![]() In contrast, companies that deployed new combinations of technologies not extensively used before performed much better. What would happen if instead of going with integrated technologies you rely on combinations of technologies from different suppliers that are not usually combined and don’t automate data sharing between each other? In our study, we found that firms that had built their websites for efficiency, electing tightly integrated services from closely linked suppliers, suffered disproportionately when GDPR came into force. Producers such as Google took their time to adapt their components to ensure their own compliance, which generated additional uncertainty. Moreover, the firm would need to ensure that any changes it implemented would not affect its ability to monitor video activity within Google Analytics. Even though WordPress provides support on how to integrate Google Analytics, the firm would need to discover what GDPR meant for its WordPress website collecting data with Google Analytics. The three components are interdependent, so that the firm faced more complex and costly adaptation to GDPR. For example, an EU-based firm that used YouTube and WordPress may have adopted Google Analytics to track its customers’ activity. Unfortunately, tech firms that provide the software often struggle to ensure their own compliance and focus on optimizing their own performance during this transition, possibly at the expense of their users’ performance. But you now have many strong interdependencies, and data sharing agreements with third parties, to consider when working towards compliance. This might make you more efficient in harnessing customer data. When building a digital service like an e-commerce website, you can choose connected components, often from a small group of suppliers, that are commonly used together. To explore this, we conducted a large-scale empirical study of 400 e-commerce firms to understand the implications of the tension between efficiency and flexibility on firm performance in response to GDPR. Can companies achieve competitive advantage by deploying less integrated technologies? ![]() The problem is that these very interdependencies are an obstacle on the path toward compliance. ![]() For example, e-commerce firms may rely on Google Analytics to track their customers’ behavior, and use Mailchimp for email marketing, which integrates easily with Google Analytics to analyze conversion rates of email marketing campaigns.Į-commerce companies have relied heavily on these highly interdependent technologies to make sure their websites ran efficiently. Highly integrated technologies facilitate the exchange and use of customer data. California’s Privacy Rights Act and Virginia’s Consumer Data Protection Act went into effect on January 1, 2023, while the Colorado and Connecticut Privacy Acts will become operative on July 1, 2023.īut as companies adapt their IT infrastructure to deal with new privacy regulations, they are coming up against a tradeoff between flexibility and efficiency. E-commerce companies catering to European customers had to comply with the European General Data Protection Regulation (GDPR) starting in May of 2018. In contrast, companies that deployed new combinations of technologies not extensively used before performed much better.Įurope has led the world in protecting consumers’ privacy. They found that firms that had built their websites for efficiency, electing tightly integrated services from closely linked suppliers, suffered disproportionately when GDPR came into force. Can companies achieve competitive advantage by deploying less integrated technologies? To explore this, the authors of this article conducted a large-scale empirical study of 400 e-commerce firms to understand the implications of the tension between efficiency and flexibility on firm performance in response to GDPR. As companies adapt their IT infrastructure to deal with new privacy regulations, they are coming up against a tradeoff between flexibility and efficiency.
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