Error management in service security breaches

Error management has begun to receive growing attention from both academic scholars and industry practitioners in marketing. However, the impacts of error management on consumers remain understudied. Taking data breach as an increasingly recognized error in the modern service industry, this paper aims to explore the impact of hotels’ error management on consumer attitudes and downstream behavioral intentions. This research also investigates whether such impacts can be moderated by data breach locality. Furthermore, this research examines the underlying mechanism through which a firm’s error management influences consumers’ attitudes and behaviors.

A total of 280 people were recruited to participate in a scenario-based experimental study and complete an online survey.

Results revealed that the impacts of a focal firm’s error management on consumer attitude, word-of-mouth, and revisit intention were only significant when the data breach occurred at the focal firm (versus the rival firm), which was mediated by consumer trust. However, this mediating effect of consumer trust was not found when the focal firm reacted to a data breach that occurred at a rival firm.

This research represents one of the first studies to introduce the concept of consumer trust to understand the impact of error management on consumers following a data breach. By further including data breach locality as a potential moderator, this research provides suggestions on how firms should strategize their marketing efforts for more effective results.