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Electronic Commerce and Data Privacy 229 existing theories. In general, the findings of the study were consistent with theoretical expectations, as most of the hypotheses were supported. The most surprising finding was that higher levels of privacy concern (H1) did not have a significant impact on actual e-commerce activity. This finding coupled with the perceived usefulness (H2) could possibly indicate that consumers will continue using the Internet if they feel the benefits and convenience of the Internet outweigh any privacy problems. In addition, consumers who have privacy invasion experiences are more concerned about privacy (H7a) issues but do not necessarily decrease actual e-commerce usage (H7b). Again, this can help explain the continued rise in e-commerce use in the face of parallel increased privacy concerns. It is clear that individuals are concerned about the privacy of their personal information. Numerous surveys over the years have indicated a high percentage of respondents are very concerned about this issue (GVU, 1998; Harris et al., 1991, 1994, 1996; Louis et al., 1999). High levels of concern over the privacy issue have led many to express a desire for regulatory control. Our findings concerning the relationship between privacy concerns and regulatory preferences (H6) are consistent with those found by other studies (GVU, 1998; Milberg et al., 2000). The findings showed that consumers prefer government regulation to industry selfregulation with regards to the protection of their personally identifiable information. Individuals who have higher levels of privacy concerns feel that privacy policies are important (H4). However, the negative relationship (marginal) between actual e-commerce activity and the importance of privacy policies indicates that consumers who use the Internet more place less importance on those policies. This finding suggests that high-level Internet users feel that privacy policies are either inadequate or ineffective. Limitations Although previous research provides support that students are acceptable surrogates for decision makers (Hughes & Gibson, 1991; Remus, 1986), other researchers criticize the use. The use of students in this study was justified due to the subject nature and the fact that they are consumers. Since students are usually comfortable Internet users they should be suitable subjects. Implications and Directions for Future Research The findings of this study have regulatory, organizational, and research implications. Now, more than ever, it appears that consumers are ready for government intervention in order to protect their personal information. This affects organizations because their efforts at self-regulation did not work well enough according to the FTC (2000). While great strides were made towards protecting the personal information of consumers, self-imposed privacy policies did not get the job Copyright © 2003, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
230 Henderson, Snyder and Byrd done (FTC, 2000). It appears that laws will be passed (Schwartz, 2000), organizations will have to make changes in order to be in compliance, and this may necessitate a change in business models for many e-commerce organizations. There are many opportunities to develop and extend models dealing with the privacy issue. Further research could include a study to align the attitudes of consumers in relation to behavioral intentions and actual use utilizing the TRA and TAM models. Researchers could also expand the antecedent variables to gain a better understanding of the underlying issues surrounding privacy concerns, behavioral intention, and actual use of e-commerce or the Internet in general. Another avenue of research would be to determine why consumers are indicating a preference for government regulation for protection of their personally identifiable information. Focus groups could be set up to determine why high-level Internet users feel that industry self-regulation is not as desirable as government regulation for this issue. CONCLUSION Research on the issue of privacy, while not new, has recently become a hot topic. The Internet and the EU Data Protection Directive have played a large role in this interest. In addition, media attention has made the consumer very aware of the data privacy issue. They have become very aware of just how vulnerable their personal information is and they want something done about it. Relatively speaking, e-commerce is new and not fully understood. E-commerce is growing faster than anyone expected and, of course, will experience growing pains such as the backlash stemming from the ability to invade the privacy of Internet users and the lack of data protection against any invasions. Research such as this study should help organizations understand just how critical the privacy issue is and allow adjustments to their business models to accommodate the concerns of consumers. In the long run, protecting the data privacy of consumers will help ensure success and longevity for organizations in this new economy. APPENDIX Questionnaire (adapted from the online version) Instructions: Read each question carefully and either click on the button indicating your answer or type in your answer in the space provided. Copyright © 2003, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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Acquisition Editor: Mehdi Khosrow-P
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The Economic and Social Impacts of
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vi Preface E-commerce is not new, t
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