Mitigating uncertainty through government intervention: Exploring the impact of public policy on Internet privacy concerns

Despite the rapid growth and penetration of the Internet into an increasing number of businesses and households, its use by consumers as a shopping medium remains severely limited when compared to both business-to-business (b-to-b) sales over the Internet and to traditional retail and catalog sales (OECD, 1998). Accordingly, the primary goal of this research was to contribute to our current understanding of online consumer behavior by identifying how online privacy and security concerns impact participation likelihood, and by testing two policy mechanisms that can be used effectively by governments and businesses to increase current participation levels. To address these issues, the Judgment Uncertainty and Magnitude Parameters Model (JUMP) developed by Chandrashekaran and Marinova (1998) was employed. The JUMP procedure increases the power of behavioral models by statistically and simultaneously considering the impact of both intention magnitude and intention uncertainty in the generation of an overt response or behavior. Because JUMP estimates the impact of both intention magnitude (IM) and intention uncertainty (IU), it enables researchers to more accurately account for much of the heterogeneity observed in overt behavior. Further, JUMP enables researchers to gain a more complete understanding of the process by which intentions are formed in that researchers are able to specify and estimate both the unique and shared impact of antecedents on IM and IU.; The outcome of the research provides some interesting results. First, although privacy concerns have a negative impact on a consumer's IM to shop online, these concerns can be mitigated by the two policy mechanisms tested in this paper. In addition, negative attitudes about online shopping and price also have a negative impact on IM. The quality of a consumer's online experience, on the other hand increases IM as well as moderates the negative impact of price on IM. Further, JUMP testing indicates that uncertainty plays a significant role in the formation of a consumer's intention to shop online. IU, however, appears to be reduced in the presence of positive attitudes about online shopping, prior e-commerce experience, and policy mechanisms designed to protect online privacy and security.