about sending out credit card information. A survey showed that only 24.9% of consumers felt comfortable using their credit card for purchasing on the Internet (Graeff and Harmon 2002). Media scrutiny of Internet fraud, hacking, and identity theft has heightened people’s awareness of the risks of conducting transactions on the Internet. While Internet marketing is perceived as either a threat or a nuisance by many consumers, it is a valuable tool for both online and offline businesses. Rapid advances in information technology and the increase of Internet use enable companies to gather, store, and exchange consumer data that can be used for developing more accurately targeted marketing. A typical Internet marketing strategy focuses on a long-term relationship and a series of business transactions with a customer. This strategy becomes possible through the collection of data on customers’ buying patterns, preferences, and/or personal information. These databases, however, require consumers to share their personal information, whether voluntarily or involuntarily. In most cases, the nature of e-commerce requires consumers to disclose a certain amount of personal information (e.g., their name, address, and telephone number) and payment information (e.g., their credit card number). The problem is that consumers have generally shown increasing concerns over privacy due to an increase in questionable and illegal activities in the Internet, such as the precipitous rise of junk mail, identity theft, and fraud. Thus, issues of privacy and security in e-commerce have been receiving more attention by researchers in different fields (e.g., Caudill and Murphy 2000; Culnan and Armstrong 1999). Consumers’ growing concern over their privacy is a significant problem for the potential growth of e-businesses. According to a survey of Internet marketers, 92% believe that greater consumer confidence of online privacy would lead to an increase in online purchasing (Javis 2000). A crucial question is what makes consumers voluntarily share their personal information with businesses. The present paper proposes and empirically tests a model of how individuals’ willingness to share personal information is determined. More specifically, this paper examines relationships between three factors related to consumers’ privacy concerns and one dependent variable: consumers’ willingness to disclose personal information. LITERATURE REVIEW AND RESEARCH MODEL