Online Information Review

Extended model of online privacy concern: what drives consumers’ decisions?

Ivan-Damir Anic, Jelena Budak, Edo Rajh, Vedran Recher, Vatroslav Skare, Bruno Skrinjaric,
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Ivan-Damir Anic, Jelena Budak, Edo Rajh, Vedran Recher, Vatroslav Skare, Bruno Skrinjaric, (2018)
"Extended model of online privacy concern: what drives consumers’ decisions?", Online Information
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Extended
Extended model of online model of
privacy concern: what drives online privacy
concern
consumers’ decisions?
Ivan-Damir Anic, Jelena Budak, Edo Rajh, Vedran Recher,
Vatroslav Skare and Bruno Skrinjaric Received 6 October 2017
Department for Innovation, Business Economics and Business Sectors, Revised 22 February 2018
27 June 2018
Institute of Economics, Zagreb, Croatia Accepted 11 September 2018

Abstract
Purpose – The purpose of this paper is to investigate the relationship between individual and societal
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determinants of online privacy concern (OPC) and behavioral intention of internet users. The study also aims
to assess the degree of reciprocity between consumers’ perceived benefits of using the internet and their OPC
in the context of their decision-making process in the online environment.
Design/methodology/approach – The study proposes comprehensive model for analysis of antecedents
and consequences of OPC. Empirical analysis is performed using the PLS–SEM approach on a representative
sample of 2,060 internet users.
Findings – The findings show that computer anxiety and perceived quality of regulatory framework are
significant antecedents of OPC, while traditional values and inclinations toward security, family and social
order; and social trust are not. Furthermore, the study reveals that perceived benefits of using the internet are
the predominant factor explaining the intention to share personal information and adopt new technologies,
while OPC dominates in explanation of protective behavior.
Research limitations/implications – Although the authors tested an extended model, there might
be other individual characteristics driving the level of OPC. This research covers just one country and
further replications should be conducted to confirm findings in diverse socio-economic contexts. It is
impossible to capture the real behavior with survey data, and experimental studies may be needed to verify
the research model.
Practical implications – Managers should work toward maximizing perceived benefits of consumers’
online interaction with the company, while at the same time being transparent about the gathered data and
their intended purpose. Considering the latter, companies should clearly communicate their compliance with
the emerging new data protection regulation.
Originality/value – New extended model is developed and empirically tested, consolidating current
different streams of research into one conceptual model.
Keywords Internet, Consumer behaviour, PLS–SEM, Online environment, Online privacy concern
Paper type Research paper

1. Introduction
With rapid technological advancements and ever-growing availability of the internet,
consumer online privacy has become the major talking point in discussions about online
advertising and e-commerce. It is documented that consumers generally exhibit growing
concern about their online privacy (Dinev and Hart, 2006; Ginosar and Ariel, 2017).
As consumers are becoming more aware of privacy risks connected to their online activities
(Pavlou, 2003; Goldfarb and Tucker, 2011), they could have various behavioral responses to
their concerns; from obvious ones such as choosing not to use websites and applications
they deem risky, to more subtle ones such as fabricating personal information or using
privacy enhancing software (Lwin et al., 2007). Obviously, both options are unsatisfactory
from the business point of view. Tucker (2014) shows that privacy concerns of consumers
are important for online advertising – evidence on Facebook showed that reducing concerns
by offering more privacy control to consumers yields positive advertising effects. Thus, it is Online Information Review
© Emerald Publishing Limited
1468-4527
This work was supported by Croatian Science Foundation under the Project 7913. DOI 10.1108/OIR-10-2017-0281
 OIR important to understand factors that affect consumers’ online privacy concern (OPC) as well
as their impact on consumers’ behavioral reaction.
The study adds to past research dealing with OPC in several ways. Although previous
studies have proposed various concepts, models, antecedents and consequences of OPC
(Bandyopadhyay, 2009; Chang and Wen, 2008; Youn, 2009; Weinberger et al., 2017),
there is still disagreement among researchers about drivers and consequences of OPC.
The present study proposes and empirically tests an extended model for the analysis of
antecedents and consequences of OPC, consolidating different strands of research. The
model incorporates personal values, recognized in the literature as an important
determinant of consumer behavior in the online environment (Moon et al., 2008; Yoon,
2009; Kim et al., 2016). While so far value dimensions were observed on the macro-level
(Budak et al., 2017), this paper analyses traditional values at the level of individual
respondents (Lindeman and Verkasalo, 2005). Furthermore, the focus is shifted from
intention to buy (Moon et al., 2008; Nepomuceno et al., 2014) to a broader set of possible
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consumer reactions, which is crucial from advertising point of view. Finally, the model is
tested on a nationally representative sample of internet users in a post-transition country,
unlike the majority of previous research which is predominantly focused on the USA
(Dinev and Hart, 2006; Van Slyke et al., 2006; Lwin et al., 2007; Eastlick et al., 2006), on
student population, or on highly educated individuals (Nam et al., 2006; Van Slyke et al.,
2006; Buchanan et al., 2007; Weinberger et al., 2017).
The paper is structured as follows. In the next section, we offer a literature review of
OPC, research hypotheses and an outline of the conceptual model of OPC, its antecedents
and consequences. Methodology applied to test proposed hypotheses is described in the
following section. Results are discussed in the fourth section, and the last section concludes.

