Role of Privacy Legislations and Online Business Brand Image in Consumer Perceptions of Online Privacy Risk

Developing an approach to manage privacy risk is critical to the success of e-marketing. Understanding the antecedents of privacy risk is therefore essential for the success of e-business. Because governments, businesses, and consumers are economic agents, this study examined the effects of governmental (privacy legislations) and firm-related (online business brand image) factors on consumer perceptions of online privacy risk. This paper proposes a conceptual model for exploring the underlying mechanisms of privacy legislations and online business brand image on consumer perceptions of online privacy risk. To test the conceptual model, data were collected from 425 students on a university campus which provided real personal information to online businesses within the preceding 3 months. Structural equation modeling was employed to test all the hypotheses in the conceptual model. The results reveal that perceived effectiveness of privacy legislations and online business brand image positively affect trust in online businesses. In addition, trust in online businesses positively affects perceived effectiveness of business privacy policies and perceived benefits of information disclosure, which in turn negatively influences online privacy risk perception.