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Data Privacy: Effects on Customer and Firm Performance
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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From Feeling Watched: A Phenomenological Exploration of Consumer Discomfort and Data Privacy Concerns in E-Commerce Personalized Email Marketing (2025) · cites this paper as Martin et al., 2017
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BackgroundMethodAnalyzing spillover effects from data breaches to the US (cyber) insurance industry
Eckert, C., Gatzert, N., & Schubert, M. (2022) · European Journal of Finance · doi:10.1080/1351847x.2022.2090267 · Cited by 5
“…et al. 2012), retailers (see Kashmiri, Nicol, and Hsu 2017) or competitors in various industry sectors (see, e.g. Zafar, Ko, and Osei-Bryson 2012; Martin, Borah, and Palmatier 2017; Kamiya et al. 2021), most often based on event study methodology using buy-and-hold or cumulative abnormal returns.”
BackgroundAntecedent factors of violation of information security rules
Cappellozza, A., de Moraes, G. H. S. M., Perez, G., & Simões, A. L. (2021) · RAUSP Management Journal · doi:10.1108/rausp-02-2021-0022 · Cited by 6
A preliminary investigation of gamification from the young consumer’s perspective
Hass, D., Hass, A., & Joseph, M. (2021) · Young Consumers Insight and Ideas for Responsible Marketers · doi:10.1108/yc-10-2020-1221 · Cited by 10
Whiting, A., Ritz, W., & Hain, J. S. (2021) · Journal for advancement of marketing education · doi:10.63963/001c.150594 · Cited by 5
“Calculating change variables has been previously used in other marketing studies such as Martin, Borah, and Palmatier (2017) and Whiting and Donthu (2009).”
Dynamische Preisgestaltung in der digitalisierten Welt
Spann, M., & Skiera, B. (2020) · Schmalenbach Journal of Business Research · doi:10.1007/s41471-020-00095-0 · Cited by 14
Data Privacy Concerns Throughout the Customer Journey and Different Service Industries
Mäki, M., & Alamäki, A. V. (2019) · IFIP advances in information and communication technology · doi:10.1007/978-3-030-28464-0_45 · Cited by 6
Hilken (2018) · Research Publications (Maastricht University) · doi:10.26481/dis.20180907th · Cited by 4
“Customer concerns about marketers collecting and using personal information continue to be a pertinent issue (Martin et al. 2017), particularly in relation to AR technologies (Dacko 2016).”
BackgroundLiu, D. Y., Kamal, M. M., Dou, J., & Zhang, Z. (2026) · Technological Forecasting and Social Change · doi:10.1016/j.techfore.2026.124656 · Cited by 8
Consumers’ acceptance of in-store technologies through the lens of segmentation
Namin, A., Jindal, R. P., Gauri, D. K., Ratchford, B. T., & Ketron, S. C. (2026) · Journal of Business Research · doi:10.1016/j.jbusres.2026.116010 · Cited by 2
Liu, Q.-K., Wang, R., Pareti, M., Castellini, A., Viaggi, D., & Canavari, M. (2026) · Journal of Marketing Analytics · doi:10.1057/s41270-026-00470-6 · Cited by 4
Digital IB risks: A systematic literature review through internalisation lenses
Silva-Rêgo, B., & Kogut, C. S. (2025) · International Business Review · doi:10.1016/j.ibusrev.2025.102528 · Cited by 4
Madhushanie, N., Vidanagamachchi, S., & Arachchilage, N. A. G. (2025) · Computers & Security · doi:10.1016/j.cose.2025.104659 · Cited by 3
Haji, I. H. A., Temprano-García, V., & Peluso, A. M. (2025) · European Journal of Marketing · doi:10.1108/ejm-08-2023-0629 · Cited by 4
Zhou, T., & Tang, B. (2025) · Information Development · doi:10.1177/02666669251384288 · Cited by 8
Papneja, H., & Devaraj, S. (2025) · Journal of Operations Management · doi:10.1002/joom.70026 · Cited by 5
Florea, N. V., Croitoru, G., & Diaconeasa, A.-A. (2025) · Journal of theoretical and applied electronic commerce research · doi:10.3390/jtaer20040262 · Cited by 10
“Regulatory protection mechanisms have been shown to reinforce consumer trust in cross-border digital transactions [30].”
Commercial Value of Data Resource: An Overview of Current State of Research and Future Prospects
Qin, H., Liu, Y., & Hu, Y. (2025) · SAGE Open · doi:10.1177/21582440251379511 · Cited by 4
“This is not only a legal and ethical issue, but also involves technical and economic dimensions, and balancing data tenure, privacy and commercial utilization needs is the key to the data assetization process (Martin et al., 2017).”
