An Empirical Investigation of Company Response to Data Breaches

2022 | Management Information Systems Quarterly | Citations: 5

Authors: Nikkhah, Hamid; Grover, Varun

Abstract: Companies may face serious adverse consequences as a result of a data breach eve ... Expand

Abstract: Companies may face serious adverse consequences as a result of a data breach event. To repair the potential damage to relationships with stakeholders after data breaches, companies adopt a variety of response strategies. However, the effects of these response strategies on the behavior of stakeholders after a data breach are unclear; differences in response times may also affect these outcomes, depending on the notification laws that apply to each company. As part of a multimethod study, we first identified the adopted response strategies in Study 1 based on content analysis of the response letters issued by publicly traded U.S. companies (n = 204) following data breaches; these strategies include any combination of the following: corrective action, apology, and compensation. We also found that breached companies may remain silent and adopt a “no action” strategy. In Studies 2 and 3, we examined the effects of various response strategies and response times on the predominant stakeholders affected by data breaches: customers and investors. In Study 2, we focused on customers and present a moderated-moderated-mediation model based on the expectancy violation theory. To test this model, we designed a factorial survey with 15 different conditions (n = 811). In Study 3, we focused on investors and conducted an event study (n = 166) to examine their reactions to company responses to data breaches. The results indicate the presence of moderating effects of certain response strategies; surprisingly, we did not find compensation to be more effective than apology. The magnitude of the moderating effects of response strategies is contingent upon response time. We also found that the negative effects of data breaches disappear after six months. We interpret the results and provide implications for research and practice. Collapse

Topics: data breach data protection privacy website IT security

Methods: event study longitudinal research survey qualitative content analysis statistical hypothesis test

Recognizing CEO personality and its impact on business performance: Mining linguistic cues from social media

2020 | Information & Management | Citations: 2

Authors: Wang, Shichao; Chen, Xi

Abstract: Upper echelons theory suggests that CEO personality will influence organizationa ... Expand

Abstract: Upper echelons theory suggests that CEO personality will influence organizational performance. However, difficulty in measuring CEO personality restrains related research. We capture linguistic cues CEOs leaving on social media and recognize their personality by text mining. To our knowledge, it is the first study introducing social media text mining approaches into the research stream that empirically inquires and extends upper echelons theory. Then, we investigate the CEO personality’s impact on both operational and financial performance. Results show that CEO Extraversion, Emotional Stability, and Agreeableness improve Cost Efficiency and Profitability, while CEO Conscientiousness reduces them. CEO Openness to Experience negatively influences Profitability, and all facets of CEO personality improve Employee Productivity except for CEO Conscientiousness. The contribution of our research is multi-sided: (1). methodologically, we introduce a text mining approach to measure CEO personality; (2). theoretically, we provide empirical evidence for upper echelons theory; (3). practically, our results help companies evaluate CEO candidates from a personality perspective. Collapse

Topics: personality organizational productivity social media financial performance productivity

Methods: natural language processing longitudinal research correlation analysis self reported survey autocorrelation analysis

Theories: big five model upper echelons theory

Do you see what I see? The search for consensus among executives’ perceptions of IT business value

2014 | European Journal of Information Systems | Citations: 0

Authors: Tallon, Paul P.

Abstract: Since firms rarely collect data on the precise economic or financial impacts of ... Expand

Abstract: Since firms rarely collect data on the precise economic or financial impacts of information technology (IT), perceptions play a key role in assessing IT impacts. To the extent that executives in the same firm evaluate IT impacts similarly, it can be easier to approve future IT investments or to initiate corrective action for failing IT investments. In this study, we use distributed sensemaking theory to investigate the conditions under which executives will reach a consensus as to the extent and locus of firm and process-level IT impacts in their firm. Using data from surveys of 133 top-level business executives in 13 firms, we show that consensus is a function of CIO-led sensegiving in the form of IT promotion, CIO leadership, information systems (IS) engagement with end users, and IS-business communications. The absence of consensus – discord – suggests IS disengagement, a lack of effective CIO leadership, weak IT-business communications, and ineffective promotion of the role of IT. Sensegiving does not mean telling executives what to think about IT but rather how to think about IT and its impacts at various points within the firm. Whether IT impacts are rated high or low, efforts to create increased consensus among executives can greatly enhance value from IT. Collapse

Topics: IS impact sensemaking IS value Chief Information Officer IS effectiveness

Methods: survey regression analysis method data transformation factor analysis descriptive statistic

Theories: theory of organizational sensemaking

Credit Rating Change Modeling Using News and Financial Ratios

2012 | ACM Transactions on Management Information Systems | Citations: 0

Authors: Lu, Hsin-Min; Tsai, Feng-Tse; Chen, Hsinchun; Hung, Mao-Wei; Li, Shu-Hsing

Abstract: Credit ratings convey credit risk information to participants in financial marke ... Expand

