TOPIC: EFFECTS OF CUSTOMERS TRUST AND PRIVACY CONCERNS

TOWARDS ONLINE BUSINESSES.

1.0 INTRODUCTION
The internet conceivably is the most important technology as it allows
people to carry out their daily activities such as communication,
businesses and personal life. Indeed, people have found advantages in
using the internet and these advantages may include having access to a
wide range of information, convenience and more choice for goods and
services. Probably, companies can also be grateful for the innovation of
the internet as it provides them with the means of extending their
services

outside

their

physical

environment.

However,

the

many

advantages that the internet technology brings with transacting online

may be countered with concerns such as privacy concerns. Due to the fact
that there is no presence of a physical sales personnel during online
transactions, people are usually faced with the unwillingness to transact
online.
Customers acceptance of online transactions relies not just on the
benefits online transactions bring but also on the trust they have in online
transactions. The inability of customers to trust online transactions has
been argued to be one of the major reasons why customers do not
engage in any form of online transaction (Hoffman et al., 1999). The
aspect of trust that will be employed in this paper is online trust, as online
trust differs from offline trust. Online trust can be defined as customers
trust

directed

towards

businesses

or

organizations

that

conduct

transactions online (Wang and Emurian, 2005). Online trust is vital for
every online transaction and building this trust is a difficult task. For online
businesses to continue to grow, they need to be trustworthy. Online
businesses also need to understand their customers so as to build a longterm relationship with them. An online business in this paper is defined as
a business or an organization that uses the internet as a medium to carry
out online transactions. Many online businesses collect information from

customers through order and/or registration forms. They also collect

information from customers through the use of cookies which enable them
to track the online activities of their customers in order to acquire
information about the preferences of their customers. This information
acquired by online businesses is always beneficial to them as it allows
them to sell their goods and services according to the preferences of their
customers. Moreover, online businesses can increase their revenue by
selling advertising space on their websites to advertisers because they
believe that personal information or preferences of customers can be used
by advertisers to bring more customers (Mangalindan, 2003). Although
customers find it interesting when online businesses provide them with
their preferences (Liu et al., 2005), concerns about their privacy has
become a critical issue and this stands as an obstacle to the development
of electronic commerce (Gefen, 2000; Scalet, 2001; Wu et al., 2012). For
instance, a study conducted by Hoffman et al., (1999) reported that
almost 95% of the people they surveyed refused to submit personal
information to online businesses when they asked for it. It can therefore
be ascertained that many customers may not actually trust an online
business because of their concerns over privacy.
1.1 Research question
Does the degree of trust and privacy concerns customers have with online
businesses generate an effect on their behavioural intentions for online
transactions?
1.2 Research objectives
The objectives of this research are as follows:

To understand what influences a customer to trust an online

business.
To understand the effects of customers trust and privacy concerns
towards online businesses.

1.3 Research outline

This paper began with a brief overview of customers trust and privacy
concerns towards online businesses. The next chapter (chapter two) will
review existing literatures on customers trust and privacy concerns
towards online businesses. Chapter three will focus on the adopted
methodology used in the course of this research. Chapter four will report
the findings obtained from the analysis of data. Chapter five will discuss
the findings, the limitations of the research and the implications of the
research to both academic and business practitioners. The last chapter
(Chapter six) will conclude the research and recommendations will be
suggested in this chapter.
LITERATURE REVIEW
2.0 Overview
This chapter reviews relevant literatures to gain an insight on customers
trust and privacy concerns towards online businesses.
2.1 Definition of trust
According to Mayer et al. (1995) trust is the willingness of a party to be
vulnerable to the actions of another party based on the expectation that
the other will perform a particular action important to the trustor,
irrespective of the ability to monitor or control that other party (p. 712).
This definition covers two important areas of trust which includes the
willingness of individuals to be vulnerable and the presence of confident
expectations. Moreover, Barber (1983) argues that the notion of trust is
perceived as the expectation that exchange partners (partners involved in
a transaction process) will carry out the responsibilities required of them.
Trust can also be conceptualized as a belief that embodies depending on a
person or group under uncertain environmental and risky conditions.
Trust, according to the Oxford English Dictionary (1971) is defined as the
confidence in or reliance on some quality or attribute of a person or
thing, or the truth of a statement (p. 3423). In as much as humans
interact with one another, there must be some form of trust. Trust has

been studied from different perspectives by various researchers. Whitener

et al. (1998), for example, defined trust as a concept that involves the
conviction or expectation about the anticipated actions of an exchange
partner. From this definition, one can say that a trustor (an individual
placing his or her trust in an online business) must be ready to accept the
risk that what they are expecting from an online business might not be
fulfilled. Similarly, Yoon (2002) defined trust as an element that is required
for building relationships between a trustor and trustee. Trustee is defined
as a person or a party to whom legal title to property is entrusted to.
In the build-up of exchange relationships, trust normally plays a crucial
role. Bradach and Eccles (1989) argued that trust is a type of expectation
that an online business may not act accordingly to the rules or policies
stipulated on its website. Moreover, trust guides exchanges between an
online business and its customers in anticipation of establishing a longterm relationship. Trust is regarded as an antecedent for transactions or
exchanges (Pruitt, 1981). Furthermore, saying that trust is needed for
transactions

or

exchanges

would

mean

that

trust

results

from

collaboration and coordination between exchange partners. In the

marketing literature, trust is been regarded as a central link between
buyer-seller relationship and customer loyalty and retention. Trust is
important in starting relationships with customers. For example, Frazier et
al. (1988) argued that trust is strengthened by means of keeping to ones
promises, keeping to ones personal integrity and not betraying or
cheating the other party even if the opportunity to do so presents itself.
However, these variables

can only be attained after satisfactory

transactions have been carried out. Trust changes with time. If a customer
already trusts an online business then after sometime finds out reasons to
doubt this online business, there is the possibility that the customer will
no longer trust the online business. The growth of an online business can
be influenced by their trustworthiness towards their customers.
2.2 The significance of trust

Engaging in interaction with people that cannot be fully depended on

joined with an inner desire to understand how these people act, presents
individuals with an overpowering difficulty or complexity. The impossibility
to have power over how people act or the impossibility of trying to
understand their incentives allows this complexity to look more difficult
that it can somehow reduce individuals intentions to carry out various
tasks. However, since people do need to interact constantly, they
therefore use various means to reduce these complexities. These
complexity reduction methods are important because without them,
people will probably not interact with others more than once. Trust has
been argued to be one of the most effective means of reducing these
complexities (Luhmann, 1979).
As stated earlier, trust is defined as a concept that shows conviction or
expectation about the anticipated actions of an exchange partner in
(Whitener et al. 1998). Trust is also the confidence an individual has in his
or her favourable anticipations of what another individual or individuals
will do based in most situations, on prior interactions (Gefen, 2000). The
previous behaviour of a party (a person or an organization) cannot
guarantee that the party would act as one would expect. However, if the
party behaved as expected, the party will be seen as trustworthy, thus
increasing the belief that that party will behave accordingly in future
interactions. The inability to trust others will make a party consider
possible behaviours of other parties before deciding on what actions to
take. These complexities will be too much that people will become
reluctant to do anything. Trust can be conceptualized as an effective
means of reducing complexities. However, it is not the only method, as
rules and regulations are also methods used in reducing complexities
(Gefen, 2000). Nonetheless, with the availability of rules, trust is still
necessary because there is no assurance that other people will abide by
these rules and regulations (Fukuyama, 1995). Trust makes it feasible for a
person to create an understanding of their interactions with others,
however, it does not actually allow one to predict or even control the
behavioural intentions of others.

