Strategies for managing the privacy landscape

Abstract

Firms use consumer personal information to improve their products and services. Personal information is open to misuse, however, and when exploited for undesired or unexpected purposes reduces consumer's trust in the firm and their willingness to provide personal information. How should firms manage consumer privacy? We present a framework to help firms identify their privacy impact on consumers and respond appropriately. We argue that firms should consider the full spectrum of entities they interact with and which can exploit consumer personal information, which includes: the political environment (government), the security environment (hackers), the market environment (third party firms), and the social environment (peers). Firms should pursue strategies to maximize the privacy impact consumers derive across these domains, augmenting sources of positive impact and mitigating those that generate negative impact. Successful strategies for managing privacy combine four approaches: balanced cooperation with government, heightened security against hackers, limited disclosure to third party firms, and moderated propagation with peers.