An Organizational Perspective on the Collection and Use of Personal Information: The Relationship Between Privacy, Value Creation, and Firm Success

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Individuals’ privacy in the context of online services presents a topic of significant interest in our increasingly digital society. However, there is a lack of research on the challenges faced by companies regarding their handling of individuals’ privacy. This is surprising, considering the impact that companies’ activities have on individuals’ privacy and the future role of privacy in our society. The current project presents a first step towards addressing this research gap and can serve as a foundation for future work in this neglected area.In particular, this research aims to investigate the organizational tension between a) privacy protection and b) value creation based on individuals’ personal data, which providers of online services face: Companies that try to increase privacy protection might limit their possibilities to create value through personal data as a result. On the other hand, creating value from the personal data of consumers might only be accomplished by interfering with these individuals’ privacy. This tension presents a significant challenge for companies. However, we lack adequate knowledge on how companies can deal with this tension.The goals of this project are as follows:(1) Developing a better understanding of the organizational tension between privacy protection and value creation through personal data; (2) Testing the “balance hypothesis” as posed in this proposal: a balance between privacy protection and value creation through personal data is associated with organizational success; (3) Testing the potential influence of contextual factors with regard to the “balance hypothesis” as stated above.To this end, two consecutive studies are planned. First, based on a qualitative study, a fundamental understanding and a conceptualization regarding the nature and facets of the tension between privacy protection and value creation through personal data are to be developed. Furthermore, this qualitative study includes groundwork for the second subsequent study. In this second, quantitative study, the above-stated "balance hypothesis" and potential influences of contextual factors are to be tested statistically.The results of this project are intended to be published in leading academic journals and can serve as a foundation and springboard for future research. Moreover, a better understanding of the tension described above can serve as an important basis for strategic decisions faced by companies in today’s era of data-driven value creation and privacy concerns.