Beyond the Dyad: Effects of Business Network Data Exchange on the Privacy Calculus

The Chair of Marketing and Innovation (Prof. Dr. Jan H. Schumann) and the Chair of Information Systems with a focus on Business Information Systems (Prof. Dr. Thomas Widjaja) are jointly researching a project funded by the DFG. Under the project name "Beyond the Dyad: The Effects of Data Exchange in Enterprise Networks on the Privacy Calculus", they are looking at the effects of data exchange in enterprise networks on consumers' data disclosure decisions.

Current technologies enable the collection, storage and analysis of consumer data on an unprecedented scale. As a result, they enable new business models that go beyond the consumer-company dyad and are based on the collection and trading of consumer data in corporate networks. For example, the music streaming service Spotify uses user data in a corporate network of advertisers, concert providers and other third-party companies. But traditional industries, such as the automotive and aviation industries, as well as the retail sector, are also increasingly developing business models together with technology companies that are based on the exchange and monetization of consumer data.

We refer to such practices as „business network data exchange“ (BNDE)

Visualisation "Business network data exchange"

A BNDE is a network of companies that benefits from consumer data disclosure. While previous research focuses on the dyadic view, the consumer's data sharing with a single company (A), BNDE research includes the sharing of consumer data from company A to other companies (B,C,D,E,...).

Existing research on the "privacy calculus" cannot adequately explain the phenomenon

Based on the assumption of a dyadic view, previous research explains consumers' data disclosure decisions mainly with the "privacy calculus", which assumes a rational risk-benefit trade-off. However, an exclusively rational approach is not sufficient in the BNDE context because consumers face a high degree of uncertainty when data is disclosed to an entire network of unknown companies. Because of this uncertainty, consumers in the BNDE context cannot rely only on a rational, cognitive cost-benefit consideration. "Spontaneous affective reactions to such business models, or - to put it simply - gut feelings, are thus likely to play a major role in decision-making," explains Jan H. Schumann, holder of the Chair of Business Administration with a focus on marketing and innovation at the University of Passau. Thus, when explaining consumer decisions about data disclosure to a network of companies, the established privacy calculus theory reaches its limits and needs to be extended from a dyadic perspective to a network perspective. "With our research, we aim to better understand how exactly the decision-making process occurs, what drives it, and how such business models need to be designed and communicated so that consumers are able to make better decisions and also help companies to design their BNDE networks in such a way that they are accepted by their clients," - adds Thomas Widjaja, Chair of Information Systems with a focus on Business Information Systems.

With their collaborative research project, the two chairs pursue the following goals:

Demonstrating the crucial importance of affective (low-effort) processes for consumers' data sharing decisions in BNDE contexts.
Examine the influence of the characteristics of the exchange process between customer and business network on affective and cognitive processing in BNDE situations.
Furthermore, the question of what influence network characteristics have on decisions about data disclosure in the BNDE context will be clarified.
From a practical perspective, the research should help consumers make better decisions and also help firms design their BNDE networks in a way that meets with consumer acceptance.