The significance that trust brings is however dependent on the complexity

and the type of interaction between people. The more a person depends
on other people, the more the need to trust (Rousseau et al. 1998;
Deutsch, 1958). Research on online business has used a more definite
approach, defining trust as the expectation that parties involved in online
transactions will behave amicably (Kumar, 1996) and will keep to their
promises (Rotter, 1971; Schurr, 1985) under conditions of acceptance and
exposure to vulnerability (Rousseau et al. 1998). This further means that
parties expose themselves to the vulnerability based on the belief that
other parties will not betray or cheat them even if they have the ability to
do so.
Trust is vital to business relationships. With trust, the need for negotiating
for a long period of time can be reduced. Trust reduces resolution of
details (Gulati, 1995; Fukuyama, 1995) and it also reduces the need for
compulsory regulation and complete legislation (Fukuyama, 1995). Trust
builds and encourages long-term relationship. Fukuyama (1995) argues
that trust is important as it reduces risk perception, privacy and security
concerns. In addition, In any agreement that involves the use of contracts,
trust can be very vital in such situations due to the fact that people can go
ahead to make agreements with the assurance that there will be no form
of opportunistic behaviour. On the contrary, if there is no trust in a
contractual agreement, people would have to watch out for any
opportunistic behaviour such as cheating that can be carried out on them.
Trust is important in any business relationship as it can go a long way to
determine the quality of the relationship. Consequently, trust in a business
context is the salient factor in determining the effectiveness of many
relations (Zand 1972: 229) and it also a determinant of the wide-ranging
behaviours of individuals (Konovsky and Pugh, 1994; Schurr, 1985). Lack
of trust has been argued to be the cause of having important information
twisted in order to suit some people and it creates situations. Lack of trust
also leads to the unwillingness to take risks (Fukuyama, 1995; Luhmann,
1979). The willingness to engage in activities that involves ones exposure

to risks without being able to control other peoples behaviour is an effect

of trust and this makes trust very important to the development of
electronic commerce.
2.3 Online trust
Electronic commerce can be characterized as transaction carried out on
the internet which is usually conducted between two or more entities
through various types of online-linking media such as portals or websites.
According to a study conducted by Cheskin Research (1999) as cited by
Yoon (2002), online trust is built or formed from the following factors:

Presentation: this entails the design characteristics of the website of

an online business.
Technology: this entails attributes showing technical skills and

advantage.
Search: the ability to provide customers with the convenience of

looking for what they want.

Brand: the brand of an online business allows customers predict the

reputation and the credibility of online businesses.

Security and privacy assurance: the attribute of an online business
showing

adequate

security

measures

and

privacy

protection

measures.

Trust strengthens or weakens the relationship between a person and an

online business. The factors presented above reflect on the honesty and
integrity of an online business. Individuals visiting the website of an online
business for the first time may be worried over the privacy and security of
their personal details that would be submitted during the online
transaction. Also, they may be worried when search results fail to show
what they (first-time customers) would like to purchase. This results to
having reasons to doubt the trustworthiness of that online business.
However, if these individuals see features such as the presence of a
privacy policy assuring them of the privacy of their personal information,
their trust towards that online business begins to grow. After having series

of transactions with an online business that has proven to be trustworthy,

these individuals then place their trust in that online business. It is then
left for the online business to maintain the relationship. Online businesses
can maintain relationships by updating their security and privacy
measures (Aiken and Bousch, 2006; Lauer and Deng, 2007). Also, online
businesses can maintain trust relationships by updating their information that is being current (Kim et al. 2005).
At this point, one may begin to wonder on what makes online trust
different from offline trust. The absence of sales personnel and the fact
that the buyer will not be able to physically view the product that he or
she wants to purchase are the main reasons why online trust is different
from offline trust. It has been argued that the non-availability of human
network features such as visual features, audio features and sensual
features threatens the development of customers trust towards an online
business (Nohria and Eccles 1992). Using the internet as a medium for
online transactions create concerns related to privacy and security among
exchange partners. As a result of this, online businesses are forced to
create a kind of trust relationship that is stronger than the kind of trust
relationship experienced offline. Organizations with no offline availability
would have to show more evidence in order to gain customers trust.
Furthermore, organizations with no offline availability can proof to be
trustworthy

by

having

up-to-date

security

and

privacy

measures

implemented on their websites (Aiken and Bousch, 2006). Just like offline
trust influences customers to purchase goods and services, online trust
will also function as a determinant to purchase goods and services too.
Not only that trust facilitates purchase intention, it also facilitates
customers to purchase again from an online business that has proven to
be trustworthy.
Gefen (2002) argued that integrity, benevolence and ability are essential
for general trust formation. From an e-commerce perspective, integrity is
the belief that personnel behind an online business will stick to their
stated policies and rules. Benevolence is the belief that online businesses

will not betray or cheat their customers in order to make more sales.
Ability is the belief that online businesses have the necessary skills and
competence to provide good quality products and services to their
customers (Gefen, 2002). In addition, Ang et al. (2001) suggested that the
ability of online businesses to deliver goods and services as expected
combined with the presence of a privacy policy on the website of online
businesses and the readiness of an online businesses to accept to work on
the goods or services purchased if they do not meet the customers
contentment,

would

facilitate

customers

trust

towards

online

businesses.
Hemphill (2002) in his research conceptualized the basis of online trust in
terms of fair information standards. He argues that online businesses
should have policies on the disclosure of personal details, provide
information on the purpose of collecting customers personal details and
allow customers to view and access their personal data. More importantly,
Hemphill (2002) argues that without an enforcement and redress
mechanism, a fair information practice code is merely a suggested set of
guidelines rather than a prescriptive mechanism, and does not ensure
compliance with the fair information practice principles (p. 2). Hemphill
(2002) was one of the few researchers who considered and examined the
need for legislation to create civil solutions for customers in the
occurrence of untrustworthy interactions

with an online business.

Furthermore, he noted that there are enforcement agencies that sanction

individuals that violate privacy policies. For example, the Federal Trade
Commission sanctioned several online businesses (e.g. toysmart.com) for
violating privacy regulations (Hemphill, 2002).
The aforementioned studies offer vital insights into the factors of online
trust.

The

terms

antecedent,

element,

dimension,

principle

and

determinant are sometimes used interchangeably due to the lack of

agreement among researchers on a definite meaning for what each term
means to trust. Shankar et al. (2002) made a similar observation
concerning trust studies in the e-business and information systems

literature. Additionally, researchers often offer a list of trust determinants

in their various studies without providing empirical facts on what each
feature stands for to the formation of trust.
2.4 Antecedents of online trust
This section will review the antecedents of trust. Antecedents in this
context are the criteria that can determine customers trust towards an
online business.
2.4.1 Customers web experience
Customers trust towards an online business can be attributed to their
experience in using the internet (Metzger, 2006). According to a study
conducted by Corbitt et al. (2003), the degree or extent of customers web
experience affects customers level of trust towards an online business.
From this assertion, the level of experience customers have in using the
internet influences their trust towards the internet which in turn could
build their trust towards online businesses.. Aiken and Bousch (2006)
stated that customers trust increases in the preliminary stages of using
the internet. However, when these customers become more experienced,
their trust declines when they get to know about things that could go
wrong which such as the misuse of their personal details.
2.4.2 Ease in using the website of an online business
The ability of customers to use the website of an online business easily,
especially during their first use of the website, influences their trust
towards that online business. Ease of use in this context is specifically
about the structure and the design of the website. Lohse and Spiller
(1998) argue that the overall design of a website which includes product
types, search functions, quality information and the absence of errors
such as spelling errors influences customers trust towards online
businesses. Therefore, customers are more likely to trust any online
business that has its website free from all kinds of errors and also they are
more likely to trust an online business if its website contains correct and

complete information. Additionally, Bart et al. (2005) stated that online

businesses whose websites are easy to use and have the ability to direct
their customers to what they (customers) want quickly, can easily get the
trust of their customers. Chau et al. (2007) argues that using a website
easily is critical to the formation of trust. From this, one can argue that
when a customer experiences difficulties in using the website of an online
business, there is the tendency that their trust towards that online
business will decrease as they would believe that if using the website
proves to be difficult, then they (the online business) cannot be capable to
carry out transactions.

