An empirical examination of consumer adoption of Internet of Things services: Network externalities and concern for information privacy perspectives
Introduction
An increasing number of smart objects are connected to the Internet, giving rise to the concept of the Internet of Things (IoT). Smart objects are regarded as a physical embodiment with communication functionality, possessing a unique identifier, some basic computing capabilities and a way to detect physical phenomena and to activate actions having an effect on physical reality (Miorandi, Sicari, Pellegrini, & Chlamtac, 2012). Such objects can interact with people and other smart objects over the Internet.
A large number of IoT services have also been developed, and the global market for such services is growing rapidly. According to the IDC (2014), the global IoT market is on track to hit $7.1 trillion in 2020. In terms of IoT device penetration, a recent report indicated that the number of smartphones, tablets and PCs in use will reach about 7.3 billion units by 2020, but that the population of IoT devices will reach about 26 billion devices in the same year, up from only 900 million in 2009 (Gartner, 2013). Moreover, in key countries, IoT has emerged as a vital strategy for innovative development, with projects including “Intelligent Earth” (US), “i2010” (EU) and “i-Japan” initiating since 2008. In 2009, China launched a national IoT project called “To Feel China”, and identified IoT as one of five key emerging strategic industries.
Issues related to the IoT have been widely discussed in practical and academic fields. However, most prior studies have focused on overview descriptions, concepts, business models, opportunities and challenges (Chui et al., 2010, Gubbi et al., 2013, Kortuem et al., 2010, Kranz et al., 2010, Sarma and Girão, 2009, Vermesan et al., 2011, Weber, 2010, Zhou and Chao, 2011). These studies have proposed important issues such as key technologies, standards, architectural elements, security and privacy challenges, as well as provided useful research roadmaps. However, little empirical research has examined determinants of IoT service adoption from the user's perspective. IoT allows objects to integrate with the Internet, thus forming a huge network of related objects. This provides users greater convenience in connecting to and interacting with the network in terms of tasks including identifying themselves, sharing information with others, querying information, monitoring their environment, recording individual health status, and making payments and transactions. As the user network grows in terms of the use of numerous IoT products and services, the perceived benefit of use will increase and achieve network externalities. This feedback loop drives further IoT services expansion, which in turn motivates increased usage of IoT services. However, the use of IoT services may place users at risk for the unintentional disclosure of private information (Bandyopadhyay and Sen, 2011, Weber, 2010, Ziegeldorf et al., 2014). To date, relatively little empirical attention has focused on the impact of network security and privacy in IoT service usage. This study examines reasons why consumers adopting and continue to use IoT services. The primary research questions to be addressed are as follows:
- 1.
To what extent do network externalities influence users' attitudes and continued intention to use IoT services?
- 2.
To what extent do information privacy concerns influence users' attitudes and continued intention to use of IoT services?
This study starts by investigating and analyzing the relevant literature to propose an integrated model to study the critical factors affecting consumer decisions to adopt IoT services. Specifically, this work examines network externalities and concern for information privacy (CFIP) perspectives in the context of IoT user behavior. This study differs from previous studies in at least two aspects. First, we propose a research model including network externalities and its determinants in examining IoT service usage. Though prior studies have examined the network externalities that affect IT adoption (Chiu et al., 2013, Gupta and Mela, 2008, Hsu and Lu, 2004, Luo and Strong, June 2000), few, if any, empirical studies have examined such effects in the context of IoT service adoption. Therefore, we decompose network externalities and test their effect on users' perceived benefits. Second, this study empirically examines the impact of CFIP on IoT service adoption, which has received less attention in the literature. Moreover, we also decompose CFIP to better understand its relative importance within existing models of IoT usage. The results of this study were based on data collected from IoT services users. Findings from the current study could not only provide significant insights for practitioners to develop effective strategies to promote IoT services, but also offer a more comprehensive view for future research into IoT service adoption.
