Are B2B data breaches concerning? Consequences of buyer's or firm's data loss on buyer and supplier related outcomes

Abstract

Data breaches are becoming a growing concern causing customer data vulnerability levels to increase. Arguably, data breach vulnerabilities are more detrimental in business-to-business (B2B) rather than in business-to-consumer (B2C) settings; yet more is known about B2C than B2B. Building on social contract theory, this research explores the impact of buyer data breach vulnerability if a buyer or buyer firm's information is compromised by a major supplier. An empirical model is proposed and tested. Results from 606 B2B buyers indicate that buyer vulnerabilities reduce buyer trust, whereas it increases their level of dissatisfaction, and their intent to take protective actions and switch to another supplier. Buyer trust increases relationship commitment and brand reputation, while dissatisfaction decreases them. Trust and dissatisfaction fully mediate the relationship from vulnerability to relationship commitment and brand reputation. Loss of a buyer's (buyer’ firm) information impacts not only (supplier-) buyer-related outcomes but also (buyer-) supplier-related outcomes, indicating spillover effects. Furthermore, results indicate the moderating effects of the affected party (whose information is compromised) on the buyer- and supplier-related outcomes as well as relationship quality factors. These findings indicate that B2B data breaches can have detrimental consequences. To mitigate these negative outcomes, managers should emphasize building and sustaining relationship quality, as well as employ good privacy practices through transparent and clear policies and giving users control of their data. An appropriate communication plan to inform the victims of the data breach may also help mitigate the effects of data loss.