2.4.3 Technology trustworthiness

The technical advantage of an online business is important to the
development of customers trust. Customers can choose not to trust an
online business that lacks the necessary technical skills required to carry
out online transactions. Corbitt et al. (2003) argues that technology
trustworthiness is critical to customers trust. They further add that online
businesses with poor IT (information technology) operations tend not to be
seen as trustworthy. A psychological state of trust can be conceptualized
as attributes of benevolence and credibility (Doney and Cannon, 1997). An
online business with quality technology or strong IT operations helps to
build customers trust. Also, since customers accepting to conduct online
transactions shows their willingness to accept the risks that comes with it
(Corbitt et al. 2003), risk perceptions about the technology that is used to
engage in online transactions becomes important to customers trust.
2.4.4 Risk perceptions
Trust is interlinked with risk (McAllister, 1995). In the context of online
transactions, customers may be exposed to the risk of opportunism or
expectation. According to Williamson (1975), opportunism is defined as

self interest with guile (p. 6) and it includes behaviours such as twisting
information and failing to keep to ones obligations and promises (John,
1984). However, trust can be formed without the existence of risk
perception. From a theoretical standpoint, one does not have to risk
anything before placing his or her trust in another person.
Studies

have shown that risk perceptions

are important for the

development of trust towards online businesses (Fram and Grady, 1997;

Jarvenpaa et al. 2000). Mayer et al. (1995) argue that in an organizational
context, activities that involve taking risks may depend on trust. Trust can
be conceptualized as the willingness of an individual to take risks and risk
perception can be conceptualized as the possibility of getting both
negative and positive outcomes. Stewart (1999) investigated the effects
of customers trust and risk perceptions in an online business and their
(customers) willingness to transact or purchase online. She further argued
that perceived risk is a moderating antecedent that exists between
customers trust and their willingness to transact with or purchase from an
online business. Also, Mitchell (1999) argues that perceived risk is an
antecedent of trust and the relationship that exists between the trust and
perceived risk is not recursive.
With the interlinked relationship between trust and risk perception, should
two of them be disjointedly separated? It is obvious that risk perceptions
and trust are closely related and as such they affect a customers
behavioural intention towards online business. However, trust is more
restrictive than risk perception because trust involves two different parties
namely the trustee and the trustor. In transacting or purchasing online,
customers can choose not to trust or trust an online business.
2.4.5 Perceived Security
Since the internet is a global phenomenon (Wu et al. 2012), security of
customers personal details become a global phenomenon too. Personal
details of individuals can be intercepted and used for fraudulent activities.
Furthermore, transacting in an online environment involves greater

security concerns than transacting in an offline environment. Therefore

customers need to be assured of the security of their personal details.
Security concern is still one of the major obstacles to the development of
e-commerce (Wang et al. 1998; Gefen, 2000). Perceived security is
defined as a threat that creates a circumstance, condition or event with
the potential to cause economic hardship to data or network resources in
the form of destruction, disclosures, modification of data, denial of service
and/or fraud, waste and abuse (Kalakota and Whinston, 1997: 853).
An online business having security measures that involves the use of
advanced technologies such as digital signatures, certificates and
cryptography directed at protecting customers from fraudulent activities
will positively influence customers behavioural intention to purchase from
or transact with that online business. Therefore, when an online business
has security measures, people have the tendency to trust that online
business. In light of this, online businesses are employed to enforce
security
protection

mechanisms
and

that

would

authentication

of

include

encryption,

customers

personal

verification,
information

(Chellappa and Sin, 2005). These mechanisms ensure that customers

data cannot be viewed or modified by third-parties. Moreover, enforcing
these principles or mechanisms make customers believe that their
security is guaranteed which in turn contributes to their development of
trust towards online transactions.
2.5 Privacy concerns
Privacy is not a new concept and it has generally been conceptualized as
the ability of an individual to control the terms by which his or her
personal data is obtained and used (Westin, 1967, Galanxhi-Janagi and
Fui-Hoon Nah, 2004). Privacy affects aspects such as the acquisition,
distribution and the non-authorized use of a customers personal details
(Wang et al. 1998). Privacy has been an interesting subject long before
computers were invented. Privacy has been defined as the desire of
individuals to choose freely under what situations and to what extent they
will expose themselves, their behaviour and attitudes to others (Westin,

1967).

These days, the wide use of the internet limits the ability of

internet users to remain unidentified. Internet users leave lots of

electronic footprints showing their preferences which can easily be
retrieved, shared or used by unknown people (Zviran, 2008). Due to the
fast development of new web technologies, the privacy of online users can
be raided in numerous ways. In 2004, more than 50% of well-known US
firms monitored the e-mail of their employees (Conley, 2004).
Finishing

an

online

transaction

without

revealing

some

personal

information is very difficult, in some cases impossible. With the advent of

new technologies for information processing, privacy concerns have
become a very important issue in e-commerce. Privacy concerns are
concerns that individuals have over the possibility that online business will
use the data collected from them inappropriately or without their
authorization. This inappropriate use of customers personal information
may include disclosing customers personal information to third parties
without customers consent and using customers personal information for
purposes not stated in the privacy policy of an online business (Jarvenpaa
and Toad, 1996). There are increasing concerns regarding security issues
and the purpose of data submitted online in terms of the privacy of
customers personal data and the unauthorized use of these data (Roca et
al. 2009). Customers are sometimes unwilling to submit their personal
information when these online businesses ask for them because they have
concerns that the information they submit over the internet might be
intercepted by hackers and used for fraudulent purposes. Therefore,
customers

often

waver

to

submit

personal

information

to

online

businesses because they have the feelings that these online businesses
could make use of it inappropriately or they may disclose it to third parties
without their consent (Lim, 2003). At other times, customers give falsified
information to online business or they go to a physical store to get what
they want. Trust determines the behavioural intention of a customer
towards online businesses. It sums up concerns regarding privacy and the
consequent use of customers information by an online business (Liu et al.
2005). Therefore, when security measures and privacy policies are taken

serious by an online business, customers increase their trust towards that

online business which in turn influences their behavioural intentions
towards that online business.
Online businesses place privacy policies on their websites to reduce
customers privacy concerns. Privacy policies are policies that inform
customers on what data is to be collected from them, how these data will
be used, the purpose of the data collected and the recipients of the data
collected (Westin, 1967). Online businesses place their privacy policy on
their websites to build the trust of customers (Wu et al. 2012). Moreover,
online privacy policies are aimed at decreasing the fear customers have
over the disclosure of their personal details (Westin, 1967). Privacy
policies have become very important in respect to reducing customers
privacy

concerns

because

these

policies

provide

customers

with

information about how online businesses utilize customers personal

details. Furthermore, Culnan and Milberg (1998) argue that privacy
policies help customers decide whether or not to give out personal details
online or whether or not to even transact with the online business at any
level. Laufer and Wolfe (1977) argue that individuals carry out a simple
risk-benefit calculation when deciding whether or not to provide their
personal details to online businesses. They further argue that if the
benefits of disclosing their personal information overshadow the risks,
customers will be more likely to disclose their personal details to the
online business. Privacy policy is a vital means of reducing customers
privacy concerns. This policy enables customers to make a decision
whether or not they want to provide personal details or to choose not to
have anything to do with the online business at all (Culnan and Milberg,
1998).
Customers are concerned about losing control over the ways in which
online businesses handle their personal data (Wu et al. 2012). It has been
argued that customers who disclosed false personal details would be
willing to provide their genuine details if the online business provided a
policy about how their personal details will be used (Westin, 1999). This

therefore suggests that privacy concerns could be reduced if online

businesses provide understandable privacy policies. However, privacy
policies will reduce privacy concerns only if customers read and utilize the
information disclosed in these policies. Furthermore, if the policy is not
perceived as one that is understandable, then it is less likely to be
considered by customers. On the other hand, if customers perceive that
the privacy policies of online businesses are comprehensible, then the
chances of the customers reading and utilizing the policy will be high. This
further leads to customers placing their trust in that particular online
business.
Wu et al. (2012) argue that online businesses should provide customers
with the control over all aspects of information collected from them. They
further stated five principles that online businesses should follow in order
to gain customers trust. These principles are:

Notice: Notice requires that online businesses should give customers

notification or notice about the information to be collected from
them, how these information will be collected and the purpose of

the information to be collected.

Access: Access requires that online businesses should provide
customers

with

the

opportunity

of

accessing

their

personal

information to check for completeness and accuracy.

Choice: Choice requires that customers should have a choice about
how their personal information will be used and to which parties it
will be revealed to. It also requires that customers should be given

the choice to opt-in or opt-out from a transaction.

Security: Security requires that adequate security mechanisms are
implemented

to

protect

customers

personal

details

from

unauthorized use.
Enforcement: Enforcement requires that there should be an
enforcement authority to enforce privacy policies and also to
sanction individuals who violate them.

