Scholarly article on topic 'Consumers’ Issues and Concerns of Perceived Risk of Information Security in Online Framework. The Marketing Strategies'

Consumers’ Issues and Concerns of Perceived Risk of Information Security in Online Framework. The Marketing Strategies Academic research paper on "Economics and business"

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{"Information Security" / "perceived riskvtrust" / e-business}

Abstract of research paper on Economics and business, author of scientific article — Theodosios Tsiakis

Abstract Internet (web) transactions are subject to numerous information security threats. Consumers‟ trust is fundamental in web transactions and is influenced by perceived information security. The primary factor/reason causing consumers lack on e- business is perceived security risks associated with online transactions. There is a certain relationship between electronic security concerns and customer online shopping attitudes and behavior. Customer security in e-business environment is an on going research issue especially in current electronic marketing field. A marketing strategy can strengthen of reduce the security of an information security company The purpose of this paper is to try to identify, illustrate and analyze the current and future directions in consumer issues and concerns of perceived risk of information security. Also to illustrate the current status of security issues, concerns for online buying shopping attitudes and behavior.

Academic research paper on topic "Consumers’ Issues and Concerns of Perceived Risk of Information Security in Online Framework. The Marketing Strategies"

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Social and Behavioral Sciences

Procedia - Social and Behavioral Sciences 62 (2012) 1265 - 1270

WC-BEM 2012

Consumers9 issues and concerns of perceived risk of information security in online framework. The marketing strategies

Theodosios Tsiakis*

Department of Marketing, Alexandrian Technological Educational Institute of Thessaloniki, P.O BOX 141, Thessaloniki 57400, Greece

Abstract

Internet (web) transactions are subject to numerous information security threats. Consumers' trust is fundamental in web transactions and is influenced by perceived information security. The primary factor/reason causing consumers lack on ebusiness is perceived security risks associated with online transactions. There is a certain relationship between electronic security concerns and customer online shopping attitudes and behavior. Customer security in e-business environment is an on going research issue especially in current electronic marketing field. A marketing strategy can strengthen of reduce the security of an information security company The purpose of this paper is to try to identify, illustrate and analyze the current and future directions in consumer issues and concerns of perceived risk of information security. Also to illustrate the current status of security issues and concerns for online buying shopping attitudes and behavior.

©2012Published by ElsevierLtd. Selectionand/orpeerreviewunder responsibility of Prof. Dr. Hüseyin Arasli

Keywords: Information Security, perceived risk, trust, e-business;_

1. Introduction

Current rapid technological achievements and developments that are observed especially in the last decade have substantially made Internet market to be used by everyone. A plethora of products' and services' purchases are now operated online through websites and internet applications, contributing to the extent of e-business a one of the most essential commercial tool. But that does entail that all consumers are participating in online transactions as part of the Internet boom. Online shopping is the process where consumers purchase products or services simply by using the Internet. The act of shopping through the Internet raises questions about consumers/customer prothesis to shop online. Although the Internet has great potential for consumer value, there seems to be a discrepancy between the number of consumers who visit a website and the number of actual purchases being made (Ab Hamid, 2008) (Chuleeporn & Corpus, 2006). Furthermore, e-business and in parallel intention to shop online is still problematic due to lack of trust and perceived security risk of on line transactions. Because buyers are capable to have physical, tangible proof of the goods in advance, they always perceive a greater risk than shopping brick-and-mortar (Sheng & Liu, 2009). The issue then is how to effectively and efficiently induce a sufficient level of initial online trust so that successful transactions can be fulfilled and the e-market to stay competitive (Wu et al., 2010). Thus, marketers effort need to be concentrated to the design of web sites in such a way that they can communicate with their consumers effectively, efficiently and it most of all secure (Mann & Sahni, 2011). Websites according to (Flanagin

* Corresponding Author name. Tel.: +302310791652 E-mail address: tsiakis@mkt.theithe.gr

ELSEVIER

1877-0428 © 2012 Published by Elsevier Ltd. Selection and/or peer review under responsibility of Prof. Dr. Huseyin Arasli doi:10.1016/j.sbspro.2012.09.216

& Metzger, 2007) can "be conceptualized as information repositories that represent organizational or individual sources, while also reflecting the characteristics of those sources through design features of the sites themselves". Websites must relate to characteristics as confidentiality, integrity, availability (CIA model) of information, non-repudiation of communication and protection of personal privacy.

