Perceived Data Privacy as a Moderator of AI-Personalized Recommendation and Digital Customer Empowerment on Customer Engagement in Shopee E-Commerce

Abstract

Purpose: This study examines the effects of AI-Personalized Recommendation and Digital Customer Empowerment on Customer Engagement, and investigate the moderating role of Perceived Data Privacy, among Generation Z Shopee users in Semarang City, Indonesia.

Design/methodology/approach: A quatitative survey of 100 purposively selected respondents was analyzed using Partial Least Square – Structural Equation Modeling (PLS-SEM) with Two-Stage Moderation approach in SmartPLS 4, and hypotheses were tested via bootstrapping with 5,000 subsamples.

Findings: Digital Customer Empowerment is found to positively and significantly influence Customer Engagement, confirming that greater autonomy, control, and participation in the digital shopping experience meaningfully strengthen engagement. AI-Personalized Recommendation, however, shows no significant direct effect, suggesting that personalization alone does not yet translate into deeper engagement. Perceived Data Privacy does not significantly moderate either relationship, indicating that privacy perception neither strengthens nor weakens the influence of AI-personalized recommendation or digital empowerment on engagement. The proposed model nonetheless demonstrates adequate explanatory and predictive power.

Practical implications: Shopee is encouraged to strengthen empowerment-oriented features from transparent product reviews, responsive feedback channels, and participatory shopping tools, while improving algorithmic transparency and privacy communication to build the trust needed for AI-based personalization to succeed. Regulators are encouraged to accelerate the socialization of Indonesia’s Personal Data Protection Law (UU No. 27 of 2022) among young digital consumers.

Originality/value: This study integrates AI-personalized recommendation, digital empowerment, and perceived data privacy within a single structural model grounded in Stimulus-Organism-Response Theory, the Technology Acceptance Model, and Privacy Calculus Theory, a combination rarely tested among privacy-sensitive Generation Z digital natives in Semarang City.

Paper type: Empirical