Above and Beyond Compliance: Investigating How Non-Market Privacy Activities Impact Consumer Trust, Privacy Concerns and Behavior Intentions

With the ever-growing incidence of data breaches and the inability of regulation to keep pace with technological advances, organizations must seek to address privacy beyond the minimum regulatory requirements, including wider societal and political responsibilities. These privacyspecific responsibilities are often enacted through activities in the non-market environment, i. e., the social, political, and legal interactions organizations have with key stakeholders that indirectly affect profitability. Such non-market privacy activities have the potential to enhance privacy effectiveness and yield reputational benefits. However, there is a dearth of research exploring how organizations' privacy-related actions in the non-market environment influence consumer perceptions and behavior. This research integrates power responsibility equilibrium (PRE) theory to explore how the levels of control and justice signaled by an organization's nonmarket privacy activities impact consumer outcomes (trust, privacy concern, and purchase/ continuance intentions). These hypotheses are explored quantitatively using two experimental vignette studies (Experiment 1, n = 396; Experiment 2, n = 503). Findings provide strong empirical support for the role of perceived control and justice in shaping consumer responses to organizational privacy behaviors and highlight opportunities to enhance the consumer trust. Our results also challenge the adequacy of current risk-based approaches to privacy protection and suggest a trust-based approach may be more effective. This research contributes to both the information systems and the non-market strategy literatures by extending the application of PRE Theory to the domain of non-market privacy activities and offering empirical support of its relevance to consumer-firm relationships.