Increasing Cybersecurity Investments in Private Sector Firms

Journal of Cybersecurity, 2015, Vol. 1, No. 1

15 Pages Posted: 8 Sep 2017

See all articles by Lawrence A. Gordon

Lawrence A. Gordon

University of Maryland - Department of Accounting & Information Assurance

Martin P. Loeb

University of Maryland - Robert H. Smith School of Business

William Lucyshyn

University of Maryland - Center for Public Policy and Private Enterprise

Lei Zhou

University of Maryland - Robert H. Smith School of Business

Date Written: 2015

Abstract

The primary objective of this article is to develop an economics-based analytical framework for assessing the impact of government incentives/regulations designed to offset the tendency to under-invest in cybersecurity related activities by private sector firms. The analysis provided in the article shows that the potential for government incentives/regulations to increase cybersecurity investments by private sector firms is dependent on the following two fundamental issues:

(i) whether or not firms are utilizing the optimal mix of inputs to cybersecurity, and

(ii) whether or not firms are able, and willing, to increase their investments in cybersecurity activities.

The implications of these findings are also discussed in this article, as well as a formal analysis of these implications. In addition, this article provides a discussion of existing actions by the US federal government that should be more effectively utilized before, or at least in conjunction with, considering new government incentives/regulations for increasing cybersecurity investments by private sector firms.

Keywords: cybersecurity economics; cybersecurity investments; cybersecurity policy and regulations

Suggested Citation

Gordon, Lawrence A. and Loeb, Martin P. and Lucyshyn, William and Zhou, Lei, Increasing Cybersecurity Investments in Private Sector Firms (2015). Journal of Cybersecurity, 2015, Vol. 1, No. 1. Available at SSRN: https://ssrn.com/abstract=3032551

Lawrence A. Gordon

University of Maryland - Department of Accounting & Information Assurance ( email )

Robert H. Smith School of Business
College Park, MD 20742-9157
United States

Martin P. Loeb

University of Maryland - Robert H. Smith School of Business ( email )

Robert H. Smith School of Business
College Park, MD 20742-1815
United States
301-405-2209 (Phone)
301-314-9157 (Fax)

William Lucyshyn (Contact Author)

University of Maryland - Center for Public Policy and Private Enterprise ( email )

College Park, MD 20742-1815
United States
301 405-8257 (Phone)

Lei Zhou

University of Maryland - Robert H. Smith School of Business ( email )

College Park, MD 20742-1815
United States

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