Mitigating Privacy Tension: The Role of Active Privacy Transparency in Privacy Granting, Trust Decline, and Negative Word-of-Mouth

Privacy-related news can embroil firms in public controversy, eroding user trust and triggering negative word-of-mouth. We examine whether firms can mitigate downstream damage before a crisis unfolds through the new approach we propose—active privacy transparency. Unlike conventional practices that leave information about firms’ data practices buried in lengthy privacy policies, active privacy transparency proactively presents precise information about a specific data practice when users make the corresponding permission decision, enabling a genuinely informed choice. Across behavioral experiments, we find that this preventive approach mitigates trust decline and negative word-of-mouth when users later encounter negative third-party news about the firm’s privacy practices. Importantly, these downstream benefits do not necessarily come at the immediate cost of lower permission granting. Rather, the immediate effect depends on users’ privacy knowledge, and more knowledgeable users may even become more willing to grant permissions. For managers, these findings position active privacy transparency as a preventive privacy-management approach rather than a postincident remedy. For policymakers, these findings call for moving beyond broad transparency mandates toward clearer guidance on what information should be provided and when, where, and how it should be communicated, while supporting initiatives that strengthen users’ privacy knowledge.

• 저널Information Systems Research
• 토픽Privacy, Security, and Data Protection · Sociology and Political Science
• DOI10.1287/isre.2023.0134
• 저자D X, Matthew J. Hashim, Q.H. Wang