The power of words: how linguistic framing affects consent in retail privacy policies
Romero, M., Slejko, G., & Abell, A. (2025) · Journal of Retailing · doi:10.1016/j.jretai.2025.09.001 · Cited by 4
Erliana, S. (2025) · Journal of Digital Business and Innovation Management · doi:10.26740/jdbim.v4i2.71956 · Cited by 4
“Clear privacy policies, data anonymization techniques, and opt-in mechanisms for personalized experiences reinforce the ethical use of customer data (Martin et al., 2017).”
Hu, H.-C., & Simchi-Levi, D. (2025) · arXiv.org · doi:10.48550/arxiv.2507.07852 · Cited by 4
“Customers may choose to withhold demographic or behavioral information for privacy reasons (Martin et al., 2017; Bracale et al., 2025); in healthcare systems, historical records may be incomplete or fragmented (Dziura et al., 2013; Turkson et al., 2021); and in operational platforms, data pipelines…”
Kiss, L., & Sellung, R. (2025) · i-com · doi:10.1515/icom-2024-0064 · Cited by 4
Should I Use ChatGPT Travel Insurance Recommendations? A Dual‐Process Theory Perspective
Herjanto, H., Amin, M., & Çobanoğlu, C. (2025) · International Journal of Consumer Studies · doi:10.1111/ijcs.70044 · Cited by 4
Exploring Psychological Drivers in Dynamic Pricing and Consumer Decision Making
Niemeier, C., & Pospíšil, R. (2024) · Golden Ratio of Marketing and Applied Psychology of Business · doi:10.52970/grmapb.v5i1.654 · Cited by 5
“The kind and amount of information that is aggregated for use in price determination may violate consumer rights, especially where he/she has to be charged differently based on his/her circumstances (Martin, Borah and Palmatier, 2016).”
Durans, A. D. A., & Mainardes, E. (2024) · International Journal of Bank Marketing · doi:10.1108/ijbm-04-2024-0243 · Cited by 4
Ryanto, K., & Tundjungsari, V. (2024) · Journal La Multiapp · doi:10.37899/journallamultiapp.v5i4.1399 · Cited by 4
“…crimes, finding that data leaks were caused by breaking into customer data or accounts and duplicating consumer identities by financial services, Martin et al. (2017) found the factor of consumer data leakage due to parties breaking into customer data or accounts and duplicating consumer…”
BackgroundThe Impact of Data Privacy Laws on Digital Marketing Practices
Obudho, K. (2024) · Journal of Modern Law and Policy · doi:10.47941/jmlp.2155 · Cited by 4
“Martin, Borah & Palmatier (2017) investigated the effects of data privacy regulations on customer trust and firm performance in the marketing sector.”
BackgroundInfluentialBeyond transactions: Understanding the determinants of e-satisfaction in online shopping
Utama, I. D., Sudirman, I. D., & Kurnianingrum, D. (2024) · Journal of Asian Scientific Research · doi:10.55493/5003.v14i2.5063 · Cited by 5
“Moreover, the growing emphasis on data protection and privacy in the digital age is a major concern for consumers who are already aware of their personal information's security [79, 80].”
BackgroundImpact of Accounting Information System on Performance of Vietnamese Construction Enterprises
Duong, T. V. A. (2023) · International Journal of Professional Business Review · doi:10.26668/businessreview/2023.v8i10.3438 · Cited by 4
“Martin et al. (2017) confirmed that data privacy produces adverse outcomes for companies, including negative abnormal stock returns and negative customer behaviour.”
BackgroundJin, K. (2023) · Highlights in Business, Economics and Management · doi:10.54097/hbem.v9i.9229 · Cited by 4
“In this paper, privacy sensitivity refers to consumers' perception of the harm that may be caused by merchants or platforms using their personal privacy data in various ways in the context of e-commerce live streaming[5].”
BackgroundYan, C., Yang, Z., & Dai, X. (2023) · International Journal of Bank Marketing · doi:10.1108/ijbm-06-2022-0271 · Cited by 5
Paradoxes Datenschutzverhalten
Lasarov, W., & Hoffmann, S. (2021) · HMD Praxis der Wirtschaftsinformatik · doi:10.1365/s40702-021-00706-2 · Cited by 7
“Die wahrgenommene Kontrolle der Konsument*innen über die eigenen Daten gilt als bedeutende Einflussgröße auf deren Verhalten in datensensiblen Situationen (Acquisti et al. 2013; Bleier und Eisenbeiss 2015a, b; Martin et al. 2016; Mothersbaugh et al. 2012; Tucker 2014; Xu et al. 2012).”
BackgroundInfluential
Metadata
- Authors
- Martin, K. D., Borah, A., & Palmatier, R. W.
- Affiliations
- Colorado State University (US)
- University of Washington (US)
- Venue
- Journal of Marketing
- Publisher
- SAGE Publications
- Published
- 2017-01
- Volume
- 81
- Issue
- 1
- Pages
- 36-58
- ISSN
- 0022-2429 (ISSN-L)
- 1547-7185
- 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
- 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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