Abstract: Credit ratings convey credit risk information to participants in financial markets, including investors, issuers, intermediaries, and regulators. Accurate credit rating information plays a crucial role in supporting sound financial decision-making processes. Most previous studies on credit rating modeling are based on accounting and market information. Text data are largely ignored despite the potential benefit of conveying timely information regarding a firm’s outlook. To leverage the additional information in news full-text for credit rating prediction, we designed and implemented a news full-text analysis system that provides firm-level coverage, topic, and sentiment variables. The novel topic-specific sentiment variables contain a large fraction of missing values because of uneven news coverage. The missing value problem creates a new challenge for credit rating prediction approaches. We address this issue by developing a missing-tolerant multinomial probit (MT-MNP) model, which imputes missing values based on the Bayesian theoretical framework. Our experiments using seven and a half years of real-world credit ratings and news full-text data show that (1) the overall news coverage can explain future credit rating changes while the aggregated news sentiment cannot; (2) topic-specific news coverage and sentiment have statistically significant impact on future credit rating changes; (3) topic-specific negative sentiment has a more salient impact on future credit rating changes compared to topic-specific positive sentiment; (4) MT-MNP performs better in predicting future credit rating changes compared to support vector machines (SVM). The performance gap as measured by macroaveraging F-measure is small but consistent. Collapse

Topics: missing data accounting database system Java systems design

Methods: support vector machine machine learning computational algorithm Gibbs sampling sentiment analysis

New Product Exploration Under Environmental Turbulence

2011 | Organization Science | Citations: 9

Authors: Danneels, Erwin; Sethi, Rajesh

Abstract: This study identifies two organizational factors that foster explorative product ... Expand

Abstract: This study identifies two organizational factors that foster explorative products, willingness to cannibalize and future-oriented market scanning, and examines whether the relationships of these factors with exploration are contingent on environmental turbulence in customer, competitor, and technological sectors. The study analyzes data from 145 U.S. public manufacturing firms to examine the relationship between the two organizational factors and the degree to which the firms pursue explorative new products—new products that are meaningfully distinct from competing alternatives. Results suggest that both willingness to cannibalize and future-oriented market scanning promote explorative new products. The relationship of willingness to cannibalize with explorative products is stronger under customer turbulence. In contrast, the relationship of future-oriented market scanning with explorative products is weaker under customer and competitive turbulence and stronger under technological turbulence. The study concludes that the two organizational factors promote explorative new products, but their effectiveness is contingent on turbulence in different sectors of the firm's environment. Collapse

Topics: innovation management social media Slack database system technological change

Methods: survey survey design confirmatory factor analysis data transformation exploratory factor analysis

Theories: big five model

Competing Perspectives on the Link Between Strategic Information Technology Alignment and Organizational Agility: Insights from a Mediation Model

2011 | Management Information Systems Quarterly | Citations: 522

Authors: Tallon, Paul P.; Pinsonneault, Alain

Abstract: Strategic information technology alignment remains a top priority for business a ... Expand

Abstract: Strategic information technology alignment remains a top priority for business and IT executives. Yet with a recent rise in environmental volatility, firms are asking how to be more agile in identifying and responding to market-based threats and opportunities. Whether alignment helps or hurts agility is an unresolved issue. This paper presents a variety of arguments from the literature that alternately predict a positive or negative relationship between alignment and agility. This relationship is then tested using a model in which agility mediates the link between alignment and firm performance under varying conditions of IT infrastructure flexibility and environmental volatility. Using data from a matched survey of IT and business executives in 241 firms, we uncover a positive and significant link between alignment and agility and between agility and firm performance. We also show that the effect of alignment on performance is fully mediated by agility, that environmental volatility positively moderates the link between agility and firm performance, and that agility has a greater impact on firm performance in more volatile markets. While IT infrastructure flexibility does not moderate the link between alignment and agility, except in a volatile environment, we reveal that IT infrastructure flexibility has a positive and significant main effect on agility. In fact, the effect of IT infrastructure flexibility on agility is as strong as the effect of alignment on agility. This research extends and integrates the literature on strategic IT alignment and organizational agility at a time when both alignment and agility are recognized as critical and concurrent organizational goals. Collapse

Topics: organizational productivity information technology infrastructure IS agility strategic management information system use

Methods: survey data transformation parametric test confirmatory factor analysis Compustat

Value Chain Linkages and the Spillover Effects of Strategic Information Technology Alignment: A Process-Level View

2011 | Journal of Management Information Systems | Citations: 0

Authors: Tallon, Paul P.

Abstract: The alignment of information technology (IT) and business strategy is a perennia ... Expand

Abstract: The alignment of information technology (IT) and business strategy is a perennial challenge for corporate executives. While earlier studies confirm the value of alignment, there is still some question as to how alignment creates value and the level at which value is created. In this research, we use a series of theoretical arguments based on the interconnected structure of the value chain to consider the extended effects of alignment at the process level. Since processes are often linked to create a complex chain of activities, the absence or presence of alignment in any process could have implications for business performance elsewhere in the value chain. Minimally aligned processes can not only disrupt performance within the focal process, but their effects may also be felt further downstream in the form of bottlenecks and a diminution in the business value of IT. Using a simplified form of the value chain and data from matched surveys of business and IT executives at 317 U.S. and EU firms, we examine how the effects of alignment on a given process spill over into processes further downstream, creating higher IT business value in those downstream processes. We also show that these spillover effects continue along the length of the value chain and do not diminish based on distance from the focal process. Our results reinforce the call for firms to improve the fit between business and IT strategy by showing how efforts to improve alignment in a given process can deliver a stream of benefits along the value chain. This research provides a fresh perspective on the value of alignment, facilitating a deeper understanding and appreciation of the link between strategic IT alignment and firm performance. Collapse

