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It pays to be forthcoming: timing of data breach announcement, trust violation, and trust restoration

Steven Muzatko (Arkansas State University, Jonesboro, Arkansas, USA)
Gaurav Bansal (University of Wisconsin – Green Bay, Green Bay, Wisconsin, USA)

Internet Research

ISSN: 1066-2243

Article publication date: 7 July 2023

408

Abstract

Purpose

This research examines the relationship between the timeliness in announcing the discovery of a data breach and consumer trust in an e-commerce company, as well as later trust-rebuilding efforts taken by the company to compensate users impacted by the breach.

Design/methodology/approach

A survey experiment was used to examine the effect of both trust-reducing events (announced data breaches) and trust-enhancing events (provision of identity theft protection and credit monitoring) on consumer trust. The timeliness of the breach announcement by an e-commerce company was manipulated between two randomly assigned groups of subjects; one group viewed an announcement of the breach immediately upon its discovery, and the other viewed an announcement made two months after the breach was discovered. Consumer trust was measured before the breach, after the breach was announced, and finally, after the announcement of data protection.

Findings

The results suggest that companies that delay a data breach announcement are likely to suffer a larger drop in consumer trust than those that immediately disclose the data breach. The results also suggest that trust can be repaired by providing data protection. However, even after providing identity theft protection and credit monitoring, companies that fail to promptly disclose a breach have lower repaired trust than companies that promptly disclose.

Originality/value

This study contributes to the literature on e-commerce trust by examining how a company's forthrightness in reporting a data breach impacts user trust at the time of the disclosure of the data breach and after subsequent efforts to repair trust.

Keywords

Acknowledgements

The authors thank the editor, associate editor, and three anonymous reviewers for their guidance and constructive comments during the review process. An earlier version of this paper, titled Timing of Data Breach Announcement and E-Commerce Trust, was presented and published in the proceedings of the 13th Annual Conference of the Midwest Association for Information Systems. The research was made possible in part due to Frederick E. Baer Professorship in Business at Austin E. Cofrin School of Business at the University of Wisconsin–Green Bay. The authors also thank the University of Wisconsin–Green Bay Grants in Aid of Research for partially funding this project.

Citation

Muzatko, S. and Bansal, G. (2023), "It pays to be forthcoming: timing of data breach announcement, trust violation, and trust restoration", Internet Research, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/INTR-12-2021-0939

Publisher

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Emerald Publishing Limited

Copyright © 2023, Emerald Publishing Limited

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