Too generous to be fair? Experiments on the interplay of what, when, and how in data breach recovery of the hotel industry

Abstract

Although data breaches have become increasingly common, few studies have examined data breach recovery. Thus, this study aims to examine when (i.e., reactive versus passive) and how (i.e., public versus private) to conduct data breach recovery in the hotel industry, using different types of compensations. Based upon the fairness heuristic theory and the prospect theory, two experiments were conducted with university students as the samples. The results show that consumers' perceived justice with economic and social compensation is not significantly higher than that with either economic compensation or social compensation, under the public mode or the private mode. Furthermore, under the reactive mode participants’ perceived justice with economic and social compensation is lower than that with just economic compensation. Our study expands the literature on service recovery to data breach recovery in the hotel industry. It also provides important practical guidelines for travel industry managers.