Privacy calculus model in e-commerce – a study of Italy and the United States Tamara Dinev 1 , Massimo Bellotto 2 , Paul Hart 3 , Vincenzo Russo 4 , Ilaria Serra 3 and Christian Colautti 4 1 Department of Information Technology and Operations Management, College of Business, Florida Atlantic University, Boca Raton, FL, U.S.A.; 2 University of Verona, Verona, Italy; 3 Florida Atlantic University, Boca Raton, FL, U.S.A.; 4 University IULM, Milano, Italy. Correspondence: Tamara Dinev, Department of Information Technology and Operations Management, College of Business, Florida Atlantic University, 777 Glades Rd, Boca Raton, FL 33431, U.S.A. Tel: þ 1 954 762 5313; Fax: þ 1 954 762 5245; E-mail: tdinev@fau.edu Received: 22 December 2004 Revised: 29 August 2005 2nd Revision: 14 November 2005 Accepted: 21 November 2005 Abstract This study examines cross-cultural differences beliefs related to e-commerce use for Italy and the United States. We argue that for both cultures, the user’s decision to make an online purchase is simultaneously influenced by a set of contrary factors. These include decision facilitators such as propensity to trust and institutional trust, and decision inhibitors such as perceived risk and privacy concerns. We argue that substantial cultural differences exist that affect the above factors and the relationships among them. We use Hofstede’s cultural theory and Fukuyama’s theory of trust and social capital, along with emic factors important for the Italian society, to develop the study’s propositions. The hypotheses were empirically tested using LISREL structural equation modeling and multigroup analysis. The results revealed that the Italian society exhibited lower propensity to trust, institutional trust, privacy concerns, and higher perceived risk. The relationships between institutional trust and e- commerce use, privacy concerns and e-commerce use, and perceived risk and institutional trust are all weaker for Italy. The relationship between perceived risk and privacy concerns is stronger for Italy. The paper’s major contribution is in validating an important model of e-commerce use across two cultures and showing the moderating effects of culture. European Journal of Information Systems (2006) 15, 389–402. doi:10.1057/palgrave.ejis.3000590 Keywords: cross-cultural research; Internet use; Internet privacy; Internet trust; LISREL; multigroup analysis Introduction Privacy and the cross-country differences in privacy regulations are among the 10 most important trends that will impact the Internet in the first decade of the 21st century (Erbschloe, 2001). Building competitive advantage through providing relevant product information to customers, personalized services, customized incentives and products can only be realized when consumers provide personal information. The need to gather more personal data, however, increases the threat to customers’ privacy and may affect the further growth of Internet usage because of growing privacy concerns. Furthermore, the global nature of the Internet and e-commerce is making privacy issues even more complex because the perceptions of privacy, trust, risk, and fair information practices vary across cultures and depend on government regulations (Milberg et al., 2000; Bellman et al., 2004). Designing the appropriate practices for information collection and addressing cultural variation in trust and privacy percep- tions should allow global corporate marketers to more readily facilitate the free exchange of Internet services across countries. MIS researchers (Milberg et al., 2000; Bellman et al., 2004) have found that there are differences in information privacy concerns across cultures. European Journal of Information Systems (2006) 15, 389–402 & 2006 Operational Research Society Ltd. All rights reserved 0960-085X/06 $30.00 www.palgrave-journals.com/ejis