Relating Cyber Security Budget to Organizational Strategy: An Empirical Analysis

Corporate data is highly valuable and firms deploy cyber security infrastructure to protect its valuable infrastructure. Information systems technology (IST) and cyber security infrastructure (CSI) literature is dominated by computer scientists and experts. It is well known that the environment drives the strategy of firm; and strategy of firm in turn drives the organizational structure and systems (including the Information Systems Technology (IST) used and the Cyber Security Infrastructure (CSI) deployed. In literature strategy of firm is related to Internet of Things (IoT) type, RFID and Business Process Engineering. On similar lines, in literature, the dimensions of IST flexibility are related to strategy of the firm. On similar lines we relate cyber security budget (CSB) and cyber security infrastructure (CSI) to strategy of the firm. Literature has identified two basic strategy types, that is, cost leadership or defenders (here firms mass produce to deliver products at least cost) and prospectors (differentiators) (who charge a premium for giving additional features in the product). It has been argued that in cost leaders most important departments are production and finance (marketing is low in importance as customers of the low income group strata of the society are willing to wait for the cheapest product) and hence these firms have internal orientation and are insulated from the market place; whereas in differentiators marketing and R&D are most important departments and here customer related data and data on product designs are to be most confidential, and these are spread out in the market place. Insulated factories do not need high CSB whereas when marketing is important CSB needs to be that much higher. When products are targeting the same customer and have similar features, etc., firms (differentiators) go for plant within a plant (PWP). Hence CSI also tends to get modular and it reduces cost. Due to high obsolescense in the IST/CSI technology compatibility across different generations compatibility is a big issue. Differentiators tend to acquire modern IST and CSI and have compatibility issues and increased cost. If high rapidity is desired of CSI then costs are higher. Hence we give following six hypotheses: H1: highly modular CSI will tend to reduce costs; H2: highly compatible CSI will reduce costs; H3: High rapidity of CSI will increase the costs; H4: High modernity of CSI will tend to increase costs; H5: cost leaders will have less CSB and H6: Differentiators will tend to have higher CSB. Data from 76 firms gave full support to the