Privacy please: Power distance and people’s responses to data breaches across countries

Abstract

Information security and data breaches are perhaps the biggest challenges that global businesses face in the digital economy. Although data breaches can cause significant harm to users, businesses, and society, there is significant individual and national variation in people’s responses to data breaches across markets. This research investigates power distance as an antecedent of people’s divergent reactions to data breaches. Eight studies using archival, correlational, and experimental methods find that high power distance makes users more willing to continue patronizing a business after a data breach (Studies 1–3). This is because they are more likely to believe that the business, not they themselves, owns the compromised data (Studies 4–5A) and, hence, do not reduce their transactions with the business. Making people believe that they (not the business) own the shared data attenuates this effect (Study 5B). Study 6 provides additional evidence for the underlying mechanism. Finally, Study 7 shows that high uncertainty avoidance acts as a moderator that mitigates the effect of power distance on willingness to continue patronizing a business after a data breach. Theoretical contributions to the international business literature and practitioner and policy insights are discussed. Supplementary Information The online version contains supplementary material available at 10.1057/s41267-022-00519-5.

Stakeholder accountability in the era of big data: an exploratory study of online platform companies

“…For example, most online companies have not disclosed any consultative approach to identify their stakeholders’ key concerns and issues, despite regulatory requirement to use consultancy services in developing the reports. Although data breaches of customer information are one of the biggest challenges that businesses face in the digital economy, these issues were rarely disclosed resulting in financial loss to businesses and causing significant harm to users and society (Pentland, 2014; Madan et al , 2022). The companies’ response to data breaches can remain largely unnoticed due to voluntary big data disclosure practices (Al-Htaybat and von Alberti-Alhtaybat, 2017).…”

International business in the digital age: Global strategies in a world of national institutions

“…Second, societies vary in their attitudes to new technologies, including pace of technological change and protection of personal data, which in turn affect how and how quickly consumers engage with new technologies (Smith, Deitz, Toyne, Hansen, Gru ¨nhagen, & Witte, 2013). In this issue, Madan, Savani and Katsikeas (2023) show that people's responses to data breaches in the digital space are associated with traditional concepts of national culture, specifically power distance and uncertainty avoidance. Such national variations in consumer attitudes can be expected to influence cybersecurity protocols firms adopt, and the ability of digital businesses to internationalize.…”

“…Three papers analyze challenges of digital transformation in mature organizations and ecosystems: the impact of Industry 4.0 (Lee et al, 2023), solving wicked problems (Tatarinov et al, 2023) and management of digital human resources (Grimpe et al, 2023). Three papers analyze digital strategy from a platform user perspective, exploring how individuals and teams engage with partners around the world, including e-sport teams (Lin et al, 2023), crowdsourcing (Kumar et al, 2023) and cybersecurity (Madan et al, 2023).…”

“…Several papers in this special issue touch on potential roadblocks to making digital technologies work within global operations. In this issue, Madan et al (2023) analyze how differences in culture influence reactions to data breaches. Similarly, language differences might impede the use of certain digital technologies or result in misinformation or mis-communications, thus reducing the benefit of such technologies for a mature firm.…”

Commentaries on “Scale use and abuse: Toward best practices in the deployment of scales”

“…In line with Haws et al, besides prioritizing validated scales, research must emphasize (1) the contexts in which the measures were validated; (2) the measures' relevance to the research question, conceptual framework, and sample (e.g., not using scales/items phrased in a work context for student samples); and (3) the measures' parsimony. If the research question involves different cultural dimensions, researchers may opt for scales developed and validated together (e.g., Madan et al, 2022) rather than independently developed and validated scales for specific dimensions—which may undermine discriminant validity among the separate scales (Yoo et al, 2011).…”