How to Optimize Your Company’s Approach to Data Privacy

The author found that the relationship between data privacy performance and firm’s market valuation is more complicated than the conventional wisdom of “the more the better” suggests. Instead, the relationship takes the form of an inverted U-shape; the higher firms perform on data privacy, the more they are valued by financial markets, but only up to an optimal turning point, above which improving performance actually hurts firms’ market valuation. How do you know if your company is in this optimal zone? The authors suggest looking at competitors and making sure you’re not an outlier on how much data privacy your offer your customers. The sweet spot, they say, is with the crowd.