Privacy Paradox to Competitive Advantage : A Grounded Theory Study Introducing the Theory of Privacy Paradox

Managing data privacy is critical for the development of e-commerce. Consumers face a dichotomy between attitude and behavior in sharing information, leading to the privacy paradox. Despite extensive research, scholars are yet to determine a theoretical basis for the privacy paradox. We interviewed 30 Millennials representing 13 countries in Australia using the Multi-Grounded Theory (MGT) approach to explore the rationale for the privacy paradox in the context of online banking. The study presents the Theory of Privacy Paradox (TPP) with a novel doctrine that the higher dissonance and reactance increase the privacy paradox over time and in the presence of higher power distance belief. Four types of privacy paradox situations are identified by segmenting the participants through the lens of national culture and banking experience. Further, employing TPP as the basis, a conceptual model is introduced to advocate the theory into practice, enabling banks to create a competitive advantage