Privacy concerns and benefits in SaaS adoption by individual users

Abstract

Software-as-a-Service, a new model of accessing software, presents individual users with tremendous opportunities to work and live conveniently and efficiently. Existing research has put much focus on understanding SaaS potential and risks for organizations and not much effort has been invested in understanding individual users, despite their market significance. This study aims at closing this gap by analyzing the cognitive mechanism through which individual users trade off privacy against the benefits that SaaS offers and identify salient benefits that trigger such trade-off. Based on the Theory of Reasoned Action, the Privacy-Trust-Intention model and cost-benefit theories, we developed a research framework that capture the trade-off between benefits and privacy and further analyzed data collected from an online survey of SaaS users in Korea with 290 respondents. Our findings indicate that individual users’ intention to use SaaS is negatively affected by privacy concerns and positively affected by overall perceived benefits in a relationship that is mediated by trust towards SaaS providers. Surprisingly, no direct, significant effect of privacy concerns on intention to use SaaS was found, whereas overall perceived benefits were found to have a direct effect on users’ intention to adopt SaaS. We found convenience to be the most salient benefit that users expect from adopting SaaS. Our study contributes to existing research by developing and empirically verifying a benefits-versus-privacy framework in a rather neglected segment of SaaS consumers in previous research. The findings also guide SaaS providers in mitigating privacy concerns; while efforts to minimize privacy will enhance users’ trust, it is of paramount importance to maximize salient benefits such as convenience that outweigh privacy concerns during users’ decision making to adopt SaaS.