The Relevance of Corporate Information Transparency of the Use and Handling of Customer Data in Online Product Presentations

Abstract

ABSTRACT Many companies are seeking to balance between the use of information transparency to attract new customers by presenting themselves as open companies and the associated risk of losing customers, as disclosing certain information could trigger negative sentiments. Being transparent with certain information can make the potential buying process seem more incomprehensible to the customer. Most studies focus on different aspects of information disclosure in the case of product or price transparency. The impact of information transparency on data use and handling as well as the relevance of customers’ privacy concerns have often been disregarded. This study addresses the research questions of (1) how customers respond to a higher level of information transparency in the context of a service provider’s data use and handling in terms of purchase intention and willingness to pay and (2) the extent to which customer trust in a service provider has a significant mediating influence, and the associated privacy concerns a moderating influence, on the relationship between the level of information transparency of data use and handling and the customers’ purchase intention and willingness to pay. We base our study on the information processing model and privacy calculus theory and manipulate service providers’ communication on information transparency regarding data use and handling in online product presentations. In an online experiment (N = 142), it was found that an increase in information transparency triggers a decrease in the customers’ purchase intention and willingness to pay. Moreover, customers with high levels of privacy concerns seem to evaluate their purchase intention more critically when there was a low level of transparency, whereas, with a high level of transparency, customers with high and low privacy concerns hardly showed any difference. The results suggest that companies should communicate less about data use- and handling-related information when presenting products online.