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An integrated latent variable and choice model to explore the role of privacy concern on stated behavioural intentions in e-commerce

Dimitris Potoglou, Juan-Francisco Palacios and Claudio Feijóo

Journal of choice modelling, 2015, vol. 17, issue C, 10-27

Abstract: Consumers' privacy concerns remain the primary barrier for future growth of e-commerce. Research to date has so far considered privacy concerns either as an independent variable to explore consumers' actual (or stated) behavioural intentions (e.g. the decision to purchase goods online) or as dependent variable explained through a number of antecedents (e.g. privacy awareness). However, there has not been a formal link across antecedents, latent constructs and (stated) behavioural intentions. This study establishes this link through a stated choice experiment, and an integrated latent variable and choice model. The proposed approach simultaneously explains individuals' perceptions of privacy and general caution through observed individual characteristics and explores how these perceptions, in the form of latent constructs, may be associated with consumers' decisions to engage with an online transaction. The stated choice experiment is designed to collect consumers' choices across online retailers, a conventional store and an opt-out option in which online retailers are presented with varying levels of personal-information requirements. The data was collected come from over 500 respondents representing the online-user population in the UK. Model estimation results show that the higher an individual's privacy concern, general caution and technical protection, the less likely a consumer is to purchase a product online. In a joint model, the privacy concern variable is found to outweigh the effect of general caution and technical protection. Finally, consumers with higher levels of general caution are more sensitive towards an online retailer that shares their personal data with third parties.

Keywords: Behavioural intentions; Discrete choice experiment; Privacy concern; E-commerce; Integrated choice and latent variable model (search for similar items in EconPapers)
Date: 2015
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DOI: 10.1016/j.jocm.2015.12.002

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