The double-edged effects of data privacy practices on customer responses

Abstract

Requesting personal information in frontline service encounters raises privacy concerns among customers. The proximity contact tracing that occurred during the COVID-19 pandemic provides an intriguing context of information requests. Hospitality venues required contact tracing details from customers, and customer cooperation varied with concerns about privacy. Drawing on gossip theory, we investigate the roles of businesses’ data privacy practices and government support in driving customers’ responses to contact tracing. Our findings show that perceived transparency of a business's privacy practices has a positive effect on customers’ commitment to the business, while perceived control exerts a negative effect on commitment. These effects are mediated by customers’ information falsification rather than disclosure, because the former is a sensitive behavioral indicator of privacy concerns. The results also reveal the moderating roles of government support. This research contributes to the customer data privacy literature by demonstrating the distinct effects of perceived transparency and control on commitment and revealing the underlying mechanism. Moreover, the research extends the conceptual understanding of privacy practices from online contexts to face-to-face contexts of frontline service. The findings offer implications for the management of customer data privacy.