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Abstract
This research addresses the tensions that arise between the collection and use of personal information that people provide in the course of most consumer transactions, and privacy. In today's electronic world, the competitive strategies of successful firms increasingly depend on vast amounts of customer data. Ironically, the same information practices that provide value to organizations also raise privacy concerns for individuals. This study hypothesized that organizations can address these privacy concerns and gain business advantage through customer retention by observing procedural fairness: customers will be willing to disclose personal information and have that information subsequently used to create consumer profiles for business use when there are fair procedures in place to protect individual privacy. Because customer relationships are characterized by social distance, customers must depend on strangers to act on their behalf. Procedural fairness serves as an intermediary to build trust when interchangeable organizational agents exercise considerable delegated power on behalf of customers who cannot specify or constrain their behavior. Our hypothesis was supported as we found that when customers are explicitly told that fair information practices are employed, privacy concerns do not distinguish consumers who are willing to be profiled from those who are unwilling to have their personal information used in this way.
(Information Privacy; Procedural Justice; Trust; Service Quality; Organizational Information Processing)
Introduction
Two converging trends, one competitive and the other technological, are driving American business. First, to survive in the increasingly competitive global economy, companies depend on vast quantities of information to build strong bonds with current customers, and to attract new customers. Second, information technology (IT) continues to increase in capability and to decline in cost, allowing information to be used in ways that were previously impossible or economically impractical. Technology enables companies to record the details of any customer transaction at the point-of-sale, to store vast quantities of transaction data in their data warehouse, and to use these data to execute marketing programs with a business partner or alone. Technology also enables the development of extensive customer databases, making it possible to deal with customers as individuals. Instantaneous access to the customer's history by a customer service representative allows standardized, impersonal encounters with whomever answers the 800-number to assume the appearance of a personal relationship (Gutek 1995)....