2. Conceptual framework and literature review

Figure 1 presents a research framework based on the antecedents – privacy
concern – consequences paradigm, as suggested by Li (2011) and Smith et al. (2011). This
paper aligns these views, reinforcing the argument made by Smith et al. (2011, p. 1008) that
positivist privacy researchers should keep their eye on an optimized antecedents → privacy

Consumer behavioral
Antecedents of online intention
privacy concern
Intention to share
Traditional personal
values information

Intention to use
Social trust new technologies

Perceived benefits
Regulatory Online privacy
of using the
framework concern
Internet

Belief in privacy Active protection

rights of personal data

Sustaining from
Computer
Figure 1. anxiety
revealing
Conceptual framework personal data
of antecedents and
outcomes of online Fabrication of
privacy concern personal data
 concern → outcomes macro model that eventually includes an expanded set of antecedents Extended
as well as an exhaustive set of outcomes. The presented conceptual framework model of
encompasses both societal, regulatory and individuals’ antecedents of OPC. We selected the online privacy
variables of interest based on literature review that were shown to be important for
explaining OPC, but have been rather neglected in empirical research. concern
Weinberger et al. (2017) analyze determinants of knowledge about privacy protection,
and examine the influence of privacy concern as one of the motivational factors on online
privacy literacy skills. In contrast, privacy concern in our model is a central variable and
elements of privacy literacy in terms of Weinberger et al. (2017) such as regulatory
framework are considered the antecedents of OPC.
In a digital era, the meaning of privacy has evolved and nowadays it focuses on personal
information shared with family, friends, businesses and strangers, while consumers must
actively participate in self-protection as new digital technologies represent potential threat
to their privacy (Markos et al., 2012). Behavior consequences in the online environment are
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far more complex than in offline environment (Ginosar and Ariel, 2017). Online privacy,
which is a central variable of interest in this study, involves the rights of an individual
concerning the storing, reusing, provision of personal information to third parties and
displaying of information pertaining to oneself on the internet (Malhotra et al., 2004).
Ginosar and Ariel (2017) note that the study of online privacy addresses three separate
domains: user privacy concerns and behavior, website privacy notices and practices, and
state privacy policies and regulations. Internet users have privacy concerns about collection,
sharing and unauthorized manipulation with their personal information and their reactions
differ depending on the concern.
Past research has so far examined the importance of values on macro-level, while in this
study we examine the impact of individual traditional values on privacy concern, which
have a central role in social life and ought to receive more research attention in online
setting. Values are psychological constructs linked with personality, motivation and
behavior (Lindeman and Verkasalo, 2005), while traditional values as one value type
include, e.g. the respect for tradition, family and security (Schwartz, 1992, 1999). Past
research suggests that in some traditional societies it is believed that if information about an
individual falls into the wrong hands, it could be easily used to harm that individual, which
increases the level of concern (e.g. for Maori population in Cullen (2009)):
H1. Traditional values are positively related to OPC.
Furthermore, consumer trust is widely recognized in the literature as an important
determinant of consumers’ behavior in the online environment (Eastlick et al., 2006; Chang
and Wen, 2008; Cases et al., 2010; Bansal et al., 2016). In our model, we examine the impact of
social trust (ST) which includes trust in people and public institutions in line with Naef and
Schupp (2009). Trust is important because it helps individuals overcome uncertainty and
risk and engage in “trust-related behaviors” with vendors, such as sharing personal
information and making purchases, while lack of trust negatively affects purchase
intentions and internet purchases (Arcand et al., 2007; Chang and Wen, 2008; Kim et al.,
2008). If trust increases, individuals are likely to perceive less risk, and be less concerned
about their privacy:
H2. ST is negatively related to OPC.
Privacy policy literature debates on how much regulation is needed, and what is the best
mechanism for reducing privacy risks (Lee, 2003; Xu et al., 2012). On the one hand,
advocates of state intervention argue that state regulation is necessary to protect consumers
from unfair practices of online firms and that the presence of online government regulation
increases trust and reduces consumer concern, as internet users have limited knowledge and
 OIR resources to assess data security and they rely on laws to protect them (Acquisti et al., 2015).
On the other hand, supporters of self-regulation argue that internet businesses have market
incentives to protect user privacy to avoid losing customers (Ginosar and Ariel, 2017). In this
model, we examine the impact of perceived effectiveness of regulatory policies according to
the framework proposed by Lwin et al. (2007). Those authors showed that weak and less
effective perceived government online privacy regulation increases privacy concern, and as
a result individuals will want to protect their privacy:
H3. Perceived quality of government online privacy regulation is negatively related
to OPC.
“Right to privacy” is a fundamental value in democracy, and as such it is reasonable to
examine its relation to privacy concern. Belief in privacy rights includes a set of beliefs and
values of individuals related to privacy, and is driven by psychological need for privacy
(Mulligan et al., 2016). Yao et al. (2007) argue that due to its “elusive ontological nature,” it is
more fruitful to observe privacy rights as a set of individuals’ beliefs than as a “right”
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defined legally. Peoples’ beliefs in privacy rights vary between individuals, whereas those
individuals who believe in the right to privacy and have a more intense psychological need
for privacy are more likely to be concerned about privacy violations on the internet than the
others. Earlier studies (Yao et al., 2007; Yao and Zhang, 2008) showed that beliefs in privacy
rights are an important factor that significantly and positively influences OPC:
H4. Belief in privacy rights is positively related to OPC.
Computer anxiety (CA) can be defined as the tendency of individuals to be uneasy,
apprehensive or fearful about the use of computers (Parasuraman and Igbaria, 1990), the loss
of data and possible mistakes of using the computers (Thatcher and Perrewe, 2002; Cazan
et al., 2016). Although some studies did not find significant relationship between CA and
information privacy concern (Korzaan and Boswell, 2008), other studies indicate that
individuals who experience high levels of CA behave less comfortably around computers and
exhibit higher levels of privacy concern (Stewart and Segars, 2002; Skrinjaric et al., 2017):
H5. CA is positively related to OPC.
The consequences of OPC were operationalized in the existing literature in various
ways. Intention to disclose personal information was discussed in the context of general
privacy concern, but also in the context of social networks and applications connected
with them (Min and Kim, 2015; Kehr et al., 2015). Min and Kim (2015) found significant
negative impact of OPC on intention to give personal information, while Kehr et al. (2015)
found positive relationship between perceived privacy and intention to disclose
information. We advance the intention to disclose personal information from Min and
Kim (2015) to include intention to share personal information in the broadest sense,
encapsulating sharing of different personal information on the internet, not just on social
networking sites, from sharing private images and location to sharing credit card data
when buying online. This approach enables us to estimate the relationship between
consumers’ privacy concerns and their general behavioral intention in the online
environment, from private conversations to business transactions. In line with previous
similar research, the expected sign between privacy concern and the intention to share
personal information online is negative:
H6. OPC is negatively related with the intention to share personal information.
While intention to use new technologies is generally considered in the technology
acceptance model (TAM) framework in the literature (Pavlou, 2003; Jiang and Deng, 2011;
Arpaci, 2016), we use different approach by focusing on consumers’ privacy concerns
 as the predictor of their general propensity toward new technologies/services/applications. Extended
Recent research has shown that intention to use new technology is connected and model of
intertwined with peoples’ privacy concerns (Thakur and Srivastava, 2014; Arpaci, 2016). online privacy
Arpaci (2016) found that perceived privacy is a significant positive predictor of trust and
consequently of attitudes and intentions to use mobile cloud storage services. Interestingly, concern
Thakur and Srivastava (2014) found very weak effect of perceived risk on adoption
intention for mobile payment services in India, where one of the predictors of perceived risk
was perceived privacy, suggesting that there are differences between different cultures with
regards to privacy concern and online behavior (Ur and Wang, 2013). We expect to find
negative connection between privacy concern and intention to use new technologies, as new
technologies are often connected with serious privacy threats (e.g. see Ziegeldorf et al., 2014;
Friedewald and Pohoryles, 2016):
H7. OPC is negatively related with the intention to use new technologies.
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Aside from intentions to adopt technologies, reveal private information or make a