It can be suggested that if an online business complies with them, then

customers privacy concerns will be limited or removed. This then
influence customers trust towards online businesses.
2.6 Trust and privacy concern in e-commerce
Individuals that do carry out online transactions frequently measure the
risks of revealing their personal information and the misuse of this
information (Milne and Culnan, 2004). Customers must have the feelings
that an online business is trustworthy before revealing personal details
(Schoenbachler and Gordon, 2002). Studies have proposed that concerns
over customers privacy acts as an obstacle to the development of trust
(Wu et al. 2012; Liu et al. 2005). While the sales force in an offline
business plays an important role in customer interaction in building
customers trust (Doney and Cannon, 1997), trust will play a more crucial
part in an e-commerce context where there is absence of physical sales
personnel. Odom et al. (2002) argued that organizations can gain a large
amount of money if concerns such as privacy can be addressed
appropriately (Odom et al. 2002).
The internet has created lots of opportunities for organizations to put their
businesses on the global map and it has also supported organizations to
carry out their businesses online (Wu et al. 2012). E-commerce presents
numerous benefits for online users including online services, fast and easy
communication. Also, large amounts of personal details about customers
are usually collected and used by organizations through registration and
order forms or through the use of cookies. Furthermore, the information
gathered by these organizations enables them to track customers online
activities in order to get their (customers) preferences and interests.
These information become useful to organizations as they help discover
the demands of their customers, it also helps online businesses to create
effective advertising programs and in some cases, it helps them sell
advertising space on their websites better (Liu et al. 2005). In the offline
environment, the physical effort of collecting, archiving and analyzing
such information acts as a restraint which in a way helps to protect

privacy to a reasonable extent (Blanchette and Johnson, 2002). However,

the development of new web technologies does not only change the
quality and the quantity of what can be collected, but also enables it to be
analyzed and explored in different ways (OConnor, 2006). Because of the
dramatic increase of online businesses, customers are usually worried
over concerns relating to their privacy.
Customers having online privacy concerns leads to their unwillingness to
provide personal details, rejection of online businesses or sometimes, it
could lead to them not using the internet. With privacy concerns,
customers tend to distrust online businesses. Privacy concerns do not only
limit the development of e-commerce but may also have an effect on the
validity and completeness of customers databases which could lead to
imprecise targeting, frustrated customers and wasted efforts (Wu et al.
2012). To avoid these problems, online businesses should assure users
that their privacy is secure and safe. However, this comes down to the
degree of trust between the online business and the customer. Because of
this, many researchers view trust and privacy concerns as major barriers
to the growth of e-commerce, specifically as less experienced internet
users are less capable of differentiating the media propaganda from the
valid threats that privacy may bring (Grabner-Kraeuter, 2002). Developing
trust becomes a key aspect in reducing the concerns customers have over
privacy and to improve the relationships between customers and online
businesses (Milne and Boza, 2000). With the growth of e-commerce, some
customers have concerns about the disclosure, transfer and sale of their
personal details. Rubin and Lenard (2002) argue that these concerns are
relatively slowing the growth of e-commerce. Creating a privacy policy
reduces customers concerns over privacy which in turn influences their
trust towards online businesses.
2.7 Behavioural intention
Behavioural intentions can be defined as the behaviours customers exhibit
before

or

after

engaging

in

online

transactions.

Trust

influences

behavioural intentions including the willingness to provide personal

information to an online business (Liu et al. 2005). Some customers are

more willing to trust an online business even if they have limited
knowledge about them while others need more information before they
can trust an online business. This further shows variations in individuals
willingness to trust. Factors such as internet usage and previous
interactions of customers have been argued to affect the behavioural
intentions of customers to engage in online transactions (Salam et al.
2005). For instance, Customers who have had pleasant interactions or
experiences with an online business are more likely to develop favourable
behavioural intentions towards that online business. Also, pleasant
internet usage such as the ease in using the website of an online business
combined with its trustworthiness influences customers behavioural
intention to either purchase from or visit that online business again. Salam
et al. (2005) stated that continued pleasant experiences with an online
business can result to a long-term relationship with the online business.
They further suggested that online businesses can bring about long-term
relationship with customers by improving the interface of their website
making it easy for customers to use.
Previous interactions influence customers behavioural intentions and
decisions

towards

online

businesses.

For

instance,

if

customer

successfully purchased goods from an online business in the past, there is

the possibility of that customer wanting to transact with or purchase from
that online business again. On the other hand, if the purchase or
interaction was not successful in the past, customers are more likely not
to purchase from that online business again. Customers learn about an
online business through various ways including communication with
others, recommendation from others, product promotions and advertising.
Individuals visiting an online business for the first time, tend to rely on this
information when deciding whether or not to transact with or purchase
from that online business.
2.8 Privacy, trust and behavioural intentions of customers

Trust is important in an online environment (Fukuyama, 1996). Without

trust, online businesses probably would exist without reliabilities. Hoffman
et al. (1999) argue that the primary motive why many individuals do not
transact online is due to the lack of trust and concerns over the disclosure
of their personal details.
As business organizations put in efforts on building long-term relationships
with customers, trust has assumed a more central role (Doney and
Cannon, 1997; Dwyer et al. 1987, Garbarino and Johnson, 1999; Viega et
al. 2001). A successful customer relationship would require online
businesses from its inception to describe the way they collect information
from individuals and how those information will be used or shared.
The behavioural intentions of a customer depend on the trust a customer
has towards an online business (Liu et al. 2005). More particularly, a
customers attitude and perception will influence the actions that
customer would take when he or she thinks that certain behaviours will be
connected to a specific result. In addition, social pressures and subjective
customs to carry out or not to carry out a specific behaviour influences
behavioural

intentions,

determined

by

the

positive

or

negative

assessment the individual has on that behavioural intention.

Heijden and Verhagen (2002) proposed that the image of an online store
or an online business is a vital predictor for the intention of purchasing or
transacting online. They further developed dependable and accurate
measures which would include usefulness of an online business and its
trustworthiness. Furthermore, the result of their research showed that that
trust is an important element needed for transacting online. A related
result can be found from the study carried out by Jarvenpaa et al. (2000).
Several studies have researched privacy and trust in the field of ecommerce (Cheung and Lee, 2006; Kim, 2001, Martin et al. 2001;
McKnight et al. 2000; Nagai and Wat, 2002). However, only a handful of
studies have included privacy as a prerequisite of trust (Liu et al. 2005;
Wu et al. 2012). Furthermore, only few researches have been done to
investigate

the

relationship

among

trust,

privacy

concerns

and

behavioural intentions. Hence, the need for research to investigate how

customers trust and privacy concerns influences their behavioural
intentions towards online businesses.
2.9 Proposed research hypothesis
Online businesses use various ways to build customers trust in their
websites such as providing online privacy policies and evidences of
security measures. Liu et al., (2005) in their research found out that a
successful relationship between a seller and a buyer depends on the
degree of trust the buyer has in the seller. They further stated that trust is
influenced by privacy which in turn influences the behavioural intentions
of customers to engage in online transactions. The results of the study
conducted by Liu et al., (2005) showed that there was a positive
relationship between privacy and trust. Privacy has been argued to be a
major criterion in building trust in electronic commerce (Liu et al., 2005;
Wu et al., 2012). If customers have the assurance that their privacy is
protected, the possibility of them placing their trust in online businesses
will be high. Privacy influences customers trust towards online businesses.
In light of this, the following hypothesis is proposed:
H1= Privacy is positively related to the trust a customer has in an online
business.
Ocass and Fenech (2003) and Vijayasarathy (2004) empirically tested the
positive

relationship

between

security

and

customers

behavioural

intentions towards online businesses. Furthermore, Lian and Lin (2008)

and Ranganathan and Ganapathy (2002) reported that in other constructs
that were tested such as innovativeness; security was reported to have a
greater impact on the acceptance of online transactions by customers.
Also Flavin and Guinaliu (2006) reported that the formation of trust
affected the behavioural intention to purchase, but that trust was
particularly influenced by the security perceptions a customer has towards
the handling of his or her personal information by an online business. In
the study carried out by Mukherjee and Nath (2007), it was found out that

security features (such as security seals) on the websites of online

businesses is the key prerequisite of trust which in turn positively
influences customers behavioural intention to purchase online. In light of
this, the following hypothesis is proposed:
H2= Security is positively related to the trust a customer has in an online
business
One of the outcomes of trust is that trust decreases the perception that an
online business will cheat or betray a customer (Ganesan, 1994).
Increased level of customers trust has been argued to positively influence
customers behavioural intention to engage in online transactions.
Ganesan (1994) reported that low perceptions of risks towards online
transactions increases customers trust which in turn influences their
behavioural intentions. One can therefore say that trust reduces the risk
perceptions

customers

have

toward

online

businesses.

