Factors Affecting Perceptions of Privacy Breach among Smartphone Application Users

Drawing on psychological contract theory, we experimentally examine four factors affecting perceptions of privacy breach among smartphone application users. We investigate the effects of the type of information which is perceived to be misappropriated by the application, the presence of legal agreement giving application developers rights to use the information, the source of information suggesting that a privacy breach may have occurred and the application type (free or paid). We find that perceptions of misappropriation of financial information are more distressing than perceived misappropriation of geo-location data. The presence of legal contracts giving application developers rights to information only partially attenuates perceptions of privacy breach among application users. This study offers a novel theoretical perspective and a new focal construct of perceived privacy breach for future research on privacy. Additionally, this study highlights the practical limitations of legal contracts in preventing perceptions of privacy breach.