transaction on the internet, there are other potential behavioral responses by consumers,
notably, protective behavior. Privacy protection behaviors are motivated by consumers’
need to protect their personal information. Altman (1975) was the first to suggest the
connection between consumers’ privacy concerns and their attempt to protect their personal
information. Lwin et al. (2007) stated that protective behavior implies personal information
fabrication, withholding and protecting by using privacy enhancing technologies. The
results from their study suggest that firms and regulators need to be perceived by
consumers as acting responsibly in their utilization of personal data if they wish to avoid
negative behavioral responses by consumers. They also show that privacy concern plays a
crucial mediating role in linking business policy and regulatory perceptions to negative
online user responses. These negative consumers’ reactions to potential privacy intrusions
may represent a serious setback for further growth of e-commerce. We adopt the constructs
and measures from Lwin et al. (2007) and include them into our conceptual framework as the
final outcome of OPC. We expect positive relationship of all constructs with OPC, in line
with previous similar research:
H8. OPC is positively related to active protection of personal data.
H9. OPC is positively related to sustaining from revealing personal data.
H10. OPC is positively related to fabrication of personal data.
In order to control for the consumers’ intrinsic motivation for using the internet, perceived
benefits of using the internet from Dinev and Hart (2006) were also included in the model.
We argue that perceived benefits of using the internet will be positively related to
intention to share personal information and intention to use new technologies, and will
reduce individuals’ inclination to engage in protective online behavior. Past research has
tried to explain why users are willing to disclose personal information by applying
communication privacy management and social exchange theories (Laufer and Wolfe,
1977; Petronio, 1991) which postulate that users develop rules of information disclosure by
evaluating the perceived risks and perceived benefits in order to manage their privacy
effectively. Various studies confirmed that perceived benefits have an impact on
information disclosing intention (Berendt et al., 2005; Dinev and Hart, 2006; Youn, 2009;
Li, 2011). Perceived benefits through intentions affect actual behavior, which means that
individuals will reduce their tendency to engage in internet protective behavior (Li, 2011).
Considering the adoption of new technologies, TAM suggests that consumers who buy a
new product or service expect that the benefits they receive from the new product or
services exceed the costs, and several studies show that perceived benefit is significantly
 OIR and positively related to adoption intention of a new product or service (Wang et al., 2008).
In line with stated, the following five hypotheses are proposed:
H11. Perceived benefits of using the internet are positively related to intention to share
personal information.
H12. Perceived benefits of using the internet are positively related to intention to use
new technologies.
H13. Perceived benefits of using the internet are negatively related to active protection
of privacy.
H14. Perceived benefits of using the internet are negatively related to sustaining from
revealing of personal data.
H15. Perceived benefits of using the internet are negatively related to fabrication of
personal data.
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3. Method
Data for this study were collected by Computer-Assisted Telephone Interviewing (CATI)
method during a period of November 2015 to March 2016. Internet users in Croatia
represent the population for this study, and secondary data were used to assess the
number of internet users in Croatia. Online phone book was used as a sampling frame.
The sample was made on a one-way stratification by 21 counties. The sample allocated to
each stratum was proportional to the assessed number of internet users in each stratum.
Within each stratum a combination of random and systematic sampling was applied.
Pages from phone book were selected using simple random sampling procedure. Sample
units within each page were selected by applying systematic sampling procedure (i.e.
selecting every kth unit from the page). Sample units were contacted with telephone and
asked if they agree to participate in the study. Those that agreed to participate in the
study were asked the eliminating question – “Are you an internet user?”, and only those
answered “Yes” (internet users) participated in the study. The final sample consists of
2,060 internet users aged 18 or older. The structure of the final sample is proportional to
the population of Croatian internet users in terms of age group and gender based on
secondary data assessments, and is in accordance with previous studies of internet users
in Croatia (Dumicic and Zmuk, 2009; CBS, 2016).
Questionnaire was developed in Croatian language. The items adopted from the
literature in English were translated to Croatian and checked for the accuracy of translation
with the back translation procedure conducted by a professional not involved in the
research study. The first question in the survey questionnaire was the eliminating question
whose aim was to identify internet users and non-users and to proceed with the
questionnaire only with internet users.
The core of the questionnaire consists of multi-item scales to measure variables in our
extended model (see Table I). The questionnaire used five-point Likert-type items, anchored
by 1 for strongly disagree and 5 for strongly agree, adopted from existing scales.
Traditional values (VAL) were measured by three items adapted from Lindeman and
Verkasalo (2005) as part of their shortened version of Schwartz’s value survey. ST was
measured by three items from Naef and Schupp (2009), intended for measuring general trust
in people and trust in institutions. Perceived quality of regulatory framework (REG) was
measured by three items from Lwin et al. (2007). Belief in privacy rights (NFP) was
measured by three items adopted from Yao et al. (2007). Individual CA was measured by
three adopted items from Parasuraman and Igbaria (1990). OPC was measured by six items
scale, adopted from Smith et al. (1996), covering various aspects of personal OPC.
 Variable N Mean SD Min. Max.
Extended
model of
Gender online privacy
Male 1,024 0.5 0.5 0 1
Female 1,036 0.5 0.5 0 1 concern
Age 2,060 39.83 12.91 18 84
Number of people in household 2,060 3.52 1.26 1 12
Education
Primary or less 17 0.01 0.09 0 1
Secondary 1,035 0.5 0.5 0 1
Tertiary 945 0.46 0.5 0 1
PhD or post-grad 63 0.03 0.17 0 1
Income of respondents’ household (HRK)
2,500 or less 51 0.02 0.16 0 1
2,501–5,000 305 0.15 0.36 0 1
5,001–7,500 451 0.22 0.41 0 1
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7,501–10,000 601 0.29 0.45 0 1