Also,

low

perception of risk will influence customers behavioural intentions towards

an online business. Similarly, during a transaction process, the level of
trust a customer has towards an online business is a function of the level
of risk that is taking place during the transaction (Koller, 1988). Andrade
(2000) posits that customers conceptualize transacting online to be of
higher risk than transacting in an offline environment. Trust is interlinked
with risk (McAllister, 1995). Since trust has been argued to have an effect
on the behaviours of customers, Jarvenpaa and Todd (1996) posits that
customers trust in online businesses will reduce their risk perceptions of
being cheated or betrayed by online businesses. A low perception of risk
will negatively influence customers behavioural intentions towards the
online business. Thus, the following hypothesis is proposed:
H3= Customers risk perceptions towards an online business is negatively
related to their trust towards that online business.
According to a study conducted by Chen and Barnes (2007), trust
influences behavioural intentions of customers to transact with an online
business. Trust in e-commerce is important to online transactions because

the level of uncertainty or ambiguity in an online environment exposes the

user/customer to vulnerability because he or she cannot physically see
whom he or she is transacting with. Therefore, customers trust in online
businesses will determine their behavioural intentions to conduct online
transactions. Moreover, some researchers have carried out research to
show that trust in online businesses increases behavioural intention to
engage in online transactions (George, 2002; Bhuttacherjee, 2002;
Mukherjee and Nath, 2007). Bhuttacherjee (2002) reported that trust
positively affects the behavioural intention of customers to transact with
an online business. On the other hand, George (2002) showed that the
more customers believe an online business to be trustworthy, the higher
their behavioural intentions towards transacting with that online business
will be. It can therefore be argued that trust will influence intentions to
transact online. Thus, the following hypothesis is proposed:
H4= Trust is positively related to the behavioural intentions a customer
has towards online business.
George (2002) reported that negative behavioural intentions toward
online transactions are associated with privacy concerns. Privacy concerns
have been pointed out as a significant factor that prevents consumers
from engaging in online transactions (Hoffman et al., 1999). These
concerns may include customers receiving spam mails, customers being
tracked for their history in using the internet and customers having their
personal details being accessed by third parties without authorization
(Wang et al., 1999). However, customers may find it beneficial when
online businesses remember basic information about them and use this
information to provide them with what they (customers) want. Although
such customization is beneficial to both parties, if its use is leaked, it
becomes a threat to customers privacy. Studies have shown that
customers are increasingly concerned about the absence of privacy
protection during online transactions (Wu et al., 2012; Liu et al., 2005).
According to a web survey of internet users, almost 95% of users refused
to transact online when asked to provide personal details (Hoffman et al.,

1999). Another web survey showed that 92% of web users are concerned
about their privacy and 61% declined to transact online (Ryker et al.,
2002). It is obvious that privacy concerns have an influence over the
behavioural intention of a person to purchase online. People who are
concerned with their privacy could be unwilling to go ahead with
transacting with an online business as most of it requires them disclosing
personal information. Therefore the following hypothesis is proposed:
H5= Privacy is negatively related to the behavioural intentions of a
customer has towards an online business.

RESEARCH METHODOLOGY
3.0 Overview
According to Easterby-Smith et al., (2008), a research methodology can be
defined as the combination of different techniques used to enquire about
a particular situation. This chapter aims to discuss the techniques that
were employed to enquire about the effects of customers trust and
privacy concerns towards online businesses. Specifically, this chapter will
discuss the epistemological considerations of this research, the ontological
considerations of this research, the ethics employed during the course of
this research and the strategy that was employed during the course of this
research. This chapter would also describe the various statistical
techniques used for this research.
3.1 Epistemological considerations
Epistemological considerations relates to the question of what is
considered to be acceptable knowledge in a particular area of study
(Bryman, 2012). This research employed positivism as its epistemological
approach. This is because it describes the philosophical position that can
be determined by research. Further, it describes how trust and privacy
concerns influence an individuals behavioural intention to engage in
online transactions. Positivism also entails generating hypothesis or
hypotheses that can be tested, thereby paving the way for further
explanations about relevant theories or literatures. This relates with the
deductive theoretical approach. Since, this research involved deducing
and testing hypotheses thereby allowing explanations to be assessed, one
can therefore say that it followed a positivism epistemological approach.

Furthermore, positivism entails that only knowledge that is confirmed by

the senses can truly be regarded as knowledge. This research involves the
acquisition of acceptable knowledge on the effects of customers trust and
privacy concerns towards online businesses. According to Easterby-Smith
et al., (2008), positivism can cover a wide range of situations and can be
used when a sample size is large. In light of this, positivism can further be
justified as the epistemological approach for this research since this
research covers a wide range of situations which would include the
various behavioural intentions customers have towards online businesses.

3.2 Ontological considerations

Ontological considerations are concerned with the character of social
entities (Bryman, 2012). Basically, ontology concerns how a researcher
sees the world. Easterby-Smith et al., (2008) argues that different
researchers have different viewpoint about a research area. Collins (1983)
stated what counts for truth can vary from place to place and from time
to time (p.88). Similarly, the underlying assumption of this research is
that a customers willingness or behavioural intentions to engage in online
transactions is dependent on/upon the levels of trust and the degree of
privacy concerns he or she has towards online businesses. The researcher
in this context is of the opinion that individuals have different views about
online transactions. Therefore, facts related to this research were
gathered through consensus based on different perspectives.
3.3 Research ethics
Research ethics refers to the proper code of conduct researchers exhibit
towards their research subjects (Saunders et al., 2011). Bryman (2012)
highlighted that a research should follow the following ethics:

Provide an informed consent to the research subjects stating the

objectives of the research.

Ensure that the research subjects are protected from any form of

harm.
Ensure that the data of the research subjects are kept strictly

confidential and used only for the purpose of the research.

Ensure that no form of deception is used on the research subjects.

The ethical principles highlighted above were duly observed by the

researcher. Also, the researcher ensured that participants data were not
publicized or circulated. The research subjects were duly informed of the
research objective as this was stated on the first page of the
questionnaire. Participation was voluntary, participants were allowed to
either accept or reject the offer to participate in the survey.

3.4 Research strategy

Research strategy according to Bryman (2012) is the broad orientation to
the conduct of a social research. Bryman (2012) stated that a research
that entails a deductive quantifiable approach to investigate the
relationships between a particular research area and the research that is
to be conducted can be referred to as a quantitative research. This
research can be justified as a quantitative research since it involved
quantifying the collected data before analyzing them. Basically, the steps
that were involved in this research (quantitative) would be discussed in
this section.
3.4.1 Theory
This research employed a deductive theoretical approach. According to
Bryman (2012), deductive theory shows the nature of the relationship
between what is known about a particular research area and the research
that is to be carried out. In the context of this research, the researcher on
the basis of what is already known about customers trust and privacy
concerns towards online businesses, deduced hypotheses that were

subjected to analysis. These hypotheses were either confirmed or

rejected. Thus, agreeing with Brymans (2012) argument where he stated
that deductive theoretical approach involves confirming or rejecting a
hypothesis in order to enable a researcher to compare them with what is
already known about a particular research area.
3.4.2 Deducing hypotheses
After going through relevant literatures on the effects of customers trust
and privacy concerns towards online businesses, some hypotheses were
deduced. These hypotheses were to be tested to find out the relationship
or significance between variables related to this research.
3.4.3 Research design
According to Bryman (2012), a research design provides an outline for the
collection and analyses of data. Furthermore, a research design shows
what data is to be collected, how these data would be collected and where
these data would be collected from. This is done for the purpose of data
analysis. This research employed a cross-sectional design and the use of
questionnaire was the method that was employed to collect information
from the research subjects. This agrees with Brymans (2012) argument
where he argued that in a cross-sectional design, information may be
collected either by structured interviews or questionnaires. Moreover,
items on the questionnaire were collected simultaneously. This also agrees
with Brymans (2012) argument where he stated that in any crosssectional design research, data on the variables that are of interest to a
researcher are mostly collected at the same time. Furthermore, when a
person completes a questionnaire, the responses to the items are
submitted at the same time. During the course of this research, it was
possible to investigate relationships that exist between variables. This
further agrees with the argument by Bryman (2012) where he stated that
it is feasible to examine relationships between variables in a crosssectional research design. He added that in most cases, there is nothing