2. Overview of current state

In the classic, traditional shopping context, consumers were passive recipients of marketing information (Schrank & Dubinsky, 2004). With the utilisation of advanced Information and Communication Technologies (ICT) consumers are now active users, co-producers of information and firms are collecting more customer information than ever before (Malhotra & Malhotra, 2011). As Internet usage is increasing and online shopping accordingly, marketers need to study and understand how the transformation in the online retailing environment relates to dissatisfaction and distrust especially in those countries whose marketing infrastructures are well developed (Limbu et al., 2011) (Chuleeporn & Corpus, 2006). Online marketing transactions necessitate online customer trust in order for customers to place an order online and even submit his or her financial information and other personal data in undertaking other financial transactions (Yazdanifard et al., 2011). Consumers should have an understanding of online security and privacy risks.

Consumers always perceive a certain degree of risk when they are engaged in buying situation. Risk that a consumer will experience according to (Jahankhani, 2009) is a function of two variables: the amount at stake (consequences) and the individuals feeling of subjective certainty of success or failure. (Chang, 2010) mention that the degree of risk is based on two variables, "consumer purchasing decisions regarding the desired results" and "degree of uncertainty".

In the electronic environment we are concerned with subjective (perceived) risk and not "real world" (objective) risk (Vincent-Wayne, 1999). Consumers perceived risk increases with uncertainty and magnify by the associated negative consequences. In order for consumers to decrease perceived risks, they use several strategies, such as brand loyalty, store image or word-of-mouth, either to confirm their buying decision or reduce the uncertainty they feel about the decision (Schrank & Dubinsky, 2004). Perceived risk can prevent customers from purchasing from an online retailer (Yazdanifard, 2011). Perceived risk is defined as "assessment of uncertainties or lack of knowledge about the distribution of potential outcomes and the uncontrollability of outcome attainment" (Ab Hamid, 2008). Bauer (1967) were the first to introduce the concept of perceived risk to the marketing literature and represented consumer purchase action as a risk-taking behavior.

Online trust is "the extent to which a person perceives the credibility and benevolence of the other party with which he or she first interacts in an online environment" (Wu et al., 2010). Trust is considered to have a positive influence on customers' perceptions and leads to consumer engagement in internet shopping (Yazdanifard, 2011). Initiating, building, and maintaining trust between buyers and sellers is a key facilitator for successful e-business regarding trust definitions perspectives (i. context characteristics, ii. trustor properties and iii. characteristics of the trusted object) (Grabner-Krauter et al., 2006). (Zhou, 2011) identified four factors that affect online initial trust. The first is associated with website characteristics (information quality and website quality). The second concerns consumer characteristics (trust propensity and moderation effect on initial trust. The third category is connected with online vendors (reputation as a trust signal, company size, willingness to customize and brand image). The last is associated with third parties (trust seals, brand association and structural assurances). Trust of an online service is not merely based on objective assessments, but that it can arise from up to five different sources: users' inherent personality, knowledge based on users' prior experiences, institutional assurances from providers, calculative assurances from providers, and cognitive assurances from third parties (Soumya et al., 2011). The above five sources reflect both the predispositions of users and the assurances of providers. Literature shows that researchers have different views about how trust and perceived risk are related. Figure 1 summarizes the four types of relations identified by researchers (Lim, 2003).

Description

Perceived risk

(a) Trust

Williagnes to buy

Perceived risk

Trusting behaivor

Perceived risk

(d) Perccived risk

Figure 1. Four types of relations between trust and perceived risk, adopted from Lim, (2003).

3. Current research

Risk is the "combination of the probability of an event and its consequence when there is at least the possibility of negative consequences" (Asnar & Giorgini, 2008). Perceived risk simply is the uncertainty that consumer confront when he is not capable to prognosticate the consequences of his purchase decisions general. Perceived risk arise when consumer is uncertain about the advancement of his shopping action. (Lim, 2003) in a marketing context defines perceived risk as "the nature and amount of risk perceived by a consumer in contemplating a particular purchase action".

