Human Capital Acquisition in Response to Data Breaches

55 Pages Posted: 18 Mar 2021 Last revised: 30 Mar 2024

See all articles by Sarah Bana

Sarah Bana

Stanford University; Chapman University - The George L. Argyros College of Business and Economics

Erik Brynjolfsson

National Bureau of Economic Research (NBER); Stanford

Wang Jin

Stanford Digital Economy Lab

Sebastian Steffen

Boston College - Carroll School of Management; Stanford Digital Economy Lab (S-DEL); Massachusetts Institute of Technology (MIT) - Initiative on the Digital Economy; MIT Sloan School of Management

Xiupeng Wang

Northeastern University - D’Amore-McKim School of Business; Stanford Digital Economy Lab; Boston University

Date Written: June 30, 2023

Abstract

As data security threats become more frequent and costly, it is increasingly important to understand how firms strategically acquire human capital in response to data breaches. We analyze such threats by combining unique information on data breach events with detailed firm-level job posting data and show that breached firms significantly increase their demand for cybersecurity workers in the quarters following a breach. To differentiate the varied cybersecurity roles that firms seek, we use the widely-used Cybersecurity Workforce Framework of the National Initiative for Cybersecurity Education (NICE) and find that firms predominantly hire for managing and developing cybersecurity strategy, and for identifying, analyzing, and mitigating threats to IT systems. We further observe that firms respond to breaches by hiring not only cybersecurity workers but also public relations workers, with the latter occurring more quickly, suggesting that firms rely on these workers to manage trust and external communications. To improve the interpretation of a causal relationship between data breaches and increased investment in cybersecurity-related human capital, we conduct tests of parallel trend and falsification tests using non-cyber data breaches, propensity score matching, and staggered Difference-in-Difference methods for multiple treatment timing and heterogeneous treatment effects. Overall, we demonstrate the important role of human capital investments in firms’ post-breach incident responses.

Keywords: Cybersecurity, Data Breaches, Human Capital Acquisition, Value of Data and Privacy, Incident Response

JEL Classification: D83, L86, K24, J24

Suggested Citation

Bana, Sarah and Brynjolfsson, Erik and Jin, Wang and Steffen, Sebastian and Wang, Xiupeng, Human Capital Acquisition in Response to Data Breaches (June 30, 2023). Available at SSRN: https://ssrn.com/abstract=3806060 or http://dx.doi.org/10.2139/ssrn.3806060

Sarah Bana

Stanford University ( email )

Stanford, CA 94305
United States

Chapman University - The George L. Argyros College of Business and Economics ( email )

1 University Drive
Orange, CA 92866
United States

Erik Brynjolfsson

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Stanford ( email )

366 Galvez St
Stanford, CA 94305
United States

HOME PAGE: http://brynjolfsson.com

Wang Jin

Stanford Digital Economy Lab ( email )

Stanford, CA 94305
United States

Sebastian Steffen

Boston College - Carroll School of Management ( email )

140 Commonwealth Avenue
Chestnut Hill, MA 02467
United States

HOME PAGE: http://www.bc.edu/bc-web/schools/carroll-school/faculty-research/faculty-directory/sebastian-steffe

Stanford Digital Economy Lab (S-DEL) ( email )

210 Panama St.
Cordura Hall
Stanford, CA 94305
United States

Massachusetts Institute of Technology (MIT) - Initiative on the Digital Economy ( email )

245 First Street
Cambridge, MA 02142
United States

MIT Sloan School of Management ( email )

100 Main Street
Cambridge, MA 02142
United States

HOME PAGE: http://sebastiansteffen.com/

Xiupeng Wang (Contact Author)

Northeastern University - D’Amore-McKim School of Business ( email )

360 Huntington Ave.
Boston, MA 02115
United States

Stanford Digital Economy Lab ( email )

Stanford, CA 94305
United States

Boston University ( email )

595 Commonwealth Avenue
Boston, MA 02215
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
1,012
Abstract Views
3,645
Rank
42,549
PlumX Metrics