The effect of a data breach announcement on customer behavior: Evidence from a multichannel retailer
In this study, the authors assess the effects of a data breach announcement (DBA) by a multichannel retailer on customer behavior. They exploit a natural experiment and use individual customer transaction data from the retailer to conduct a detailed and systematic empirical examination of the effects of a DBA on customer spending and channel migration behavior. To identify the effects, the authors compare the change in customer behavior before and after the DBA between a treatment group (customers whose information is breached) and a control group (customers whose information is not breached) using the difference-in-differences modeling framework. They find that although the data breach results in a significant decrease in customer spending, customers of the firm migrate from the breached to the unbreached channels of the retailer. The findings further reflect that customers with a higher retailer patronage are more forgiving because the negative effects of the DBA are lower for customers with a higher level of patronage. The authors propose and empirically test for the role of customer data vulnerability as the behavioral mechanism that drives customer behavior subsequent to a DBA. The authors offer prescriptions for managers on how to engage with customers following DBAs.
Duke Scholars
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- Marketing
- 3507 Strategy, management and organisational behaviour
- 3506 Marketing
- 1506 Tourism
- 1505 Marketing
Citation
Published In
DOI
EISSN
ISSN
Publication Date
Volume
Issue
Start / End Page
Related Subject Headings
- Marketing
- 3507 Strategy, management and organisational behaviour
- 3506 Marketing
- 1506 Tourism
- 1505 Marketing