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eCRM: Understanding Internet Confidence and the Implications for Customer Relationship Management - Literature Review Understanding eCRM, Internet Confidence

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With over half of the U.S. population online and a growth rate of in excess of two million users per month, the Internet has become an important mainstream medium (NTIA, 2002). This widespread adoption signifies the convergence of two long-term trends in business: the rapid expansion of the information economy and the rise of customer service over the Web (Rust & Kannan, 2002). Accordingly, there has been radical change in the field of marketing as many companies recognize the potential of this unique medium for efficiently delivering targeted messages, generating sales, and facilitating two-way communication with consumers. One such change has been the emergence of the Internet as a powerful electronic customer relationship management (eCRM) tool.

As we enter the 21st century, technological innovations have enabled marketers to collect large amounts of information and build databases full of consumer profiles (Pardun & Lamb, 1999). In fact, many firms implementing customer relationship management (CRM) today have turned to the Internet, in particular the Web, as a primary means for collecting customer information (Masci, 1999). When you consider as many as 90 million Americans use the Internet daily, it is not surprising to learn that 97% of all commercial Web sites attempt, in some form or another, to collect personal information from their visitors (Federal Trade Commission, 2000). The type of information Web sites collect in order to build their databases for consumer research and relationship marketing varies from gender, age, martial status, educational level, ethnicity, occupation, household income, Internet usage, and even buying patterns (Turban, Lee, King & Chung, 2000). Academicians and practitioners alike have been vociferous in pointing out the importance of such data gathering with regard to the successful implementation of any CRM strategy (Abbott, Stone & Buttle, 2001; Hall, 2001; Zhang, Wang & Chen, 2000). The reason the Internet has become so important is because eCRM data acquisition often streamlines record entry and arrangement used during analyses to profile existing, as well as prospective, customers. Furthermore, eCRM enables a company to create the perception of one-to-one communication through interactivity with very little incremental cost, while maintaining the added advantage of mass marketing because of widespread adoption (Noyes, 2000).

With corporate implementation and adoption of eCRM ongoing, understanding when consumers are willing to comply with data requests and their subsequent thought processes while providing personal information online becomes increasingly important. One acknowledged explanation as to why consumers agree to provide marketers with personal information is when the obtained benefits (i.e., incentives or returns) exceed their anticipated risk (Gangadharbatla, Li & Edwards, 2002; Zhang et al., 2000). However, recent research has also indicated that an Internet user’s personal beliefs and subsequent confidence with technology can also serve an influential role in understanding online behavior (LaRose & Eastin, 2002).

The individual beliefs formulated about one’s ability to comprehend concepts and effectively use this medium reassures decision-making while also reinforcing actions online to serve as the basis for establishing a consumer’s personal level of Internet confidence. Because customer expectations are shaped by technology in this information economy, the cognitive process of developing Internet confidence is a crucial component for understanding online behavior (Eastin & LaRose, 2000). Nevertheless, current research has failed to explore the impact Internet confidence has on a consumer’s willingness to comply with data requests. This is surprising considering that e-marketing efforts rely so heavily on gathering personal information online. Therefore, the purpose of this chapter is to expand our theoretical understanding of e-commerce by introducing Internet confidence within the realm of CRM. Obviously, there are other factors discussed throughout this book that also impact a consumer’s willingness to supply information online (e.g., privacy, trust, security, etc.), yet our exploratory focus remains to examine the influence of Internet confidence on consumer behavior. In the proceeding sections, we propose a hypothesis model for understanding Internet confidence, present research results testing this model, and conclude with eCRM implications.

Literature Review
Understanding eCRM

Customer relationship management is a long-term business philosophy focused on collecting, understanding, and utilizing cumulative customer information intelligently in order to continuously assess consumer needs (Varki, 2002). Not surprising, one of the foremost factors influencing the success or failure of any CRM strategy is the quality of the data collection and analysis (Abbott, et al., 2001; Farah & Higby, 2001; Masci, 1999; Zhang, et al., 2000). This is precisely why many firms implementing CRM today have turned to the Internet as a primary means for collecting customer information. Of course, this trend has led to a multitude of concerns with regard to how companies collect, buy, and sell one’s personal information. As a result, over 2,000 Web sites now display some form of recognized privacy seal (i.e., TRUSTe, BBB Online, etc.) designed to alleviate apprehension over gathered personal information (Erlanger, 2004). Nevertheless, 52% of U.S. consumers remain very uncomfortable with providing personal information via the Web (Online Selling and eCRM, 2003).