10,001–12,500 274 0.13 0.34 0 1
12,501–15,000 197 0.1 0.29 0 1
More than 15,000 181 0.09 0.28 0 1
Region of the respondent
Zagreb 544 0.26 0.44 0 1
West Croatia 262 0.13 0.33 0 1
East Croatia 387 0.19 0.39 0 1 Table I.
Central Croatia 461 0.22 0.42 0 1 Demographics of the
South Croatia 406 0.20 0.40 0 1 survey respondents

Intention to share personal information (SH) was measured by a new five items scale which
will be evaluated in the measurement model phase of PLS–SEM. The new five items scale
was developed by the research team, following the procedures for new scales described in
Churchill (1979). The items cover information on sharing of private images, posting their
current location or company and providing credit card information. Intention to adopt new
technologies (NEWT) is measured by two items scale, taken from Wang et al. (2008).
Perceived benefits of using the internet (BNF) were measured by three items scale, using
adapted items from Dinev and Hart (2006) and Malhotra et al. (2004). All items for measuring
different aspects of protective behavior were adopted from Wirtz et al. (2007).
Structural model of OPC and research hypotheses were tested using the PLS–SEM
methodological approach. There are several reasons for using PLS–SEM instead of
CB–SEM, also summarized in Hair et al. (2016). First, the aim is prediction of key constructs
and identification of key determinants of these constructs. Second, although the sample
used in this study is large enough to implement CB–SEM, the data will unlikely be normally
distributed since survey measures subjective people’s perceptions. PLS–SEM, unlike
CB–SEM, is also called a soft modeling technique because of minimal distributional
assumptions (Monecke and Leisch, 2012). Furthermore, Sanchez (2013) points out that using
CB–SEM means implicitly assuming that the data is generated by some true underlying
model, with the goal of covariance analysis being the revelation of this true model causing
these observed covariances. This means that data have to follow the model. On the other hand,
PLS–SEM does not assume the data generating model. Rather, the model serves to provide
useful insights into gathered data and the final aim is to summarize the relationship between
latent variables in the model (Sanchez, 2013). Since research conducted here is exploratory in
its nature, and not based on previously developed and well-established theory, PLS–SEM is
deemed to be appropriate approach. Complete analysis was performed using the plspm
package in R, written by Sanchez et al. (2015). Results are presented in the next section.
 OIR 4. Results
Demographics of survey respondents and basic descriptive statistics for all survey items are
given in Tables I and II. Several conclusions can be drawn from these descriptive data. First,
on average, propensity toward traditional values and family is very high amongst the
participants. Second, ST is on average on fairly low levels. This is true for both trust in other
people and in institutions. Belief in privacy rights is also very high on average, unlike
perceived benefits and CA, both of which are around 3. OPC is relatively high, averaging
3.56 on all six items, while intention to share personal information is surprisingly low. Also,
the majority of the survey participants expressed sustaining from revealing personal
information on the internet as means to combat their privacy concern. Thus, the descriptive

Statistic Mean SD Min. Max.

