Consumer trust, perceived security and privacy policy. Three basic elements of loyalty to a web site
| DOI | https://doi.org/10.1108/02635570610666403 |
| Published date | 01 June 2006 |
| Date | 01 June 2006 |
| Pages | 601-620 |
| Author | Carlos Flavián,Miguel Guinalíu |
| Subject Matter | Economics,Information & knowledge management,Management science & operations |
Consumer trust, perceived
security and privacy policy
Three basic elements of loyalty to a web site
Carlos Flavia
´n and Miguel Guinalı
´u
Faculty of Economics and Business Studies, University of Zaragoza,
Zaragoza, Spain
Abstract
Purpose – The purpose of this paper is to analyze the effect of privacy and perceived security on the
level of trust shown by the consumer in the internet. It also aims to reveal and test the close
relationship between the trust in a web site and the degree of loyalty to it.
Design/methodology/approach – First, there is an explanation of the main attributes of the
concepts examined, with special attention being paid to the multi-dimensional nature of the variables
and the relationships between them. This is followed by an examination of the validation processes of
the measuring instruments.
Findings – Specifically, the study reveals thatan individual’s loyalty to a web site is closely linked to
the levels of trust. Thus, the development of trust not only affects the intention to buy, as shown by
previous researchers, but it also directly affects the effective purchasing behavior, in terms of
preference, cost and frequency of visits, and therefore, the level of profitability provided by each
consumer. In addition, the analyses show that trust in the internet is particularly influenced by the
security perceived by consumers regarding the handling of their private data.
Practical implications – The results of this study provide several managerial implications for
companies in this sector. Suggestions are offered for national and international organizations involved
in regulating these markets.
Originality/value – The results of this research remedy, to a certain extent, the scarcity of empirical
studies that have designed and validated measuring scales for the concepts of privacy, security, trust
and loyalty to the internet, as well as testing the relationships between them.
Keywords Internet, Trust,Data security, Privacy, Customer loyalty
Paper type Research paper
1. Introduction
The increasing use that organizations are making of new technologies, aimed at
obtaining and processing data regarding consumer characteristics and behavior, ha s
meant that consumers are very concerned about the use, treatment and potential
transfer of their private data, as well as security in information systems (Harris
Interactive, 2002; European Commission, 2004; Kelly and Erickson, 2004).
Furthermore, the constant references in the media that call into question the
supposed security of the internet (e.g. the spreading of viruses or hacker attacks) only
serve to aggravate the already low confidence that consumers have with regard to
online purchasing (Consumers Union, 2002; Emarketer, 2004). For example, over
40 percent of consumers feel that their privacy is jeopardized, with over 45 percent
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The authors are grateful for the financial support of the Ministry of Education and Science and
the Arago
´n Government (S-46; PM-034).
Consumer trust
and privacy
policy
601
Industrial Management & Data
Systems
Vol. 106 No. 5, 2006
pp. 601-620
qEmerald Group Publishing Limited
0263-5577
DOI 10.1108/02635570610666403
believing that the laws currently governing the internet do not go far enough. This
concern regarding the possible lack of privacy in online transactions is becoming a
major obstacle to the spread of e-commerce (Lardner, 1999), due basically to the loss of
control perceived by the user over the use of personal information supplied to the seller
(Hoffman et al., 1998).
The problems of privacy, security, and their effect on trust and loyalty on the
internet have been analyzed in various research studies (Kruck et al., 2002; Gavish and
Gerdes, 1998). This work analyzes the influence exercised by consumer-perceived
privacy and security on the trust shown to a web site, as well as the role of these
variables in loyalty. First, there is an explanation of the main attributes of the concepts
examined, with special attention being paid to the multi-dimensional nature of the
variables and their relationships. This is followed by an examination of the validation
processes of the measuring instrument (the measurement scales are shown in the
Appendix, Table AI). The proposed hypotheses are tested. The work concludes with a
discussion of the main managerial implications, as well as the future research lines.
2. Analysis of the concept of trust
2.1 Trust in marketing
The importance of trust in marketing is constantly growing (Sahay, 2003). Indeed, trust
is considered to be, along with commitment, communication and satisfaction, one of the
basic pillars supporting the relationship marketing theory. Trust may be defined as:
...one party’s belief that its needs will be fulfilled in the future by actions undertaken by the
other party (1).
Thus, trust is a set of beliefs held by a consumer as to certain characteristics of the
supplier, as well as the possible behavior of the supplier in the future (Ganesan, 1994;
Coulter and Coulter, 2002). In line with this reasoning, the literature has identified
various dimensions in trust. Of these dimensions, perceived honesty and benevolence
have most often been associated with consumer trust. Honesty (or credibility) indicates
the certainty the consumer has in the business’ sincerity and the fact that it keeps its
promises (Gundlach and Murphy, 1993). Benevolence is related to the consumer’s belief
that the company is interested in his welfare, that it does not intend to show
opportunist behavior (Larzelere and Huston, 1980), and that it is motivated by the
quest for joint benefit (Doney and Cannon, 1997).
2.2 Consumer trust in a web site
The constant development of relationships over the internet is significantly affecting
most commercial sectors (Gunasekaran and Love, 1999; van der Smagt, 2000; Wu and
Chang, 2005; So et al., 2005). However, this influence has not been translated into high
sales figures via the internet since there is a lack of trust that means that consumers are
reluctant to adopt e-commerce (Gefen, 2000; Jarvenpaa et al., 2000; So and Sculli, 2002;
Hedelin and Allwood, 2002). This distrust is a consequence of the particular features of
the internet when set against transactions conducted via traditional channels
(Yousafzai et al., 2003). Thus, when a consumer conducts a transaction with an online
store that is characterized to be operating in an uncertain environment (Fung and Lee,
1999) such as the internet, the consumer is less likely to trust that everything about his
transaction is assured and normal as compared to his transactions with an offline store.
IMDS
106,5
602
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