Topics: IS value information system use strategic management organizational productivity IT alignment

Methods: survey regression analysis method cross sectional research statistical hypothesis test robustness check

Theories: resource based view of the firm

Misperceiving the Beliefs of Others: How Pluralistic Ignorance Contributes to the Persistence of Positive Security Analyst Reactions to the Adoption of Stock Repurchase Plans

2011 | Organization Science | Citations: 0

Authors: Zhu, David H.; Westphal, James D.

Abstract: We consider how a social psychological bias referred to as pluralistic ignorance ... Expand

Abstract: We consider how a social psychological bias referred to as pluralistic ignorance occurs among security analysts and how this bias may lead to behavioral conformity and isomorphism in analysts' reactions to the adoption of a particular organizational policy, namely, stock repurchase plans. Our theory suggests why (1) there may be a systematic tendency for analysts to underestimate the extent to which other analysts share their reservations about repurchase plans (i.e., reservations about whether plans reflect well on the performance prospects of adopting firms), such that (2) analysts conform to other analysts and issue more positive earnings forecasts and stock recommendations in response to the adoption of repurchase plans despite having private reservations about whether the plans reflect well on adopting firms. We also contend that analysts are less likely to underestimate the extent to which others share their reservations about repurchase plans to the extent that they have frequent communication ties to other analysts. Whereas prior neoinstitutional research on conformity and isomorphism has primarily adopted a cognitive perspective in which actors conform to the behavior of others based on their understandings of a particular policy or practice (i.e., they take the value of the policy for granted or infer the value of the policy from others' prior decisions), we develop a social psychological perspective on isomorphism wherein actors imitate others based on their biased perceptions of others' beliefs about the policy. We also extend perspectives on institutional persistence by explaining why constituents may continue to publicly endorse a policy despite having private reservations about the policy's efficiency benefits. Collapse

Topics: corporate governance organizational productivity social network decision making database system

Methods: survey analysis of covariance statistical hypothesis test qualitative content analysis descriptive statistic

Theories: institutional isomorphism theory game theory organizational behavior theory agency theory

Market Value of Voluntary Disclosures Concerning Information Security

2010 | Management Information Systems Quarterly | Citations: 64

Authors: Gordon, Lawrence A.; Loeb, Martin P.; Sohail, Tashfeen

Abstract: Information security is a fundamental concern for corporations operating in toda ... Expand

Abstract: Information security is a fundamental concern for corporations operating in today's digital economy. The number of firms disclosing items concerning their information security on reports filed with the U.S. Securities and Exchange Commission (SEC) has increased in recent years. A question then arises as to whether or not there is value to the voluntary disclosures concerning information security. Thus, the primary objective of this paper is to assess empirically the market value of voluntary disclosures of items pertaining to information security. Based on a sample of 1,641 disclosing and 19,266 non-disclosing firm-years in a cross-sectional pooled model, our primary findings provide strong evidence that voluntarily disclosing items concerning information security is associated positively with the market value of a firm. These findings are based on the use of a market-value relevance model, as well as a bid-ask spread analysis. The study's findings are robust to alternative statistical analyses. The findings also provide support for the signaling argument, which states that managers disclose information in a manner consistent with increased firm value. Finally, the study findings provide some insight into the strategic choice that firms make regarding voluntary disclosures about information security. Collapse

Topics: data security IT security threat organizational value database system Sarbanes–Oxley Act

Methods: cross sectional research descriptive statistic regression analysis method data transformation factor analysis

Theories: lemon market theory

Firm-Level Productivity Analysis for Software as a Service Companies

2009 | International Conference on Information Systems | Citations: 0

Authors: Huang, Ke-Wei; Wang, Mengqi

Abstract: Software-as-a-service (SaaS) is a relatively new software delivery business mode ... Expand

Abstract: Software-as-a-service (SaaS) is a relatively new software delivery business model and has been one of the fastest growing segments of the information technology industry in recent years. In this study, we investigate the relationship between the SaaS software delivery model and the productivity of software vendors. We explore scale economies of pure-SaaS firms, non-SaaS firms, and mixed-SaaS firms (firms delivering products by dual models) by examining 179 publicly listed software companies in the United States. We use a Cobb- Douglas production function to model the functional relationship between inputs and outputs and employ the feasible generalized least squares method to evaluate the marginal product of each input factor. The input factors examined include capital, labor, R&D expenses, and marketing expenses. The most surprising result is the presence of significant diseconomies of scale in pure-SaaS firms. Also, SaaS firms are more productive only in utilizing capital assets. Collapse

Topics: software as a service productivity economies of scale research and development marketing management

Methods: longitudinal research autocorrelation analysis regression analysis method generalized least square econometric modeling