The realization of the Internet as a CRM tool means the collection, dissemination, and commercial use of personal information is now easier to capture than ever before (Cavoukian & Tapscott, 1996). Accordingly, many firms today are turning to the Internet not just to establish an online identity but to also expand their ability to acquire customer information through online data collection (Masci, 1999). With corporate implementation and adoption of eCRM ongoing, understanding the factors that influence a consumer’s willingness to provide information online becomes increasingly important. However, most attempts to gather information online are often rejected by Internet user’s because consumers are very concerned about providing personal information online (Camp, 1999; Caudill & Murphy, 2000). These concerns can stem from numerous factors, such as gender, age, occupation, and cultural background (Zhang et al., 2000, 2001), as well as one’s personal understanding of technology (LaRose & Eastin, 2002). While trust, privacy, and security related issues remain top barriers to online data collection, the scope of this chapter is focused on understanding the effect of one’s ability to use technology, referred to as Internet confidence.

Internet Confidence

While there have been numerous studies investigating the impact of self-confidence on consumer decision-making and behavior (Bearden, Hardesty & Rose, 2001; Bettman, Johnson & Payne, 1991; Fleming & Courtney, 1984), very little is known about the nature of self-confidence as it applies to e-commerce and especially one’s willingness to provide personal information online. In fact, the construct of confidence can have different meanings depending on the context. For instance, it may refer to a person’s trust in another, another person’s ability to perform a task, or a person’s judgment about a future event (Barbalet, 1998). In addition, the concept may also refer to one’s belief in self-ability, which is the conceptualization used in this framework. The feeling of confidence in one’s ability has been characterized as essential for any behavior to take place because this belief serves as a form of self-assurance (Dequech, 2000). With regard to using the Internet, personal confidence in one’s ability to successfully understand, navigate, and evaluate content should alleviate doubts when providing information online corresponding with heightened beliefs about data collection practices. These beliefs formed reflect a consumer’s perceived capability in using the Internet to accomplish tasks (Eastin & LaRose, 2000). Subsequently, as Internet confidence (i.e., beliefs) increases, then attitudes toward the object of those beliefs will also increase (Ajzen & Sexton, 1999, p. 118).

H1: Internet confidence will be positively associated with a consumer’s attitude toward providing personal information online.

Earlier work conducted to understand technology behavior has applied Fishbein and Ajzen’s (1975) Theory of Reasoned Action as an explanatory model. This framework considers the beliefs that an individual has about a behavior and the actions taken from those beliefs. While this approach has had success predicting the uses of computing technologies (Davis, Bagozzi & Warsaw, 1989), later studies indicate that modifications to the model were needed. For example, Ajzen’s (1991) extension as the Theory of Planned Behavior suggests that an individual’s perceived ability, or confidence, to perform a behavior could also play an important role in the adoption process, ultimately suggesting that the level of perceived complexity experienced from a behavior could influence the formation of internal perceptions (Ajzen, 1991).

More recently, Bandura’s (1986, 2001) Social Cognitive Theory has been posited as a means for understanding the use of information technology (Compeau & Higgins, 1995; Compeau, Higgins & Huff, 1999; Eastin & LaRose, 2000; LaRose & Eastin, 2002). Social Cognitive Theory includes a complex triadic causal structure that establishes the development of competency and regulation of action (Bandura, 1986, 2001). Through the development of knowledge structures, cognitive models of action are created which guide behavior. Consequently, this cognitive guidance is a crucial component to the developmental stages of a behavior. One cognitive factor that has been characterized as an influential variable is perceived confidence, more commonly referred to as self-efficacy (Bandura, 1997).

As a primary self-regulatory mechanism, self-efficacy simply refers to the level of confidence an individual has toward a given behavior. As a central component of Social Cognitive Theory, this confidence represents the internal belief “in one’s capability to organize and execute the courses of action required to produce given attainments” (Bandura, 1997, p. 3). To date, researchers have positively linked Internet confidence to online performance, prior experience, and Internet use (Eastin & LaRose, 2000). Furthermore, Eastin (2002) found that Internet confidence was positively related to e-commerce activities, such as online banking. Thus, it is reasonable to assume that confidence in one’s ability to use the Internet will be positively related to their willingness to provide personal information online because internal beliefs are associated with actual behavior.

H2: Internet confidence will be positively associated with a consumer’s willingness to provide personal information online.

Bearden and colleagues (2001) characterize consumer confidence as the extent to which individuals feel capable and secure with their decisions and behaviors. As one’s confidence increases, a person is better equipped at making decisions and feels confident about the resulting behavior. However, behavior is more strongly associated with one’s attitude toward that action when deliberate cognitive processing is involved (Fazio & Towles-Schwen, 1999, p. 99). Because Internet confidence does not represent a form of deliberate cognitive processing directly associated with the behavior in question (i.e., willingness to provide personal information online), attitude toward online data collection should exude a stronger direct influence on behavior than Internet confidence.

H3: Attitude toward online data collection will mediate the relationship between Internet confidence and a consumer’s willingness to provide personal information.

Eddington, Sir Arthur (Stanley) [next] [back] Economics of Information - What Is “The Information Economy”?, Economic Analysis of Information, The Information Production Chain

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