The Effect of Privacy Concerns on the Purchasing Behavior Among Malaysian Smartphone Users

Introduction

As more consumers embrace the rise of the Internet era, the online privacy concerns remains a top priority for every smartphone user (DMA, 2015). Many companies find it difficult to ensure privacy and security on their apps for their users to use and engage in a successful transaction, especially where cybercrimes are fast increasing. Privacy concerns naturally becomes an important issue as e-commerce makes it ascent into an important business aspect of most organizations. This is due to the fact that marketers are collecting more information on customers who are buying online to study not only their characteristics, but also their purchase preferences and behaviors. This concerns has proven to have negative consequences for the adoption of e-commerce (Sheehan and Hoy, 1999; Cho et al, 2009). In Malaysia alone, it was reported that it has 35% of smartphone penetration, resulting to more than 10 million smartphone users. McCann even predicted that smartphone penetration in Malaysia will rise to 60% by 2015. The statistics also reveals that Malaysia holds a 66% of Internet users from the population, with 60% internet penetration and 140% mobile penetration, with 47% of Malaysia own more than one mobile phone (MCMC, 2014, Euromonitor, 2014). The number of smartphone users showed a drastic increase as compared to 2011 and 2012 where the numbers of users for those years were only 14% and 12% respectively. Moreover, 64.6% of Malaysian users intend to change their hand phones to smartphones in the near future. Of the current smartphone users, 50.9% of them have installed 10 to 30 apps in their smartphone (MCMC, 2013). In other survey findings, The Wall Street Journal examined 101 popular smartphone apps and found out that, 56 apps transmitted the phone’s unique identifiers to other companies without users’ awareness, while about 47 apps transmitted the device’s location to outsiders (Thurm & Kane, 2010; Angwin & Valentino Devries, 2011). Furthermore, the study revealed that both Apple iOS and Google Android mobile operating systems regularly record and transmit location data without the consent of phone owners. These findings represent a concerns, especially when MCMC state that most Malaysian smartphone users opt for “jailbreak” smartphones that allow the downloading of apps that have not been approved by app stores as these apps may impose security and data integrity risks. The increase number of smartphone users will only lead to increasing privacy risks (Al-Hadadi & Al Shidhani, 2013; De Cristofaro, 2011).

In addition to these alarming statistics, the lack of academic research on the influence of privacy concerns on consumers’ intention to purchase smartphone apps still represent a significant gap, especially when including other influential factors that affect the decision to purchase apps such as the stimulus of social influences and one’s own perceived ability to perform the behavior. Although there are significant number of theories and research on the effect of privacy concerns on purchase intention in the general concepts on information systems and e-commerce (Dai et al., 2014), there is little evidence if the results of those research still hold true in the mobile technology context (Lai & Lai, 2014).