| Abstract: | Providers of online services are under increasing pressure to leverage the value inherent in customer data to remain competitive. At the same time, however, Internet users' privacy has become more and more subject to public debate, and companies must protect this privacy if they want to attract and retain customers. It seems that companies struggle to satisfy these competing demands, and neglecting either could have detrimental effects on their success. Different streams of research underline the importance of either privacy protection or the collection and use of customer information. But they remain largely silent about the resulting challenges that companies face. In this study, we address this gap by exploring how companies perceive and handle the tensions between their organizational information needs that necessitate some degree of privacy intrusion and their need to attract and retain customers, which requires privacy protection. We develop a grounded theory that explains how companies balance these opposing demands from an organizational perspective. More specifically, we identify four challenging tensions that define the conditions under which companies must operate. We find that companies try to achieve and maintain a state of balance in the presence of these tensions, and we discover three categories of tactics that help companies in their balancing acts. Our research contributes to a provider‐centric perspective on information privacy and uncovers the management of customer information and privacy as a new but important context in which organizational ambidexterity is required. We offer a detailed perspective on the specific challenges that companies face with respect to customer information and privacy, and our results can guide managers who have to deal with these challenges. |