The remainder of this study is organized as follows: Section 2 provides a theoretical overview; Section 3 proposes the research model and states the research hypotheses; Section 4 describes the research method; Section 5 describes and analyses empirical results; and Section 6 presents discussions and implications for practitioners and researchers.
Section snippets
Internet of Things (IoT)
The Internet of Things (IoT) uses the Internet to form a huge network of smart objects. Whereas the conventional Internet connects people in the exchange of information, the IoT integrates machines and objects with embedded sensors and allows them to communicate autonomously over the Internet. The IoT concept has been described by a range of names, including machine to machine (M2M), sensor networks, smart planet, pervasive computing and ubiquitous computing. IoT is generally defined as a
Conceptual model and hypotheses
Fig. 1 illustrates the research model built based on the literature review. It asserts that intention to use IoT is determined by the user's perceived benefit, concern for information privacy and attitude. Furthermore, attitude mediates the impact of perceived benefits and concern for information privacy. Number of IoT services and perceived critical mass are considered to be direct network externalities, and perceived compatibility and perceived complementarity are considered to be indirect
Sample
An online field survey was conducted in Taiwan to test the hypotheses. To increase the response rate from IoT service users, respondents were recruited over a period of two months through messages on well-known websites including Sogi.com, Facebook and other IoT-related bulletin board systems (BBS) with a wide reach and tolerance of such survey advertisement messages. The message outlined the aim of current study, provided a hyperlink to the survey form, and as an incentive, offered respondents
Descriptive statistics
Table 2 presents descriptive statistics. On average, the participants responded positively to the research constructs (averages all exceeded 3, with collection as an exception, which is slightly lower than 3 (2.96)). This indicated that users may not perceive IoT use as divulging extensive amounts of personal identifiable information.
Analytical strategy for model assessment
In order to test the proposed hypotheses, data were collected and analyzed using structural equation modeling (SEM), a second-generation multivariate data analysis
Discussion
This study revealed that the continued intention to use IoT services can be predicted by the proposed model (R2 = 0.77). Perceived benefits, attitude and CFIP significantly and directly affected continued intention to use IoT services. Of these, attitude was found to have the most significant influence on behavioral intention, with a coefficient much higher than others (β = 0.74). This implies that to effectively promote the use of IoT, it is important to help users form a positive attitude
Chin-Lung Hsu is an associate professor of Information Management at National Taipei University of Business, Taipei, Taiwan. He received MBA and Ph.D. degrees from National Taiwan University of Science and Technology, Taipei, Taiwan, in 1999 and 2004, respectively. Dr. Hsu's articles have appeared in Computers in Human Behavior, Information & Management, Omega, Internet Research, Electronic Commerce Research and Applications, International Journal of Mobile Communications, International Journal
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Chin-Lung Hsu is an associate professor of Information Management at National Taipei University of Business, Taipei, Taiwan. He received MBA and Ph.D. degrees from National Taiwan University of Science and Technology, Taipei, Taiwan, in 1999 and 2004, respectively. Dr. Hsu's articles have appeared in Computers in Human Behavior, Information & Management, Omega, Internet Research, Electronic Commerce Research and Applications, International Journal of Mobile Communications, International Journal of Computer Application in Technology, International Journal of Technology and Human Interaction, International Journal of Mobile Human Computer Interaction, and Information Management & Computer Security. His research interests include electronic commerce and Internet marketing.
Judy Chuan-Chuan Lin is a Professor of Computer Science and Information Management at Soochow University, Taipei Taiwan. She received the BSEE from Columbia University, New York; the MS from Polytechnic School of Engineering at New York University, New York; the PhD in MIS from National Taiwan University of Science and Technology. Her papers have appeared in Information and Management, International Journal of Information Management, Behavior and Information Technology, Electronic Commerce Research and Applications, Online Information Review, Journal of Information Science, Internet Research, International Journal of Mobile Communications, International Journal of Mobile Human Computer Interaction, International Journal of Technology and Human Interaction, and various international conference proceedings and journals. Her research interests include internet marketing as well as electronic commerce and innovation adoption.