Information Technology Innovativeness and Data-Breach Risk: A Longitudinal Study

Abstract

ABSTRACT The adoption of new Information Technology (IT) innovations has led to increased uncertainty among employees, a greater demand for security measures, and more entry points for cyber-attacks, which all increase the risk of data breaches for firms. Despite the prevalence of discussions around this issue, there has been a lack of empirical research examining the data breach risk associated with IT innovations. To address this gap, we have developed arguments based on an organizational learning theoretical framework that explains how IT innovativeness can exacerbate data breach risk. Through our analysis of a sample of data breaches that occurred between 2013 and 2021, we have discovered that there is a positive association between firm IT innovativeness and the risk of data breaches. We also find that the effects of IT innovativeness can vary under certain conditions. For example, we find that the positive relationship between IT innovativeness and data breach risk is mitigated when managers possess IT expertise or when firms have established extensive board connections with cybersecurity managers. Moreover, we find that the relationship between IT innovativeness and data breach risk is amplified in complex environments but not in dynamic or munificent ones. This study takes the lead in advancing the theoretical understanding and empirical validation of security-related risks associated with IT innovations. Moreover, our findings serve as a timely reminder for research and practice to carefully consider the implications of introducing novel technologies into firms and the potential dark side consequences that may arise. Additionally, this study underscores the importance of understanding organizational learning in risk assessment and change management, as well as the critical role of contextual factors in moderating the unintended security-related consequences linked to IT innovations.