Predicting the Adoption of Location-Based Services: The Role of Trust and Perceived Privacy Risk

Location-based services (LBS) use positioning technology to provide individual users the capability of being constantly reachable and accessing network services while on the move. However, privacy concerns associated with the use of LBS may ultimately prevent consumers from gaining the convenience of anytime/anywhere personalized services. Understanding consumer’s privacy concerns toward LBS is of increasing importance as mobile and positioning technologies develop and change with escalating speed. Drawing on the integrative social contract theory and the trust-risk model, we conducted an experiment study to examine the effects of LBS providers’ interventions—third party privacy seals, P3P (Platform for Privacy Preferences Project) compliance, and device-based privacy enhancing features—on building consumer trust and reducing privacy risk. Results indicated that service providers’ interventions including joining third party privacy seal programs and introducing device-based privacy enhancing features could increase consumers’ trust beliefs and mitigate their privacy risk perceptions. However, the proposed P3P compliance did not have a direct impact on perceived privacy risk, influencing it only indirectly, through trust. The study reported here is novel to the extent that existing empirical research has not examined this complex set of interrelated issues in the Lcommerce context. Implications for theory and practice are discussed, and suggestions for future research along the directions of this study are provided.