Cited by 786Privacy, Security, and Data ProtectionCustomer Service Quality and LoyaltyInformation and Cyber Security

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Data Privacy: Effects on Customer and Firm Performance

Martin, Kelly D., Borah, Abhishek, Palmatier, Robert W.·2017·Journal of Marketing

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Abstract

Although marketers increasingly rely on customer data, firms have little insight into the ramifications of such data use and do not know how to prevent negative effects. Data management efforts may heighten customers’ vulnerability worries or create real vulnerability. Using a conceptual framework grounded in gossip theory, the authors link customer vulnerability to negative performance effects. Three studies show that transparency and control in firms’ data management practices can suppress the negative effects of customer data vulnerability. Experimental manipulations reveal that mere access to personal data inflates feelings of violation and reduces trust. An event study of data security breaches affecting 414 public companies also confirms negative effects, as well as spillover vulnerabilities from rival firms’ breaches, on firm performance. Severity of the breach hurts the focal firm but helps the rival firm, which provides some insight into mixed findings in prior research. Finally, a field study with actual customers of 15 companies across three industries demonstrates consistent effects across four types of customer data vulnerability and confirms that violation and trust mediate the effects of data vulnerabilities on outcomes.

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Andrews, J. C., Walker, K., Netemeyer, R. G., & Kees, J. (2023) · Journal of Public Policy & Marketing · doi:10.1177/07439156231165250 · Cited by 12
“As for need to be popular, it is well accepted that childhood and adolescence are times of an increased need to “fit in” and be popular (Fitzsimons and Moore 2008; Martin et al. 2013). Children or young teens who exhibit a high need to be popular show higher levels of engaging in maladaptive behaviors, ranging from sm…”
Background
Antecedents of information sensitivity and willingness to provide
Kang, J. S., Lan, J., Yan, H., Li, W., & Shi, X. (2022) · Marketing Intelligence & Planning · doi:10.1108/mip-02-2022-0065 · Cited by 16
“As We Grow, It Will Become a Priority”: American Mobile Start-Ups’ Privacy Practices
Chen, W., Huang, G., Miller, J., Lee, K., Mauro, D., Stephens, B., & Li, X. (2018) · American Behavioral Scientist · doi:10.1177/0002764218787867 · Cited by 13
“Data security breaches had— at least in the short term—not only negative effects on the focal companies but also negative spillover effects on rival firms, although the severity of the breach hurt the focal firm but helped the rival firm (Martin, Borah, & Palmatier, 2017).”
Background
Blockchain traceability and agri-food appeal: A task-technology fit perspective
Pan, L., Huo, B., & Hong, X.-P. (2024) · Food Quality and Preference · doi:10.1016/j.foodqual.2024.105400 · Cited by 10
Strategizing Responses to Data Breaches: A Multi-Method Study of Organizational Responsibility and Effective Communication with Stakeholders
Nikkhah, H. R., & Grover, V. (2024) · Journal of Management Information Systems · doi:10.1080/07421222.2024.2415774 · Cited by 15
“However, an event study can be influenced by confounding events, potentially leading to misleading results [29, 50].”
Influential
Defending novice user privacy: An evaluation of default web browser configurations
Radivojevic, K., Clark, N., Klempay, A., & Brenner, P. R. (2024) · Computers & security · doi:10.1016/j.cose.2024.103784 · Cited by 10
Are B2B data breaches concerning? Consequences of buyer's or firm's data loss on buyer and supplier related outcomes
Swani, K., Labrecque, L. I., & Markos, E. (2024) · Industrial Marketing Management · doi:10.1016/j.indmarman.2024.03.007 · Cited by 15
The importance of cybersecurity disclosures in customer relationships
Nelson, A. S., & Wang, S. (2024) · Journal of Corporate Accounting & Finance · doi:10.1002/jcaf.22695 · Cited by 10
An Assessment of Digitalization Techniques in Contact Centers and Their Impact on Agent Performance and Well-Being
Pacella, M., Vasco, P., Papadia, G., & Giliberti, V. (2024) · Sustainability · doi:10.3390/su16020714 · Cited by 16
Sensing privacy: Extending consumer privacy research through a consumer culture theory approach
Horppu, J. (2023) · Marketing Theory · doi:10.1177/14705931231175698 · Cited by 17
“The way in which consumers come to understand and experience privacy is not just affected by the companies ’ privacy practices (Martin et al., 2017) or the trust and relationship between consumers and brands (Fortes et al., 2017; Hayes et al., 2021), neither is it based solely on individual factors…”
Background
Forecast of seasonal consumption behavior of consumers and privacy-preserving data mining with new S-Apriori algorithm
Tran, D., & Huh, J.-H. (2023) · Journal of Supercomputing · doi:10.1007/s11227-023-05105-6 · Cited by 10
“Important bank account information can be leaked and make it easier for online assets to be appropriated as well as for online fraud, and many other consequences from violating data privacy [10] [11].”
Background
Insurance Inclusion in Uganda: Impact of Perceived Value, Insurance Literacy and Perceived Trust
Kiwanuka, A., & Sibindi, A. B. (2023) · Journal of risk and financial management · doi:10.3390/jrfm16020081 · Cited by 18
The Moderating Effect of The Cloud Computing on The Relationship Between Accounting Information Systems on The Firms Performance in Jordan
Alshawabkeh, A., Kadir, M. R. B. A., Nori, W. M. N. W. M., & Hassan, H. (2022) · Wseas Transactions on Business and Economics · doi:10.37394/23207.2022.19.101 · Cited by 10
Information disclosing willingness in mobile internet contexts
Gao, M., Liu, M. T., & Chu, R. (2022) · Asia Pacific Journal of Marketing and Logistics · doi:10.1108/apjml-08-2021-0576 · Cited by 15
An Empirical Analysis of Insurer Participation in the U.S. Cyber Insurance Market
Cole, C. R., & Fier, S. G. (2020) · North American Actuarial Journal · doi:10.1080/10920277.2020.1733615 · Cited by 10
“Research suggest that stock insurers are afforded a greater degree of managerial discretion than that provided to mutual insurers (Mayers and Smith 1981) and this managerial discretion may allow stock insurers to participate in the cyber market.”