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val_1 4.017 1.051 1 5

val_2 4.502 0.731 1 5
val_3 4.297 0.897 1 5
st_1 2.199 1.057 1 5
st_2 2.274 1.095 1 5
st_3 2.754 1.154 1 5
bnf_1 3.046 1.320 1 5
bnf_2 2.915 1.298 1 5
bnf_3 2.805 1.284 1 5
nfp_1 3.614 1.335 1 5
nfp_2 4.582 0.673 1 5
nfp_3 4.605 0.734 1 5
ca_1 3.543 1.317 1 5
ca_2 3.015 1.398 1 5
ca_3 2.248 1.245 1 5
opc_1 3.477 1.310 1 5
opc_2 3.941 1.078 1 5
opc_3 3.179 1.312 1 5
opc_4 3.360 1.386 1 5
opc_5 3.341 1.353 1 5
opc_6 4.047 1.038 1 5
reg_1 3.408 1.008 1 5
reg_2 3.559 1.005 1 5
reg_3 4.150 0.926 1 5
sh_1 2.421 1.326 1 5
sh_2 2.010 1.181 1 5
sh_3 1.945 1.204 1 5
sh_4 1.967 1.214 1 5
sh_5 2.248 1.363 1 5
pb_fab_1 1.879 1.145 1 5
pb_fab_2 1.782 1.164 1 5
pb_fab_3 2.633 1.479 1 5
pb_prot_1 1.764 1.264 1 5
pb_prot_2 2.060 1.475 1 5
pb_prot_3 1.599 1.098 1 5
pb_sust_1 4.584 0.800 1 5
pb_sust_2 4.525 0.812 1 5
pb_sust_3 4.590 0.859 1 5
newt_1 3.083 1.054 1 5
newt_2 2.282 1.084 1 5
Table II. age 39.834 12.915 18 84
Descriptive statistics Note: n ¼ 2,060
 data presented show that consumers indeed care about their online privacy. In order to Extended
explore and evaluate the presented framework, PLS–SEM analysis was performed. model of
Following Sanchez (2013) and Hair Jr et al. (2016), PLS–SEM model is estimated, followed online privacy
by the evaluation of the measurement and structural model. Internal consistency reliability
of the estimated model is satisfied. All measures of unidimensionality, based on rule of concern
thumbs from Hair Jr et al. (2016), show that the measurement model is well specified.
For reference, all measures of unidimensionality are given in Table III.
Next, convergent validity of the estimated model was examined through outer loadings
of indicators and average variance extracted (AVE). Loadings of 0.7 and above are
considered acceptable since this means that the latent variable explains a large part of that
indicator’s variance, at least 50 percent. Five indicators in the estimated model are below
this threshold value. However, in line with the suggestions from Hair et al. (2016), items with
loadings between 0.4 and 0.7 should be considered for removal from the scale only if deleting
the indicator leads to the increase in the composite reliability or in AVE. Removing one item
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from OPC construct leads to increase in AVE from 0.57 to 0.73. Removing one item from SH
construct leads also to a large increase from 0.58 to 0.71. These items are, therefore, removed
from the further analysis. Considering the ST construct, two out of three items have
loadings below threshold. Deleting both items would lead to one item scale which is strongly
advised against. The middle approach is adapted by deleting only the item with the lowest
loading which increases AVE from 0.5 to 0.67. Final outer loadings are plotted in Figure 2.
The discriminant validity of the measurement model represents the extent to which a
construct is truly distinct from other constructs by empirical standards Hair et al. (2016),
which can be examined through cross loadings and Fornell–Larcker criterion, with the latter
being more conservative approach. By looking at the cross loadings, it is clear that all
indicators’ outer loadings on the associated constructs are larger than all their loadings on
other constructs, thus establishing discriminant validity. Fornell–Larcker criterion,
pffiffiffiffiffiffiffiffiffiffi which
pffiffiffiffiffiffiffiffiffiffi
compares the AVE with correlations between latent variables, also shows that AVE is
larger than the largest correlation with any other construct in all cases. Table p IVffiffiffiffiffiffiffiffiffiffi
shows
discriminant validity based on Farnell–Larcker criterion. Diagonal represents pffiffiffiffiffiffiffiffiffiffi AVE of
latent variables, while below are correlations between latent variables. As AVE is larger
than correlations between latent variables in all cases, discriminant validity is established.
As the validity of the measurement model is established, we proceed with evaluation of
the structural model. Goodness-of-fit measures usual for CB–SEM, such as χ2 statistics or
the various fit indices are not applicable in PLS–SEM context (Hair et al., 2016). Tenenhaus
et al. (2005) propose a global goodness-of-fit index for validating the PLS model globally.
However, Henseler and Sarstedt (2013) provide evidence from simulation that the proposed
GoF index is not suitable for model validation. Instead, the f 2 effect size measures how much
the coefficient of determination changes when exogenous construct is excluded from the
model, or formally ( for more details see Hair Jr et al., 2016):

R2excluded R2included
f2 ¼ (1)
1R2excluded

From exogenous variables in the model, only CA has moderate effect on OPC ( f 2 ¼ 0.18),
while other variables have small effect according to Cohen (1988), with f 2 between 0 and
0.06. Standardized path coefficients of the structural model are given in Figure 3.
Traditional values and ST do not have a significant impact on OPC. CA seems to have the
largest impact on level of OPC, followed by perceived quality of the regulatory framework
and then belief in privacy rights. On the other side of the model, OPC has the largest impact
on active protection, fabrication and sharing of personal information on the internet.
Moreover, our model shows that perceived benefits of using the internet outweighs privacy
 OIR Variable Code Survey item