like time ordering to the variables because the information on these

variables is usually collected more or less simultaneously.
3.4.4 Sampling
This involves selecting a section of a specific population for research
purposes (Bryman, 2012). This section will describe the sample used for
this research and the sampling design used.
3.4.4.1 Choice of sample/ survey sample
It would be difficult to reach or survey all the individuals that engage in
online transactions. The postgraduate students of Lancaster University
were used as the survey sample for this research. However, it is of
importance to state here that arriving at this choice of survey sample was
not done without basis. According to Walczuch and Lundgren (2004), using
students for any research study in the field of e-commerce and e-retailing,
is appropriate as they have the opportunity of accessing the internet for
communication and transaction purposes. They further stated that
students also represent the sample for studies like this, since they are also
customers of online businesses. Moreover, students frequently buy
products from online businesses. In most cases, these products are sold at
a lower price online compared to businesses operating in an offline
environment. Furthermore, this gives a good reason for students to
engage in online transactions (Walczuch and Lundgren, 2004). In addition,
the overall control of the research was essential, differences due to time
and place of the research would be overpowering. Hence, the need to use
the postgraduate students of Lancaster University as survey sample.
Using students as survey sample in research is often criticized (Liu et al.,
2005). However, they are both appropriate and acceptable for studies that
involve certain relationship patterns (Dickson, 1989). Furthermore, this
research is aimed at understanding how trust and privacy concerns relate
to the behavioural intention of customers to carry out online transactions.
Thus, this agrees with Dicksons (1989) argument since this research has
a pattern of relationship. In addition, using students may be even more

suitable, since their demographics suit parts of the customer profile of

various online businesses.
3.4.4.2 Sampling design
The sampling design employed in this research is the probability sampling
design. Easterby-Smith et al., (2008) argues that employing the use of
probability sampling allows the researcher to get accurate and precise
information about the population from which the sample is taken.
Specifically, this research employed the use of a stratified random
sampling which is a type of probability sampling design. Therefore, the
survey sample used in this research was divided into homogenous groups
to ensure the representativeness of the sample in the given population.
Homogenous group in the context of this research refers to the various
postgraduate departments of Lancaster University. Some of these
departments include project management, environmental sciences, and
engineering. The questionnaire was sent to all the postgraduate students
of

Lancaster

University.

Since

all

postgraduate

students

in

each

department study or take the same module, they can be referred to as a

homogenous group.
Easterby-Smith et al., (2008) argued that using a probability sampling
design would enable a researcher to gather accurate information about
the relationship that exists between a sample and the population from
which that sample is drawn. Furthermore, the researcher would be able to
make a concrete judgement between the characteristics of the population
from which a particular sample is drawn and the sample itself, if only the
relationship

that

exists

between

them

is

understood.

Given

the

investigative nature of this research, probability sampling method suits

the purpose of this research.
3.4.5 Administering the research instrument
Questionnaires were used to collect information from the surveyed
sample. A questionnaire is a list of questions usually administered to the
selected sample for the purpose of collecting information (Bryman, 2012).

In the context of this research, the questionnaire was administered to the

respondents online. It was distributed to the postgraduate students of
Lancaster University through the ITMOC programme coordinator.
3.4.5.1 Questionnaire design
The questionnaire was designed using Google forms. The measures used
in the questionnaire were mostly adapted from related prior studies. Most
of the items or questions were measured using a seven point likert-type
scale with anchors from Strongly disagree to Strongly agree. Other
items had response options such as Yes or No. Items for trust were
adapted from prior research by Corbitt et al., (2013) and Pan and Zinkhan
(2006). Items for perceived security were adapted from Liu et al., (2005).
Items for privacy concerns were adapted from Liu et al., (2005) and
Corbitt et al., (2003). Items for behavioural intentions were adapted from
Wu et al., (2012) and Liu et al., (2005). Items for perceived risks were
adapted from Corbitt et al., (2003). Other items were questions that would
enable the researcher know the characteristics of the respondents.
3.4.6 Processing the data
This stage involved transforming the collected information into data. In
the context of this research, the data was processed so that it can be
quantified. The quantification process involved coding the collected
information.
transforming

In
the

other

words,

collected

the

quantification

information

into

process

numbers

to

involved
aid

the

quantitative analysis of the data. Codes acts as labels placed on data

about individuals to allow information to be processed by a computer
(Bryman, 2012).
3.5 Pretesting
The questionnaire was pretested to identify any problem that the research
subjects might face when answering the questionnaire. This agrees with
Grfs (2000) argument where he said that by carrying out pre-tests,
researchers would be able to identify any problem associated with the

questionnaire. Furthermore, pretesting allows researchers to improve

questionnaires if problems are identified.
During the course of this research, the researcher pre-tested the
questionnaire by sending it to some individuals that are part of the survey
sample. There was a low response as only nine (5) responses were
received within three (3) weeks. Given the duration of the research (3
months), this was seen as a very low response. This was in a way
attributed to the fact that the questionnaire did not provide participants
with anonymity. Esposito et al., (1984) argued that providing respondents
with anonymity decreases the outcomes of social desirability as well as
increasing response rate. The researcher corrected this and provided
participants with anonymity. This improved the response rate.
3.6 Statistical techniques
Statistical Package for the Social Science (SPSS) 20 is the statistical tool
that was used for analysis carried out in this research. Various tests were
conducted in order to generate findings. Before these tests were
conducted, some of the items in the questionnaire were combined into
single constructs. These items include those that have their responses
anchoring from Strongly disagree to Strongly agree. This agrees with
Likert (1932) where he stated that to create an attitudinal measurement
scale, responses from series of questions or items that are related should
be combined into a single composite score. Each item with anchors from
Strongly disagree to Strongly agree is a likert-type data but when
series of these likert-type data items are combined, they form a likertscale data (Boone Jr and Boone, 2012). They added that when related
items are combined into single composite scores, they would facilitate the
data analysis process by providing a quantitative measure of a personality
attribute or character. Moreover, a score is created by calculating the sum
of series of items that are related to a particular construct (Boone Jr and
Boone). The constructs used in this research are: trust, security, privacy
concerns, behavioural intentions and risk perceptions. The questionnaire
has four (4) items for trust, two (2) items for security perceptions, five (5)

items for behavioural intentions and seven (7) items for risk perceptions.
Therefore, responses to the items on trust were combined to give a single
composite score for trust. Also, responses to the items on security
perceptions, privacy concerns, behavioural intentions and risk perceptions
were combined to give a single composite score for security perceptions,
privacy concerns, behavioural intentions and risk perceptions respectively.
Take the case of trust for example; trust has four (4) items. For each of
these items respondents can select any response within the range of
Strongly disagree to Strongly agree which were coded as 1 to 7.
Supposing a respondent selects strongly disagree (1) for the first item on
trust, strongly agree (7) for the second item on trust, agree (6) for the
third item on trust and mildly agree (5) for the fourth item on trust; the
trust score for this particular respondent would be the combination (sum)
of all the responses he or she answered for the trust items. In other words,
it would be 1 + 7 + 6 + 5 which is 19. This example is shown in the table
below.
Trust item Trust item Trust item Trust item Trust score
Responde