Background
Social media privacy concerns and risk beliefs
Yerby, J., Koohang, A. A., & Paliszkiewicz, J. O. (2019) · Online Journal of Applied Knowledge Management · doi:10.36965/ojakm.2019.7(1)1-13 · Cited by 14
Harnessing LLMs for Cyber-Resilience: A Systematic Survey in Threat Mitigation and Future Trajectories
Ahmad, N., Sehar, U., Zhou, J., Peng, Y., & Zhang, C. (2026) · IEEE Access · doi:10.1109/access.2026.3682720 · Cited by 9
“Privacy violations may undermine trust and result in long-term financial impact, according to research looking at the connection between data privacy policies, consumer behavior, and business performance [18].”
Conclusion: Informing Customer Engagement Marketing and Future Research
Harmeling, C. M., Moffett, J. W., & Palmatier, R. (2018) · Springer eBooks · doi:10.1007/978-3-319-61985-9_14 · Cited by 10
Self-citation
The Phenomenon of Creepiness in a Digital Marketing World
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“Prior work shows that transparency reduces negative responses (Bleier et al. 2020; Martin et al. 2017), while both approaches draw on trust and persuasion knowledge (Eisend and Tarrahi 2022; Friestad and Wright 1994), suggesting they may mitigate perceived manipulation.”
The economics of cyber risk: a survey of the literature
Abrardi, L., Comino, S., & Grassini, S. (2025) · Journal of Industrial and Business Economics · doi:10.1007/s40812-025-00370-3 · Cited by 15
“Using the D&B Hoover’s database, Martin et al. ( 2017) match breached firms with their closest publicly listed competitors and show that less severe incidents tend to generate negative spillovers.”
Trust as the catalyst: Transforming perceived to created value in blockchain traceability
Pan, L., & Hong, X. (2025) · Electronic Commerce Research and Applications · doi:10.1016/j.elerap.2025.101487 · Cited by 10
Honor the Contract? Effects of Algorithmic Recommendation System Features on Perceived Benefits, Privacy Risk, and Continuance Intention to Use TikTok
Li, J., Chen, T., Li, S., & Hu, B. (2024) · International Journal of Human-Computer Interaction · doi:10.1080/10447318.2024.2436736 · Cited by 11
“The more users believe that their personal information will be treated transparently, the more willingly they will allow platforms to gather it (Martin et al., 2017; Shin & Park, 2019).”
When smart meters backfire on energy transition internalization: Ethical electricity suppliers' mitigation of consumer data vulnerability and attendant psychological disempowerment
Simon, F. L., & Schweitzer, V. (2023) · Technological Forecasting and Social Change · doi:10.1016/j.techfore.2023.122738 · Cited by 9
Does (customer data) size matter? Generating valuable customer insights with less customer relationship risk
Plangger, K. A., Marder, B. L., Montecchi, M., Watson, R. T., & PITT, L. F. (2023) · Psychology and Marketing · doi:10.1002/mar.21866 · Cited by 20
“However, developing enhanced surveillance capabilities risks damaging relationships with customers by violating their privacy (Martin et al., 2017; Maseeh et al., 2021; Plangger & Montecchi, 2020; Okazaki et al., 2020).”
Background
Platform perspective verse user perspective: The role of expression perspective in privacy disclosure
Luo, Y., Zhou, L., Huang, J., Wang, X.-X., Sun, R., & Zhu, G.-W. (2023) · Journal of Retailing and Consumer Services · doi:10.1016/j.jretconser.2023.103372 · Cited by 9
Effects of advertising and R&D on spillovers from a rival’s bankruptcy
Jindal, N., & Slotegraaf, R. J. (2023) · Journal of the Academy of Marketing Science · doi:10.1007/s11747-023-00931-9 · Cited by 9
“Indeed, marketing research reveals spillovers after a firm experiences a data breach (Martin et al., 2017) or product recall (Borah & Tellis, 2016; Cleeren et al., 2013; van Heerde et al., 2007) and finance research reveals spillovers after a firm files for bankruptcy (Helwege & Zhang, 2016; Jorion…”
A Call for Research at the Public Policy–Marketing Strategy Interface
Chisam, N., Germann, F., & Palmatier, R. (2022) · Journal of Public Policy & Marketing · doi:10.1177/07439156221092413 · Cited by 9
“At the same time, customers are concerned about how firms use their information (Martin et al. 2020). Wieringa et al. (2021) argue that firms could use techniques, such as providing customers control of data storage, to conduct analytics while protecting customer privacy. However, Lis and Wurmser (2021) report that cu…”
BackgroundInfluentialSelf-citation
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Wang, Q.-T., Li, J. J., & Yang, D.-F. (2022) · Journal of business research · doi:10.1016/j.jbusres.2022.02.033 · Cited by 9
The Impact of Digital Innovations on Marketing and Consumers
Ratchford, B. T. (2019) · Emerald Group Publishing Limited eBooks · doi:10.1108/s1548-643520190000016005 · Cited by 22
Cyberattacks on Small Banks and the Impact on Local Banking Markets
Gogolin, F., Lim, I., & Vallascas, F. (2026) · Social Science Research Network · doi:10.2139/ssrn.3823296 · Cited by 8
Smart Kitchens of the Future: Technology’s Role in Food Safety, Hygiene, and Culinary Innovation
Anumudu, C. K., Augustine, J. A., Uhegwu, C. C., Nzube, U. J., Ugwoegbu, M. O., Shodeko, O. R., & Onyeaka, H. N. (2025) · Standards · doi:10.3390/standards5030021 · Cited by 11
“Ethical issues may arise when personal data collection such as worker activities or customer purchase patterns happens without consent or proper protection [160].”
Generative AI-Destination Marketing: Do Privacy Concerns and Justification Matter?
Yhee, Y., Kim, J. Y., Kim, J., & Koo, C. (2025) · Journal of Travel Research · doi:10.1177/00472875251349235 · Cited by 8
“These results underscore the importance of addressing privacy effectively to maintain the efficacy of AI recommendations (Martin et al., 2017).”
Lending Legitimacy to Corporate Digital Responsibility: Trust in Firm Versus Government Regulation of Artificial Intelligence Services
Yoganathan, V., Osburg, V.-S., & Janakiraman, N. (2025) · Journal of services research · doi:10.1177/10946705251345097 · Cited by 8
“Also, privacy literature suggests that the direct effects of a firm’s signals related to data protection on customers can often be contradictory—for example, the mere presence of a data protection signal can heighten privacy concerns in customers (Brough et al. 2022; Martin et al. 2017).”

