Overcoming Digital Challenges: A Cross-cultural Experimental Investigation of Recovering From Data Breaches

Companies around the world are faced with challenges in dealing with data breaches. While in Germany companies need to notify the affected and fear to lose their valuable customers, in Bolivia, where rapid digital globalization increases vulnerability, data security overall is not a publicly present topic, and customers are directly exposed to the consequences of security incidents. Our study examines the cultural difference in addressing the digital challenge of recovering from data breaches. We investigate through a scenario-based experiment the effect of compensation and remorse on the customer-company relationship. Our results show that German customers are more likely to demand compensation for a data breach as a recovery action, whereas Bolivian customers are satisfied with an apology. We discuss this finding in the context of cross-cultural values and practical implications for countries that are currently undergoing a rapid rise in technology and are therefore exposed to substantial security risks.