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Comparison of information security decisions under different security and business environments

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  • Yong Wu
  • Gengzhong Feng
  • Richard Y. K. Fung

Abstract

Serious information security breaches have caused firms to suffer from customer churns directly or indirectly. To prevent customer churns, firms usually enhance their security protection through two measures, i.e. security investment and security information sharing. Prior studies seldom consider security environment and business environment simultaneously when making a firm’s optimal security decisions. Using game theory, this paper purports to demonstrate that a firm’s security decisions under a competitive environment differ significantly from those under an integrated environment. Moreover, distortions may surface if firms do not cooperate on security practices. Thus, this paper further analyses the measures that a social planner such as the government or industry association controls firms’ security decisions, and results show that these measures may not always be effective. Instead, social planners are recommended to enhance or attenuate the controlling level of the two security decisions based on realistic security and business environments.

Suggested Citation

  • Yong Wu & Gengzhong Feng & Richard Y. K. Fung, 2018. "Comparison of information security decisions under different security and business environments," Journal of the Operational Research Society, Taylor & Francis Journals, vol. 69(5), pages 747-761, May.
    • Handle: RePEc:taf:tjorxx:v:69:y:2018:i:5:p:747-761
    DOI: 10.1057/s41274-017-0263-y
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    References listed on IDEAS

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    Cited by:

    1. Yong Wu & Mengyao Xu & Dong Cheng & Tao Dai, 2022. "Information Security Strategies for Information-Sharing Firms Considering a Strategic Hacker," Decision Analysis, INFORMS, vol. 19(2), pages 99-122, June.
    2. Yong Wu & Junlin Duan & Tao Dai & Dong Cheng, 2020. "Managing Security Outsourcing in the Presence of Strategic Hackers," Decision Analysis, INFORMS, vol. 17(3), pages 235-259, September.
    3. Suyuan Luo & Tsan‐Ming Choi, 2022. "E‐commerce supply chains with considerations of cyber‐security: Should governments play a role?," Production and Operations Management, Production and Operations Management Society, vol. 31(5), pages 2107-2126, May.
    4. Xing Gao & Siyu Gong, 2022. "An economic analysis of information security outsourcing with competitive firms," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(7), pages 2748-2758, October.
    5. Xiaofei Qian & Jun Pei & Xinbao Liu & Mi Zhou & Panos M. Pardalos, 2019. "Information security decisions for two firms in a market with different types of customers," Journal of Combinatorial Optimization, Springer, vol. 38(4), pages 1263-1285, November.

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