Should firms invest more in cybersecurity?

Milena Dinkova, Ramy El-Dardiry and Bastiaan Overvest ()
Additional contact information
Milena Dinkova: CPB Netherlands Bureau for Economic Policy Analysis
Ramy El-Dardiry: CPB Netherlands Bureau for Economic Policy Analysis
Bastiaan Overvest: CPB Netherlands Bureau for Economic Policy Analysis

Small Business Economics, 2024, vol. 63, issue 1, No 2, 50 pages

Abstract: Abstract We combine unique survey data on IT use and administrative tax record data on Dutch firms to understand how cybersecurity investments relate to the probability of cyber incidents and firm profitability. This dataset allows us to control for firm size, industry, and IT organization. We construct a new indicator to measure the degree of cyber maturity of firms and find that this maturity level tends to increase with firm size. Regression analyses suggest that the relation between maturity level and probability of a cyber incident is inverted U-shaped: a higher maturity level is initially associated with a higher incident probability, but the highest maturity level is associated with fewer reported incidents. This finding is consistent with the hypothesis that basic cybersecurity measures enable better detection of incidents and more sophisticated measures help to prevent incidents. We do not find, however, evidence for a positive relation between cybersecurity measures and profits.

Keywords: Cybersecurity; Risks; IT; SMEs; Investment (search for similar items in EconPapers)
JEL-codes: D22 L25 M15 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s11187-023-00803-0 Abstract (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:sbusec:v:63:y:2024:i:1:d:10.1007_s11187-023-00803-0

Ordering information: This journal article can be ordered from
http://www.springer. ... 29/journal/11187/PS2

DOI: 10.1007/s11187-023-00803-0

Access Statistics for this article

Small Business Economics is currently edited by Zoltan J. Acs and David B. Audretsch

More articles in Small Business Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().