American and Taiwanese perceptions concerning privacy, trust, and behavioral intentions in electronic commerce.

ABSTRACT

Although the World Wide Web has opened the door for businesses and consumers across the globe, many issues and challenges remain in order to take full advantage of this unprecedented opportunity. More specifically, businesses engaged in electronic commerce call take advantage of current technologies that allow them to collect vast amounts of information about their customers. Although many companies use this information to tailor products and services to improve their relationship with their customers, many people simply do not trust most organizations that require the exchange of personal information. Recent studies suggest that many people either decline to provide this information over the Internet or simply provide false information. As electronic commerec companies extend their reach globally; the issues concerning privacy and trust must be extended beyond a single national culture. This study proposes and tests a Privacy-Trust-Behavioral Intention Model from a global perspective. More specifically, this study compares American and Taiwanese perceptions concerning online privacy and how it relates to the level of trust with a company's electronic commerce web site. In turn, the model suggests that trust is an important intermediary variable that influences behavioral intentions for online transactions.

Keywords: electronic commerce; privacy; trust; behavioral intention; culture

INTRODUCTION

The World Wide Web (WWW) has opened the door for global e-commerce. Although the United States has the lion's share of Internet users, it is estimated that Asia will have over 188 million Internet users by 2004. In particular, China is expected to have 51 million users, while India and Indonesia are expected to have 10 million and 5.1 million users, respectively (CIO Metrics, 2001). Moreover, Latin American e-commerce revenues are expected to grow from $3.6B in 2000 to $67B in 2004 (Direct Marketing, 2001). There is no doubt that the number of potential global buyers is dramatically increasing.

E-commerce provides a considerable amount of product-related information to customers so they can make better-informed purchasing decisions. On the other hand, a vast amount of personal information about customers is being created and used by many companies. Customer information can be collected both explicitly, through registration forms, order forms, online contests, and/or survey forms, and implicitly, by using tracking software and/ or cookies that allow businesses to follow customers' online activities and gather information about their personal interests and preferences. This data has become extremely valuable to online companies because it not only enables them to sell products/services that are tailored to customers' demands, but also provides an opportunity to boost their revenues by selling advertising space on their web sites at a premium (Gilbert, 1999). This premium on advertising space may result from an opportunity to use customers' personal information to help advertisers better target consumers.

Many e-commerce customers, however, are concerned about privacy issues regarding the personal information that is being collected (Alderman & Kennedy, 2000; Whiting, 2000). In fact, a US study by Hoffman and Novak (1999) revealed that almost 95% of the web users surveyed declined to provide personal information over the Internet. Moreover, 40% responded that they tend to make up personal information when online. It appears that many customers simply do not trust most web sites enough to engage in "relationship exchanges" that involve the exchange of personal information.

Internet-based e-commerce activities on a global scale compress time and space and permit the duplication and sharing of scarce corporate resources. In recognition of the international marketplace afforded by e-commerce, organizations have begun to produce a number of products that assist in "customizing" sites for use outside of their native language audience. Moreover, Forrester Research predicts a growth rate of fifty percent a year for those companies that provide multilingual versions and other interpretation tools (Engler, 1999).

Customized language alone, however, is not enough. Web site builders must also consider political, cultural, social, and legal differences. For example, China has comparatively more lenient rules regarding the use of customer data (D'Amico, 2001). Yet in other countries, laws may be broken if business firms transfer customer data internationally. For example, the European Union (EU) Directive on the protection of personal data and on the free movement of such data prohibits the transfer of personal data to non-EU nations that do not meet the adequate protection standard set forth in European data privacy laws (Goldstein, Roth, & Young, 2001).

Culture is defined as a collective programming of the mind that distinguishes a group or category of people from another (Hofstede, 1991). Culture provides people with a sense of identity and an understanding of acceptable behavior within society. This includes values, shared beliefs, or group norms that have been internalized by individuals with some modification (Hofstede, 1980). In addition, culture influences peoples' perceptions and their interpretation of the world. It influences their expectations, values, beliefs, attitudes, and ultimately their behaviors in everyday life (Adler, 1991). Groups of people have unique backgrounds because of their shared history, economy, geography, religion, and demographics. Therefore, it is important for global e-commerce organizations to understand how culture may influence the Internet-based electronic commerce activities on the World Wide Web.

Hofstede (1980) proposed a model of national culture. This model has provided a theoretical foundation in a number of information systems studies that focused on cultural differences (Garfield & Watson, 1997; Early, 1993; Katz & Townsend, 2000; Kim & Petersen, 2003). Hofstede's model includes four dimensions: (1) Individualism -Collectivism, (2) Power-Distance, (3) Masculinity-Femininity, and (4) Uncertainty Avoidance.

Individualism-Collectivism is the degree to which people in a country prefer to act on their own or as members of groups (Hofstede, 1980). More specifically, individualism is the degree to which an individual pursues self-interests and individual expression. Power-Distance, on the other hand, focuses on the extent to which members of a particular group accept unequal power distributions or specific superior-subordinate roles. Masculinity-Femininity concentrates on the degree to which individuals compete, value achievement, and resolve conflict. Lastly, uncertainty avoidance focuses on the degree to which individuals accept uncertainty of future events and the acceptance of rules, measures, or guidelines to reduce the anxiety or threat of uncertainty.

The US is traditionally recognized as having a strong culture based on individualism that stresses independence of each individual within a society. On the other hand, Asian culture, such as Taiwan, focuses more on collectivism and emphasizes the goals of the group over personal goals, stresses conformity and in-group harmony, and defines the self in relation to the group (Lu, Rose, & Blodgett, 1999; Triandis, 1995).

A study conducted by Kim and Peterson (2003) used Hofstede's cultural dimensions to compare the perceived importance of IS development strategies by developers from the US and Korea. Kim and Peterson characterized the US culture as being low in uncertainty avoidance and high in masculinity, while characterizing the Korean culture as being more risk averse and less competitive and aggressive in pursuing personal goals.

It follows, then, that individuals from the US and Taiwan may also differ in terms of their perceptions, beliefs, and use of ecommerce. For example, in order to mitigate uncertainty avoidance, individuals from Taiwan may require more assurances in terms of privacy and security to increase their level of trust when making an online purchase than individuals from the US. However, no studies that focus on privacy and levels of trust in e-commerce activities across cultural boundaries currently exist.

Therefore, the main research questions addressed in this study are:

* How does ensuring the privacy of personal information influence an individual's level of trust?

* What role does trust play in influencing a customer's behavioral intentions? This includes making an online purchase or visiting a web site again.

* Does culture play a role in the privacy-trust-behavioral intention relationship?

This study proposes and tests a theoretical model from a global perspective. More specifically, this study compares American and Taiwanese perceptions concerning online privacy and how it relates to their level of trust with a company's electronic commerce web site. In turn, the model suggests that trust is an important intermediary variable that influences behavioral intention for online transactions.

The results of this study should be of interest to both academics and business practitioners. For academics, a theoretical model for the relatively new and growing area of global electronic commerce is proposed

and tested. For practitioners, the results can provide important guidelines for developing an electronic commerce web site that will improve customer service and that supports the nurturing of critical relationships with their customers across cultural boundaries. Hopefully, this will allow an organization conducting electronic commerce to improve its competitive position.

A PRIVACY-TRUST-BEHAVIORAL INTENTION MODEL

Concerns about privacy are not new. Privacy has long been defined as the right of an individual to be left alone and to be able to control the flow of personal information (Warren & Brandeis, 1890). However, privacy concerns often arise when new …