Authors: Martin, K. D., Borah, A., & Palmatier, R. W.
Affiliations: Colorado State University (US)
University of Washington (US)
ORCID: Martin, Kelly D.
Borah, Abhishek
Palmatier, Robert W.
Venue: Journal of Marketing
Publisher: SAGE Publications
Published: 2017-01
Volume: 81
Issue: 1
Pages: 36-58
ISSN: 0022-2429 (ISSN-L)
1547-7185
DOI: 10.1509/jm.15.0497
OpenAlex: W2495772237
Cited by: 786
References: 0
Citations by year: 2026: 123 · 2025: 132 · 2024: 92 · 2023: 99 · 2022: 97 · 2021: 67 · 2020: 82 · 2019: 54 · 2018: 26 · 2017: 13
FWCI: 89.60
Type: journal article
Language: en
Open access: closed
Licence: journals.sagepub.com/page/policies/text-and-data-mining-license (tdm)
Locations: Journal of Marketing (publishedVersion)
Griffith Research Online (submittedVersion)
Funders: Colorado State University
Marketing Science Institute
Topics: Social Sciences › Sociology and Political Science › Privacy, Security, and Data Protection
Social Sciences › Business, Management and Accounting › Marketing › Customer Service Quality and Loyalty
Physical Sciences › Computer Science › Information Systems › Information and Cyber Security
Keywords: data privacy, data management practices, consumer trust, data breaches, firm performance, customer performance, transparency, data control, spillover effects, rival firms

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Data Privacy: Effects on Customer and Firm Performance

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