Consumer responses to privacy invasion: The role of regulatory environments and social expectations

Purpose
This study examines how regulatory environment and monetary reward influence consumer perceptions of a privacy invasion from a new or unknown brand.

Design/methodology/approach
The study employs a 2 × 2 × 2 factorial design simulation, manipulating invasion severity and monetary reward to measure brand attitude and perceived invasion of privacy. It involves participants from the US and Germany (N = 595) interacting with a fictitious company via their mobile devices. The simulation of privacy invasion is prompted by disinformation on data collection of the respondents' mobile devices.

Findings
Perceptions of privacy invasion intensified as the severity of the invasion increased. Greater privacy violations, particularly when paired with lower compensation, led to more negative brand attitudes. When privacy invasions were minimal, US participants perceived them more strongly than their German counterparts, likely due to differences in regulatory trust. However, in cases of high privacy invasion, German participants adjusted their perceptions based on compensation size, with larger rewards mitigating their concerns. In contrast, US participants maintained consistently high perceptions of invasion, regardless of compensation, suggesting a different evaluative approach to privacy violations.

Practical implications
The findings provide insights for marketers and policymakers on how different regulatory environments and incentives might affect consumer perceptions and attitudes toward privacy invasion, which could inform strategies for managing customer relations, compliance and consumer well-being.

Originality/value
The study extends privacy calculus theory by examining post-invasion attitudes and perceptions in combination with offered compensation. It also provides cross-national comparisons and explores the impact of regulatory differences, contributing novel empirical evidence to the field.