Abstract
Given the growing number of credit card transactions, data breaches have become an increasingly serious concern for hotel businesses. Even when a rival hotel experiences a data breach, customers of the focal hotel may feel vulnerable as well. Nevertheless, firms have little insight into the potential impacts of a data breach on customers and the corresponding recovery strategies. For this study, the joint effect of data breach locality (i.e., focal hotel vs. rival hotel) and error management (i.e., no vs. low vs. high EM) on customers’ attitudes toward the focal hotel and engagement behaviors (i.e., intentions to spread positive WOM and negative WOM) was examined. A 2 × 3 scenario-based experiment was conducted. The results of the MANCOVA analysis suggest that when a rival hotel is breached, low error management is more effective. Interestingly, when the focal hotel is breached, high error management and low error management are equally effective.
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