Journal article
Customer data privacy & security as a firm strategy: financial implications, risks, and the role of product-market competition
Journal of business research, v 208, 116070
Apr 2026
Featured in Collection : Drexel's Newest Publications
Abstract
• Product-market competition is powerful motivator for better privacy practices.
• Investing in privacy involves making trade-offs.
• Investing in privacy reduces revenues or Total Q.
• Investing in privacy reduces litigation risk or the need for liquidity.
• A shift-share (Bartik-style) instrument addresses reverse causality.
To what extent do firms pursue a customer data privacy & security strategy (CDPSS) as a competitive differentiator? What are the drivers and outcomes of this strategy? Drawing on the structure-conduct-performance framework and using a shift-share (Bartik-style) instrument, we find that firms respond to intensified product-market competition (PMC) by leveraging CDPSS, with this effect moderated by advertising intensity. We also find that competing on data privacy & security creates complex trade-offs: although employing CDPSS can reduce revenues or Total Q, it can, however, diminish litigation risk or the need for liquidity. Hence, CDPSS can be both an asset and a liability. Finally, we find mixed evidence for the mediating role of CDPSS in the PMC-performance relationship: although CDPSS mediates the effect of PMC on both revenues and litigation risk, the mediating role of CDPSS in the relationship of PMC with either Total Q or liquidity is not significant.
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Details
- Title
- Customer data privacy & security as a firm strategy: financial implications, risks, and the role of product-market competition
- Creators
- Panagiotis Avramidis - The American College of GreeceNikolaos G. Panagopoulos - Ohio UniversityKonstantinos Serfes - Drexel University, Economics (School of Economics)Pavlos A. Vlachos - The American College of Greece
- Publication Details
- Journal of business research, v 208, 116070
- Publisher
- Elsevier Inc
- Resource Type
- Journal article
- Language
- English
- Academic Unit
- Economics (School of Economics)
- Web of Science ID
- WOS:001696193500001
- Scopus ID
- 2-s2.0-105034507571
- Other Identifier
- 991022180001804721