1
1

2
7

3
6

4
5

19

nt
This was not done only for trust. It was also done for security, privacy
concerns, behavioural intentions and risk perceptions. Furthermore, the
score for each of these single variables was calculated for all the
respondents.
The questionnaire is made up of 29 items. Out of these 29 items, 6 of
them do not have anchors ranging from Strongly disagree to Strongly
agree, rather, they have response options such as Yes or No. The
response options for these 6 items were coded with numbers but these
numbers only served as labels. These are referred to as nominal scale
items. Ary et al., (2010) stated that nominal scale items can be coded into
numbers however, these numbers only serve as labels. They further

stated that there is no form of ranking in nominal scale items. An example

of this would be what is your gender? With response options as male or
female A respondent can select either male or female depending on his
or her gender. Male can come before female and female can come before
male. Therefore, male can be coded as 1 and female can be coded as
2. Also, female can be coded as 1 and male can be coded as 2. In
this case, there is no form of ranking. The numbers are only serving as
labels for the purpose of analysis. Out of the 29 items in the
questionnaire, 23 items have anchors ranging from Strongly disagree to
Strongly agree. Numbers (codes) assigned to these response options
were within the range of 1-7 with 1 representing Strongly disagree
and 7 representing Strongly agree. In these cases, there is a form of
rank; the numbers are ranked in measures of magnitude. These are
referred to as ordinal scale items. Ary et al., (2010) stated that ordinal
scale items are ranked in order of magnitudes. Moreover, numbers
assigned or coded to ordinal scale items show a greater than
relationship, though, how much greater is not inferred. These numbers or
codes only specify the order of ranks (Ary et al., 2010).
As stated earlier, composite scores were generated for each of the five (5)
constructs. According to Boone Jr and Boone (2012), composite scores are
referred to as interval scales. The composite scores generated, were
analyzed as interval measurement scales. This further agrees with Boone
Jr and Boones (2012) argument where they stated that for the purpose of
analysis, composite scores should be analyzed as interval measurement
scales.
The following tests were carried out using SPSS 20.
3.6.1 Descriptive statistics
According to Greasley (2008), descriptive statistics provide the summary
information about a given data. The descriptive statistics that were carried
out on the items with response options other than Strongly disagree to
Strongly agree are:

3.6.1.1 Frequencies
This was done to enable the researcher know the number and
percentages of respondents that responded to these items. This agrees
with Greasleys (2008) argument where he stated that a researcher has to
run frequencies to enable him or her know the number and the
percentage of respondents that responded to a particular question.
3.6.1.2 Mode
The mode was carried out on these items to enable the researcher know
the value that occurred most frequently. This also agrees with Greasleys
(2008) argument where he stated that modes would enable the
researchers to know the most frequently occurring value.
For the other items, because they were converted to composite scores
(interval measurement scale), the descriptive statistics that were carried
out are:

3.6.1.3 Mean
This was carried out to enable the researcher know the average score for
each construct. Easterby-Smith et al., (2008) stated that the mean allows
a researcher to know the average value for a particular construct or item.
This justifies the reason for calculating the mean.
3.6.1.4 Standard deviation
This was carried out to enable the researcher to know the average spread
around the mean score of each construct. This agrees with the argument
by Easterby-Smith et al., (2008) where they stated that the standard
deviation enables the researcher to know the most typical distance of
scores from the mean.
3.6.1.5 Reliability analysis

A reliability analysis was carried out to ensure that the items or variables
in each construct were internally consistent. It was carried out using
Cronbachs . Bryman (2012) stated that when respondents responses
are combined to form scores, there will be the possibility of having items
in a construct that are not related to that particular construct. They may
be related to another construct. Therefore, there was the need to carry
out a reliability test to make sure that the items in a construct are related
to that particular construct.
3.6.2 Further analyses
These tests which include correlation analysis, regression analysis, t-tests
were carried out to enable the researcher generate findings that would
help in answering the research question. Also, further analyses were
carried out to test the already postulated hypotheses.
3.6.2.1 Correlation analysis
This analysis was used to test hypotheses. In other words, it was used to
analyze the relationships between the constructs stipulated in each
hypothesis. It was also carried out to check for any significance between
two constructs. This agrees with Brymans (2012) argument where he
stated that to find the relationships between variables, researchers should
carry out correlation analysis. In the context of this research, Pearsons
correlation was used to assess the level of relationship between variables.
3.6.2.2 Regression analysis
This analysis was conducted to estimate the relationships that exist
among constructs. Specifically, it was carried out to estimate the
relationship among behavioural intention (dependent variable), trust
(independent variable) and privacy concerns (independent variable). This
agrees with Sykess (1993) where he stated that regression analysis
enables a researcher to ascertain the effect of one or more independent
variables on a dependent variable. The researcher is trying to investigate
how the effects of customers trust and privacy concerns influence the

behavioural intentions of customers towards online businesses. As a

result, behavioural intention is depending on trust and privacy concerns.
Thus, behavioural intention is the dependent variable while both trust and
privacy concerns are the independent variables.
3.6.2.3 T-test
The t-test was carried out to compare the mean scores of two constructs.
This agrees with the argument by Easterby-Smith et al., (2012) where
they stated that it is necessary for researchers to carry out t-tests to allow
them compare the mean values of two variables.

ANALYSIS AND FINDINGS

4.0 Overview
This chapter presents the results of the data analyzed. The next section
will focus on the characteristics of the respondents. The third section will
focus on the hypotheses testing. These analyses were done to enable the
researcher answer the research question.

4.1 Characteristics of respondents

Descriptive statistics were carried out to know the characteristics of the
respondents. A total of 131 respondents completed the questionnaire.
Table 1 shows the characteristics of the respondents.
4.1.1 Gender
51 males completed the questionnaire and this represents 38.9% of the
total number of respondents that participated in the questionnaire survey.
80 females completed the questionnaire representing 61.1% of the total
number of respondents that participated in the questionnaire survey.
4.1.2 Age group
The item on age group shows that 57 respondents are within the age
group of 21-25 representing 43.5% of the total number of respondents
that completed the questionnaire. 34 respondents are within the age
group of 26-30 representing 26% of the total number of respondents that
completed the questionnaire. 15 respondents are within the age group of
31-35 representing 11.5% of the total number of respondents that
completed the questionnaire. 5 respondents are within the age group of
36-40 representing 3.8% of the total number of respondents that
completed the questionnaire. 8 respondents are within the age group of
41-45 representing 6.1% of the total number of respondents that
completed the questionnaire. 12 respondents are within the age group of
46 and above representing 9.2% of the total number of respondents that
completed the questionnaire. The modal age group is 21-25. This means
that majority of the respondents are within the age group of 21-25.
4.1.3 Web experience
5 respondents reported that they have used the internet a few times
before the survey representing 3.8% of the total number of respondents
that completed the questionnaire. 4 respondents reported that they do
use the internet a few times a month representing 3.1% of the total
number of respondents that completed the questionnaire. 3 respondents

reported that they do use the internet every week representing 2.3% of
the total number of respondents that completed the questionnaire. 112
respondents reported that they do use the internet almost every day
representing 85.5% of the total number of respondents that completed
the questionnaire. 7 respondents reported other times when they use the
internet representing 5.3% of the total number of respondents that
completed the questionnaire. The modal web or internet experience is I
do use the internet/world wide web almost every day. This means that
majority of the respondents use the internet almost every day.
4.1.4 Buying goods/services online
All 131 respondents reported that they do buy goods/services online. 2
respondents reported that they do buy goods/services daily representing
1.5%

of

the

total

number

of

respondents

that

completed

the

questionnaire. 27 respondents reported that they do buy goods/services

weekly representing 20.6% of the total number of respondents that
completed the questionnaire. 26 respondents reported that they do buy
goods/services once in two weeks representing 19.8% of the total number
of respondents that completed the questionnaire. 67 respondents
reported that they do buy goods/services monthly representing 51.1% of
the total number of respondents that completed the questionnaire. 9
respondents

reported

other

times

when

they

buy

goods/services

representing 6.9% of the total number of respondents that completed the

questionnaire. Majority of the respondents buy goods/services online
monthly.
4.1.5 Average amount
7 respondents reported that they spent an average of <10 buying
goods/services

online

representing

5.3%

of

the

total

number

of

respondents that completed the questionnaire. 37 respondents reported

that they spent an average of <20 buying goods/services online
representing 28.2% of the total number of respondents that completed
the questionnaire. 54 respondents reported that they spent an average of

<50 buying goods/services online representing 41.2% of the total

number of respondents that completed the questionnaire. 27 respondents
reported that they spent an average of <100 buying goods/services
online representing 20.6% of the total number of respondents that
completed the questionnaire. 6 respondents reported that they spent an
average of >100 buying goods/services online representing 4.6% of the
total number of respondents that completed the questionnaire. The modal
average amount is <50. This means that majority of the respondents
spend <50 when buying goods/services online.
Table 1: Characteristics of respondents
Number
Gender
Male
51
Female
80
Total
131
Age group
17-20
21-25
26-30
31-35
36-40
41-45
46 and above
Total
Web experience
Never
used
before
survey
A few times before
survey
A few times a month
Every week
Almost everyday
Other
Total
Buying
goods/services
online
Daily
Weekly
Once in two weeks
Monthly
Yearly

