Introducing Conversational Explanations as a Novel Response Strategy to Data Breach Incidents in Digital Commerce

In order to individualize and personalize digital services, an increasing number of e-commerce providers are exploiting abundant amounts of customer information. Alongside these positive effects, an inherent risk of compromise of customer information arises, resulting in data breaches. Compelled by regulations, companies are obliged to notify their customers. Previous literature indicates that different data breach response strategies can mitigate the negative effects of these security incidents. Drawing on data breach and conversational agent (CA) research, we theorize that the manner in which a data breach is communicated is equally relevant. We test our developed hypotheses in an online experiment (n=89). Our results show that explaining a data breach increases customer satisfaction. Simultaneously, we reveal that CAs lend themselves as a tool to positively influence this degree of explanation. Our work provides novel insights into the centrality of explanation in a data breach response and their positive correlation with CAs.