Firm diversity and data breach risk: A longitudinal study

Qian Wang, Eric W.T. Ngai

Research output: Journal article publicationJournal articleAcademic researchpeer-review

4 Citations (Scopus)

Abstract

Research has extensively investigated the rationale of firm diversity from the economic perspective, but little is known about how such a strategy may affect information security. The present study is the first to examine how firm diversity is relevant to firms’ likelihood to experience data breaches (i.e., data breach risk). Drawing from the strands of literature on information security, diversification, and resource-based view, we propose hypotheses on the relationship between firm diversity and data breach risk, as well as the boundary conditions of this relationship. On the basis of a twelve-year sample of publicly-listed firms, our analysis provides evidence to support the negative association between firm diversity and data breach risk. Our analysis also delineates conditions under which the effects of firm diversity can intervene to reduce the data breach risk invoked, such as under related diversity and when managers are managerially capable. For academics, our research accentuates an intriguing but unexamined benefit of firm diversity because it relates to information security. For practicing professionals, this research highlights the significant impact of firms’ operational structure on information security.

Original languageEnglish
Article number101743
JournalJournal of Strategic Information Systems
Volume31
Issue number4
DOIs
Publication statusPublished - Dec 2022

Keywords

  • Data breach risk
  • Diversity type
  • Firm diversity
  • Information security
  • Managerial ability
  • Resource-based view

ASJC Scopus subject areas

  • Management Information Systems
  • Information Systems
  • Information Systems and Management

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