To what extent the following ideas represent a life-guiding principle

for you personally?
Traditional values (VAL) val_1 Tradition, that is, respect for tradition, humbleness, accepting one’s
portion in life, devotion, modesty
val_2 Conformity, that is, obedience, honoring parents and elders,
self-discipline, politeness
val_3 Security, that is, national security, family security, social order,
cleanliness, reciprocation of favors
How much do you trust?
Social trust (ST) st_1 …strangers you meet for the first time
st_2 …public authorities
To what extent do you agree with the following statements?
st_3 In general, you can trust people
Computer anxiety (CA) ca_1 Computers are a real threat to privacy in this country
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ca_2 I am anxious and concerned about the pace of automation in the world
ca_3 I am easily frustrated by increased computerization in my life
Belief in privacy rights nfp_1 People should be able to use the internet anonymously
(NFP) nfp_2 People have the right to control personal information about
themselves when online
nfp_3 There should be no personal information gathering on the internet
without consent
Regulatory framework reg_1 The existing laws in my country are sufficient to protect people
(REG) online privacy
reg_2 The government is doing enough to ensure that citizens are
protected against online privacy violations
reg_3 There should be tougher regulations by the government to protect
personal privacy online
Privacy concern (OPC) opc_1 I am concerned about my online privacy
opc_2 All things considered, the internet would cause serious privacy
problems
opc_3 Compared to others, I am more sensitive about the way my
personal information is handled online
opc_4 I am concerned about extensive collection of my personal
information over the internet
opc_5 I am concerned about my privacy violation when using the internet
opc_6 Compared with other subjects on my mind, personal privacy online
is very important
Intention to share (SH) sh_1 I don’t mind sharing private pictures on the internet
sh_2 I put private information on the internet
sh_3 I don’t mind posting on the internet information about the place
I am at the moment
sh_4 I don’t mind posting on the internet with whom I am at the moment
sh_5 I see no problem in sending my credit card data when buying online
Perceived benefits (BNF) bnf_1 In general, my need to obtain certain information or services from
the internet is greater than my concern about privacy
bnf_2 I find that personal interest in the information that I want to obtain
from the internet overrides my concerns of possible risk or
vulnerability that I may have regarding my privacy
bnf_3 The greater my interest to obtain a certain information or service
from the internet, the more I tend to suppress my privacy concerns
Fabrication (PB_FAB) pb_fab_1 I give fictitious responses to avoid giving the website real
information about myself
pb_fab_2 I use another name or e-mail address when registering with certain
website without divulging my real identity
Table III.
Survey items (continued )
 Variable Code Survey item
Extended
model of
pb_fab_3 When registering with certain website, I only fill up data partially online privacy
Protection (PB_PROT) pb_prot_1 I use software so that the recipient cannot track the origin of my mail
pb_prot_2 I use software to eliminate cookies that track my internet activities concern
pb_prot_3 I use software to disguise my identity
Sustaining (PB_SUST) pb_sust_1 I refuse to provide personal information to untrustworthy websites
pb_sust_2 I avoid visiting the untrustworthy websites
pb_sust_3 I don’t purchase goods from untrustworthy websites
Intention to adopt new newt_1 How interested would you be in using new online
technologies (NEWT) services/technologies immediately after they’re available? (1 – Not
interested, 5 – Very interested)
newt_2 What is the likelihood that you will be one of the early users of new
online services or technologies immediately after they are
available? (1 – Extremely unlikely, 5 – Extremely likely) Table III.
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Latent variable
0.75 VAL
ST
CA
NFP
REG
Loading

0.50
OPC
BNF
PB_FAB
PB_PROT
0.25 PB_SUST
SH
NEWT

0.00
val_1
val_2
val_3
st_1
st_3
ca_1
ca_2
ca_3
nfp_2
nfp_3
reg_1
reg_2
reg_3
opc_1
opc_3
opc_4
opc_5
bnf_1
bnf_2
bnf_3
pb_fab_1
pb_fab_2
pb_fab_3
pb_prot_1
pb_prot_2
pb_prot_3
pb_sust_3
pb_sust_4
pb_sust_5
sh_1
sh_2
sh_3
sh_4
newt_1
newt_2

Figure 2.
Bar chart of
outer loadings
Indicator

concern of people in decision whether to share their personal information on the internet, but
also in the adoption of new technologies.
R2 for endogenous latent variables are given in Table V. Most endogenous variables
seem not to be predominantly explained by their antecedents in the model. Since Hair et al.
(2016) write that R2 values of 0.2 could be considered high in some disciplines, such as
consumer behavior, only the main variable – OPC yields a substantial R2. The results are
discussed in detail in the next section.

5. Discussion
Results of PLS–SEM analysis revealed some interesting patterns. Surprisingly, traditional
values do not play a role in determining the individual level of OPC, which means that H1 is
not supported. Thus, one can conclude that examining the relationship between values at
 OIR Latent variable Cronbach’s α Diller–Goldstein’s ρ 1st eigenvalue 2nd eigenvalue

VAL 0.74 0.85 1.98 0.54

ST 0.51 0.76 1.53 0.83
CA 0.72 0.84 1.94 0.65
NFP 0.64 0.85 1.47 0.53
REG 0.67 0.82 1.85 0.83
OPC 0.85 0.89 3.51 0.81
BNF 0.87 0.92 2.40 0.42
PB_FAB 0.74 0.85 1.97 0.60
Table IV. PB_PROT 0.80 0.88 2.15 0.50
Unidimensionality PB_SUST 0.83 0.90 2.22 0.44
measures of the SH 0.82 0.88 2.99 0.86
estimated model NEWT 0.81 0.91 1.68 0.32
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0.014 –0.150*** 0.241***

VAL SH
–0.067*** 0.199***
–0.018 NEWT
ST

0.388***
CA OPC
BNF
–0.112***
0.089***
NFP 0.159***
PB_PROT 0.158***
0.173*** 0.160***
REG PB_FAB
0.091*** 0.135***
PB_SUST