Percentage
38.9
61.1
100

0
57
34
15
5
12
12
131

0
43.5
26
11.5
3.8
6.1
9.2
100

3.8

4
3
112
7
131

3.1
2.3
85.5
5.3
100

2
27
26
67
0

1.5
20.6
19.8
51.1
0

Other
Total

9
131

6.9
100

Average amount
<10
<20
<50
<100
>100
Total

7
37
54
27
6
131

5.3
28.2
41.2
20.6
4.6
100

4.2 Reliability of the research constructs

To ensure that the items in each research construct were internally
consistent, reliability analysis was conducted using Cronbachs . Any
value within the range of 0.6-0.8 is normally accepted, implying that the
variables for each construct are internally related in the expected manner
(Churchill Jr, 1979). Table 2 presents the research constructs and their
reliability results. The Cronbachs showed that all constructs are within
the range of 0.6-0.8. This means that the items in each construct are
internally consistent, thus, supporting the reliability of the research
constructs.

Table 2: Reliability test results

Construct
Trust
Security
Privacy
Behavioural intentions
Risk perception

Cronbachs
0.604
0.786
0.740
0.600
0.792

4.3 Descriptive statistics for the research constructs

The mean and the standard deviation for each research construct were
calculated. The construct with the highest mean is behavioural intention
while security has the lowest mean. Furthermore, the standard deviation
for behavioural intention is higher than that of security implying that the

mean value for behavioural intention has more spread than security. Table
3 shows the mean and the standard deviation for each construct.
Table 3: Descriptive statistics showing the means and standard
deviations
Construct
Mean
Standard deviation
Trust
22.17
2.768
Security
11.42
1.869
Privacy
24.50
4.725
Behavioural intention
25.91
3.662
Risk perception
25.47
6.837

4.4 Hypotheses testing

In testing the proposed research hypotheses, correlation analysis was
used to show the relationships and significance between the two
constructs in a given hypothesis. There is a convention in research that 5
percent (0.05) or 1 percent (0.01) is normally used as the significant Pvalue (Greasley, 2008). For this analysis, 0.05 was used as the P-value.
The first hypothesis (H1) stated that privacy is positively related to the
trust a customer has in an online business. For this hypothesis, the
correlation coefficient is 0.260 and the P-value is 0.003. Since the
correlation coefficient is positive, the hypothesis was supported. The Pvalue is lesser than 0.05 meaning that there is a significant relationship
between privacy and trust. Table 4 shows the summary for the first
hypothesis (H1).
Table 4: Correlations between privacy and
trust
Privac Trust
y
Pearson Correlation
1
0.260**
Priva
Sig. (2-tailed)
0.003
cy
N
131
131
**
Pearson Correlation
0.260 1
Trust Sig. (2-tailed)
0.003
N
131
131

** Correlation is significant at the 0.05 level (2tailed).

The second hypothesis (H2) stated that security is positively related to the
trust a customer has in an online business. For this hypothesis, the
correlation coefficient is 0.236 and the P-value is 0.007. Since the
correlation coefficient is positive, the hypothesis was supported. The Pvalue is lesser than 0.05 meaning that there is a significant relationship
between security and trust. Table 5 shows the summary for the second
hypothesis (H2).
Table 5: Correlations between security and
trust
Securit Trust
y
Pearson Correlation
1
0.236**
Securi
Sig. (2-tailed)
0.007
ty
N
131
131
**
Pearson Correlation
0.236 1
Trust Sig. (2-tailed)
0.007
N
131
131
** Correlation is significant at the 0.05 level (2tailed).
The third hypothesis (H3) stated that customers risk perception towards
an online business is negatively related to their trust towards that online
business. For this hypothesis, the correlation coefficient is -0.103 and the
P-value is 0.242. Since the correlation coefficient is negative, the
hypothesis was supported. The P-value is greater than 0.05 meaning that
there is no significant relationship between risk perceptions and trust.
Table 6 shows the summary for the third hypothesis (H3). The nonsignificance seems to suggest that a customers risk perceptions and trust
towards an online business are not necessarily linked. However, there is a
relationship between risk perceptions and trust. This relationship that
exists between these two constructs explains that low perceptions of risk
will influence a customers trust towards an online business.

Table 6: Correlations between risk perceptions and

trust
Risk
Trust
perception
Pearson
1
-0.103
Correlation
Risk
perceptions
Sig. (2-tailed)
0.242
N
131
131
Pearson
-0.103
1
Correlation
Trust
Sig. (2-tailed)
0.242
N
131
131
The fourth hypothesis (H4) stated that trust is positively related to the
behavioural intentions a customer has towards an online business. For this
hypothesis, the correlation coefficient is 0.271 and the P-value is 0.002.
Since the correlation coefficient is positive, the hypothesis was supported.
The P-value is lesser than 0.05 meaning that there is a significant
relationship between privacy and trust. Table 7 shows the summary for
the fourth hypothesis (H4).
Table 7: Correlations between trust and behavioural intentions
Trust
Behavioural
intentions
Pearson
1
0.271**
Correlation
Trust
Sig. (2-tailed)
0.002
N
131
131
Pearson
0.271**
1
Correlation
Behavioural
intentions
Sig. (2-tailed)
0.002
N
131
131
** Correlation is significant at the 0.05 level (2-tailed).

The fifth hypothesis (H5) stated that privacy is negatively related to the
behavioural intentions a customer has towards an online business. For this
hypothesis, the correlation coefficient is -0.440 and the P-value is 0.000.
Since

the

correlation

coefficient

is

negative,

the

hypothesis

was

supported. The P-value is lesser than 0.05 meaning that there is a

significant relationship between privacy and behavioural intention. Table 8
shows the summary for the fifth hypothesis (H5).
Table 8: Correlations between privacy and behavioural intentions
Privacy
Behavioural
intentions
Pearson
1
-0.440**
Correlation
Privacy
Sig. (2-tailed)
0.000
N
131
131
Pearson
-0.440**
1
Correlation
Behavioural
intentions
Sig. (2-tailed)
0.000
N
131
131
** Correlation is significant at the 0.05 level (2-tailed).

A further analysis using linear regression on the independent variables

(predictors) and the dependent variable was carried out. In this research,
privacy and trust are used as the predictors of behavioural intentions.
Therefore, the independent variables are privacy and trust while the
dependent variable is behavioural intentions. The results of this analysis
showed that the regression model is statistically significant (F=18.049,
df=2, P-value=0.000) and could explain 22% of the variance of
behavioural intentions (R2 = 0.22). The R2 which is the coefficient of
determination is low. This is because human behavioural intentions are
not easily predicted. This agrees with Frost (2013) where he argued that in
studies that attempt to predict human behaviours, it is expected that R 2
values will be low. He added that in studies that attempt to predict human
behavioural intention, a R2 value of less than 50% is typically expected.
However, in the context of this research, trust and privacy were
statistically

significant.

Therefore,

they

both

influence

customers

behavioural intentions towards online businesses. Trust and privacy were

found to be strong predictors of behavioural intentions. The regression
coefficient (B) for trust is 0.222 and the P-value is 0.040 (P< 0.05). The

regression coefficient (B) of privacy is 0.307 and the P-value is 0.000 (P<
0.05). The Model constant was 13.461 (P<0.05). Privacy was found to be a
stronger predictor than trust. Hence, it appears that customers privacy is
the strongest predictor of customers behavioural intentions towards
online businesses. Table 9 presents the regression model summary. Table
10 presents the results of the linear regression analysis.

Table 9: Model summaryb

Change statistics
Model
1

R
0.469a

R
0.220

R2 Change
0.220

F Change
18.049

df
2

a. Predictors: (Constant), Privacy, Trust

b. Dependent Variable: Behavioural intentions

Table 10: Regression analysis

Model
Regression coefficient t-value
(B)
(Constant)
13.461
5.422
Trust
0.222
2.076
Privacy
0.307
4.904
Dependent variable: Behavioural intentions

Sig.
0.000
0.040
0.000

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