Understanding antecedents to perceived information risks

With increasing usage of electronic devices, people are creating digital footprints of their everyday actions. These footprints come in the form of big data, and can provide useful insights into customer preferences, thus enabling companies to gain business benefits. However, customers may perceive usage of their personal information as a threat. The telecommunications sector is facing this issue. It is capable of collecting huge amount of data due to wide usage of smartphones and mobile Internet. Yet, it is unable to capitalize on these data. To manage customer perception of information risks in giving telecommunications companies permission to use their personal information, this study examines factors that influence customers’ risk perception. A survey of 512 Internet panel members in Korea shows that information practices play an important role in shaping information privacy concerns, trust, and perceived information risks. Information privacy concern is the strongest predictor of perceived information risks, followed by perceived data control, and trust. Perceived policy awareness and perceived information protection significantly influence perceived data control. The findings imply that telecommunications companies ought to increase the level of customer trust, improve their information practices, and reduce customers’ information privacy concerns if they want to lower customer perception toward information risks.