Figure 3.
Standardized path
coefficients of the
structural model
Notes: VAL, traditional values; ST, social trust; CA, computer anxiety; NFP, belief in
privacy rights; REG, regulatory framework; OPC, online privacy concern; SH, intention
to share personal information; BNF, perceived benefits of using the internet; PB_FAB,
fabrication of personal information; PB_PROT, active protection of personal
information; PB_SUST, sustaining from revealing personal information; NEWT,
intention to adopt new technologies. *,**,***Significant at 10, 5, and 1 percent levels,
respectively

VAL ST CA NFP REG OPC BNF PB_FAB PB_PROT PB_SUST SH NEWT

VAL 0.81
ST −0.14 0.82
CA 0.19 −0.09 0.80
NFP 0.18 −0.07 0.09 0.86
REG 0.14 −0.22 0.17 0.14 0.77
OPC 0.13 −0.10 0.43 0.15 0.26 0.85
BNF −0.15 0.12 −0.10 −0.01 −0.10 −0.06 0.89
PB_FAB −0.26 0.02 0.08 −0.03 0.05 0.15 0.15 0.81
PB_PROT −0.06 −0.04 0.04 0.00 0.05 0.15 0.13 0.32 0.85
Table V. PB_SUST 0.19 −0.07 0.05 0.27 0.17 0.10 −0.12 −0.10 −0.03 0.85
Fornell–Larcker SH −0.18 0.17 −0.17 −0.13 −0.19 −0.17 0.25 0.13 0.07 −0.21 0.84
criterion for assessing NEWT −0.11 0.14 −0.22
pffiffiffiffiffiffiffiffiffiffi−0.05 −0.10 −0.08 0.20 0.15 0.11 −0.13 0.24 0.92
discriminant validity Note: Diagonal represents AVE of latent variables, below are correlations between latent variables
 macro-level and OPC differs significantly from examining the relationship between individual Extended
values and OPC. Dimensions of values at the macro-level might not be applicable in the study model of
of individuals and different value dimensions might emerge for different levels of analysis online privacy
(Schwartz, 1992). Although Croatia is traditional country at the macro-level (Budak et al.,
2017), traditional values at the individual level do not affect privacy concern of internet users. concern
Another unexpected result is that ST does not seem to play a role in determining the
individual level of OPC, thus, rejecting H2. However, previous research was mainly
concerned with trust in a particular company/website (Chang and Wen, 2008; Cases et al.,
2010; Eastlick et al., 2006; Kim et al., 2008), and not broader definition of societal trust. In
fact, Kim et al. (2008) found that consumers’ disposition to trust, which is similar to ST
presented in this paper, is a weak antecedent of trust in particular website, which could
explain our results. This means that consumers generally do not translate their disposition
to trust and trust in other people and institutions to the online environment, which is
encouraging for the e-commerce. Namely, it is far easier for businesses to improve their own
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trustworthiness with different tools such as third party seals or better customer services,
than to have an influence on our broader definition of trust.
CA, belief in privacy rights and perceived quality of regulatory framework[1] all have
expected relationship with OPC with CA being the dominant effect in size, supporting
H3–H5. Indeed, belief in privacy rights, while significant statistically, yields very low
standardized path coefficient. Yao et al. (2007) found substantially larger impact of belief in
privacy rights on concerns about privacy. The difference could probably be explained
through different samples. While Yao et al. (2007) use undergraduate students for
participation in the survey (mean age is 19.5), we use a representative sample of Croatian
population (mean age is 39.8). Furthermore, along with the samples being quite different
demographically, one should also not discount the cultural differences between the USA and
Croatia. The effect of perceived quality of regulatory framework on OPC is in line with Lwin
et al. (2007). Relationship between CA and OPC illustrates that the main focus should be on
transparency and education as means to alleviate OPC through this antecedent.
The results further show that OPC negatively affects intention to share personal
information and intention to use new technologies, supporting H6 and H7. Relationships
between OPC, active protection of personal data, sustaining from revealing personal data
and fabrication of personal data are all positive, as hypothesized in H8–H10.
Perceived benefits are positively related to intentions to share personal information and
intentions to use new technologies, supporting H11 and H12. Perceived benefits are also
negatively related to active protection of personal data, supporting H13. This advances our
understanding of interaction between perceived benefits and consequences of OPC started
in Dinev and Hart (2006). Unlike in previous studies, perceived benefits are empirically
tested as a determinant of various consumers’ behavioral intentions. We show that it is an
important “antidote variable” to be included when evaluating consumers’ decisions related
to online behavior determined by OPC. Furthermore, protective behavior conceptualized in
Lwin et al. (2007) and Wirtz et al. (2007) is empirically explored in the context of perceived
benefits along with OPC. The relationship between perceived benefits and fabrication and
sustaining from revealing personal data is positive, opposing H14 and H15. The possible
explanation might be that consumers have to put on extra effort to protect their personal
information. Support for H13 means that, if they perceive web service as valuable,
consumers are less likely to engage in active protection of their data. However, they could
still engage in relatively easier protective behavior, such as data fabrication or sustaining to
provide the data. Arguably, it is easier to simply falsely state name and surname, or avoid to
state home address, than to install privacy enhancing software.
Considering consumers’ reactions to privacy concern in the form of their behavioral
intention shows that perceived benefits of using the internet generally overshadow OPC.
 OIR Positive effect of perceived benefits outweighs the negative effect of privacy concern both
for intention to share personal information and intention to adopt new technologies.
However, the estimated effect of perceived benefits is somewhat smaller than estimated by
Dinev and Hart (2006), which can be explained by the fact that we used a different set of
dependent variables in our extended model. Another interesting finding is that perceived
benefits and privacy concern actually have almost the same effect, instead of reciprocal, on
fabrication and sustaining of revealing personal information.
Another result worth addressing is very low R2 of all endogenous variables in the model,
except OPC (Table VI). This just illustrates the complexity of human behavior in online
environment. While including both pro et contra arguments, OPC and perceived benefits, it
still explains only a fraction of the entire consumers’ thought process. Obviously, the research
framework could be broadened to include other external as well as individual factors, such as
demographic characteristics. However, these are extensively studied in the literature (Chen
et al., 2001; Zhang et al., 2002; Janda and Fair, 2004; Fogel and Nehmad, 2009; Hoy and Milne,
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2010; Ji and Lieber, 2010; Joinson et al., 2010), and therefore are not included here. This
research framework was designed to advance the knowledge on less explored individual and
social antecedents of OPC and their impact on consumers’ behavioral intentions.

