From Convergence to Compromise: Understanding the Interplay of Digital Transformation and Mergers on Data Breach Risks in Local and Cross-Border Mergers
In today\u27s digital age, the potential risks and challenges associated with digital transformation (DT) and cybersecurity have received limited research attention. This dissertation consists of three interconnected studies that aim to address this gap. The first study employs paradox theory to demonstrate that DT initiatives can increase a firm\u27s susceptibility to data breaches. Using a unique dataset spanning 10 years and involving 3604 brands, our analysis reveals that DT efforts in mobile and digital marketing are associated with a higher incidence of data breaches. However, firms can mitigate this impact by enhancing their innovative capacities. These findings contribute to a better understanding of the complex relationship between DT, data breaches, and innovation. Our second investigation, rooted in complexity theory and matching theory, examines the impact of mergers and acquisitions (M&As) on the frequency of data breaches. By analyzing 18 years of data from 5072 US firms, we find that M&As increase the likelihood of data breaches, particularly when the merging firms operate in different business domains. Furthermore, we observe that M&As that receive more media attention are more prone to data breaches, while those involving a more vulnerable target firm have fewer breaches. In our third study, guided by Institutional theory, we explore the relationship between cross-border mergers and acquisitions (CBMA) and data breaches. Our findings indicate that CBMAs, especially those accompanied by significant media publicity and involving firms from divergent institutional contexts, heighten the risk of data breaches. Overall, these studies provide valuable insights for firms aiming to mitigate data breach risks during their digital transformation (DT) efforts and M&A activities. They emphasize the importance of adopting a balanced communication strategy and considering the security implications of strategic actions. Moreover, our findings contribute to the academic discourse in information systems by illuminating the intricate interplay between DT, M&As, and data breaches
