Digital Adoption and Cyber Security: An Analysis of Canadian Businesses
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arXiv
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| Main Authors: | , , |
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| Format: | Preprint |
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2025
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| _version_ | 1866910164195475456 |
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| author | Jasiak, Joann MacKenzie, Peter Tuvaandorj, Purevdorj |
| author_facet | Jasiak, Joann MacKenzie, Peter Tuvaandorj, Purevdorj |
| contents | This paper examines how Canadian firms balance the benefits of technology adoption against the rising risk of cyber security breaches. We merge data from the 2021 Canadian Survey of Digital Technology and Internet Use and the 2021 Canadian Survey of Cyber Security and Cybercrime to investigate the trade-off firms face when pursuing digitalization to enhance productivity and efficiency, balanced against the potential increase in cyber security risk. The analysis explores the extent of digital technology adoption, differences across industries, the subsequent associations with efficiency, and associated cyber security vulnerabilities. We build aggregate variables, such as the Business Digital Usage Score and a cyber security incidence variable to quantify each firm's digital engagement and cyber security risk. A survey-weight-adjusted Lasso estimator is employed, and a debiasing method for high-dimensional logit models is introduced to identify the predictors of technological efficiency and cyber risk. The analysis reveals a digital divide linked to firm size, industry, and workforce composition. While rapid expansion of tools such as cloud services or artificial intelligence can raise efficiency, it simultaneously heightens exposure to cyber threats, particularly among larger enterprises. |
| format | Preprint |
| id |
arxiv_https___arxiv_org_abs_2504_12413 |
| institution | arXiv |
| publishDate | 2025 |
| record_format | arxiv |
| spellingShingle | Digital Adoption and Cyber Security: An Analysis of Canadian Businesses Jasiak, Joann MacKenzie, Peter Tuvaandorj, Purevdorj General Economics Economics This paper examines how Canadian firms balance the benefits of technology adoption against the rising risk of cyber security breaches. We merge data from the 2021 Canadian Survey of Digital Technology and Internet Use and the 2021 Canadian Survey of Cyber Security and Cybercrime to investigate the trade-off firms face when pursuing digitalization to enhance productivity and efficiency, balanced against the potential increase in cyber security risk. The analysis explores the extent of digital technology adoption, differences across industries, the subsequent associations with efficiency, and associated cyber security vulnerabilities. We build aggregate variables, such as the Business Digital Usage Score and a cyber security incidence variable to quantify each firm's digital engagement and cyber security risk. A survey-weight-adjusted Lasso estimator is employed, and a debiasing method for high-dimensional logit models is introduced to identify the predictors of technological efficiency and cyber risk. The analysis reveals a digital divide linked to firm size, industry, and workforce composition. While rapid expansion of tools such as cloud services or artificial intelligence can raise efficiency, it simultaneously heightens exposure to cyber threats, particularly among larger enterprises. |
| title | Digital Adoption and Cyber Security: An Analysis of Canadian Businesses |
| topic | General Economics Economics |
| url | https://arxiv.org/abs/2504.12413 |