6. Conclusions and implications

Important parts of contemporary human lives are activities they do in the online environment.
This is what Reed (2014) labels as Digitized lives. In spite of the raising interest of researchers
in different aspects of human behavior in this new and ever-changing environment, both
theoretical and empirical studies on the online privacy issues are limited. Confronted with the
growing privacy exposures, it is interesting to explore how much internet users are actually
aware or concerned about the intrusion of their privacy. Do they change their behavior
accordingly? Which actions do they take when confronted with online privacy issues? Do they
trust the national regulators? Finally, are individual traditional values related to the level of
OPC? These questions are in the core of this research. This paper presents rigorous empirical
research on determinants and consequences of OPC. By using nationally representative
sample of unprecedented size, we are able to generalize the results found in previous studies of
determinants and consequences of OPC and empirically test the extended model of OPC which
could serve as baseline for future refinements and contextual modifications.
Findings from this paper contribute to unscrambling the trade-off between privacy
concern and perceived benefits of using the internet and demystifying the antecedents of
OPC. Among variables included in the model as antecedents, traditional personal values and
ST of internet users do not have a significant impact on OPC. CA seems to have the largest
impact on level of OPC, followed by perceived quality of the regulatory framework and then
by respondents’ belief in privacy rights. On the other side of the model, OPC has the largest
impact on active protection, fabrication and sharing of personal information on the internet.
Furthermore, our study confirms that perceived benefits of using the internet outweighs
privacy concern of people when online.

Endogenous variable R2

OPC 0.23
PB_FAB 0.05
PB_PROT 0.04
Table VI. PB_SUST 0.02
R2 of endogenous SH 0.09
variables NEWT 0.05
 The results of this study shed light on some important issues related to consumer privacy in Extended
online environment and consumers’ decisions that have not been addressed by previous model of
studies. First, previous research into relationship between OPC and consumers’ behavioral online privacy
intention focused predominantly on intention to transact and intention to buy (Dinev and Hart,
2005; Pavlou, 2003; Moon et al., 2008) whilst ignoring the intention to share personal concern
information and to use new technologies. Sharing of personal information is crucial from the
point of view of online advertisers. Successful online advertising could even drive the demand
in the offline environment, e.g. in case customers are willing to share their personal information
online, but are not willing to transact online (Lewis and Reiley, 2014). If no consumer
information is available, it is less likely that online advertising will be efficient. Similarly,
consumers’ actively protecting their information could also hamper advertising efforts, which
is why three forms of protective behavior are included in the conceptual framework. However,
it is also important to note some other potentially relevant factors mitigating the concerns as
well as behavioral intentions, such as privacy statements (Arcand et al., 2007).
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This study reveals that perceived benefits of using the internet are generally more
influential factors on consumer’s decision making than OPC. However, in order to provide
meaningful practical implications, it should be noted that the decision for managers is not that
clear-cut when it comes to prioritizing provision of benefits over managing privacy concerns.
Although the study indicates that perceived benefits are a stronger predictor of willingness to
share personal information and intention to use new technologies, it seems that customers tend
to fabricate and not reveal their personal information even when they perceive high benefits of
their usage of the internet. Thus, the right approach for managers would entail working toward
maximizing perceived benefits of consumers’ online interaction with the company (e.g.
convenience, speed, cost and personalization), while at the same time being transparent about
the gathered data and their intended purpose. In terms of maximizing perceived benefits for
consumers, companies should leverage consumers’ data in order to provide more relevant and
personalized user experiences (e.g. tailored online offers based on collaborative filtering;
customized marketing communication messages based on consumers’ previous interaction
with the company). When consumers experience positive surprises based on deep insights that
companies have about them, they tend to appreciate how their data were utilized (e.g. one-click
shopping experiences, or relevant product recommendations). At the same time, data usage
transparency should be enforced by straight-forward disclosures on the data collection policies
(e.g. “How we handle your data?” messages) and by enabling customers to easily manage their
privacy preferences (e.g. providing them with simple privacy settings dashboards on
companies’ websites and mobile applications). Furthermore, our study shows that one of the
major drivers of OPCs is perceived quality of the regulatory framework. In the light of the
recently introduced General Data Protection Regulation (GDPR) in European Union (European
Commission, 2018), managers should leverage this opportunity and communicate their
compliance with the new regulatory framework and their policies that include the collection
and usage of personal data. When it comes to the usage of consumers’ data, the introduction of
GDPR should be perceived as an opportunity for companies, and not as a threat. As a good
practice, managers should reassure their current customers about the benefits of sharing data
with the company (e.g. updating privacy policies and practices in order to comply with the new
regulation) and clear their databases from non-permission-based collected data. Although the
latter is usually seen as a loss for the company (e.g. due to losing reach), it should be a
beginning of a much better way of doing business based on the consumers’ data.

Note
1. third question for regulatory framework was recoded so that the construct represents affirmative
attitude towards regulation, i.e. perceived quality of regulation.
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Corresponding author
Vedran Recher can be contacted at: vrecher@eizg.hr

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