Computer Engineering Commons^™

Learning From Digital Failures? The Effectiveness Of Firms’ Divestiture And Management Turnover Responses To Data Breaches, Gui-Deng Say, Gurneeta Vasudeva

Research Collection Lee Kong Chian School Of Business

We examine whether firms learn from digital technology failures in the form of data breach events, based on the effectiveness of their failure responses. We argue that firms experiencing such technological failures interpret them broadly as organizational problems, and undertake unrelated divestitures and top management turnover to achieve better standardization and to remove dysfunctional routines. We test our hypotheses on unrelated subsidiary divestitures and chief technology officer (CTO) turnovers undertaken by 8,760 publicly traded U.S. firms that were at risk of experiencing data breaches in- volving the loss of personally identifiable information during the period 2005–2016. We find that data …