The dimensions of perceived risk were defined by a number of researchers (Schrank & Dubinsky, 2004) (Jahankhani, 2009) (Ming-Chi, 2009). The paper array the following six (Table 1):

Table 1. Types of Perceived risk

Types of Perceived Definition

Performance risk is the probability that the product will malfunction and not operate as it was

designed and advertised

Social risk describes the fear that a product or service will lead to a loss of status in one's

social group

Financial risk refers to the probability that a purchase will result in monetary loss.

Psychological risk the possibility that use of a product will result in inconsistency with consumer's

self-image.

Time risk the probability that a purchase results in loss of time when making a bad

purchasing decision by wasting time researching and making the purchase

Physical risk the probability that a purchased product or service will pose in a threat to human

health and safety

The total amount of perceived risk may be a constant while the levels of the types of perceived risk vary with the elements of the situation (Predmore et al., 2007) (Equation 1):

Total Perceived Risk = E risk = evaluation of functional + physical + financial + social + psychological + time

Technology Acceptance Model (TAM) is a theoretically justified model, based on the theory of reasoned action (TRA), is intended to examine and explain information technology adoption proposes that attitude towards using a system is influenced by two critical determinants of users' belief: one is perceived usefulness and the other is perceived ease of use. TAM manifest that the use (actual behavior) of IT is determined by individual's intention to use the technology and that one's intention is determined by the person's attitude, as well as perceived usefulness and ease of use and relates to intention and finally to behavior (an increase in perceived usefulness leads to a greater intention to use). Perceived usefulness (PU), is defined as the extent to which a user subjectively believe that the use of a new technology or a system will be useful or will improve his/her performance. Perceived ease of use (PEOU), is defined as the degree to which an individual believes that using a technology or a system will be effortless. (Ab Hamid, 2008) (Huang et al., 2011) (Ming-Chi, 2009) (Chung-Chi & Jyh-Shen, 2010).

4. Discussion

Tian et al., (2010) indicate that the majority of literature about security in e-commerce is mainly focused on security implementation, security effectiveness and few only study consumers' perceived security risks in ecommerce. Security in an online retailing context, refers to consumers' perceptions about the security both of the online transactions as well as the protection of financial information that accompany the transaction from unauthorized access and further is categorized into financial security (concern about providing financial information) and non-financial security (relating to revealing personal information) (Limbu et al., 2011).

People's perception of information security is determined by several perceivable factors, such as the perceived Knowledge, Controllability, Awareness, Severity and Possibility, which is different from the real security level of an information system (Huang et al., 2011). Consumers are reluctance to complete a simple online purchase primarily due to risk concerns and this sets perceived risk as a prominent barrier (Ming-Chi, 2009). From the perspective of consumers, security control is a quality of services that ensures "freedom from danger, risk, or doubt" (Soumya et al., 2011). Threats to assets are interruption, interception, modification and fabrication (in retailing or service firms, interruption is most significant) (Yeh & Jung-Ting Chang, 2007). Information security countermeasures involve various methods (e.g. physical, procedural, hardware, software, and personnel methods) that are employed to detect, prevent or minimize losses associated with the threats to an information system (Zhang et al., 2009). The virtuality and consequently the lack of control, cause great uncertainty and risk to e-(and m-)commerce and the sequent security problems will increase users' perceived risk and decrease the usage intention of electronic payment (Zhou, 2011). Security, which involves a complex interaction between technical, organizational and behavioral factors like

cryptography, digital signatures etc that aim at protecting users from the risk of fraud, hacking or "phishing", and has a positive influence on the intention to purchase online (Roca et al., 2009) (Amitava & Rahul, 2008). Security is protection against such threats and is mainly concentrated in a technical ways while trust and risk are related more adjustable to human concepts. Information security in business context is defined by (Ab Hamid, 2008) "as the subjective probability with which consumers believe that their personal information will not be viewed, stored or manipulated during transit or storage by inappropriate parties, in a manner consistent with their expectations".

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