The next Entrepreneurship and Innovation Policy Research virtual seminar is Thursday, April 18, from 11:00-12:00 ET. Deepak Somaya (University of Illinois) - will present "Data Privacy, Scaling, and Firm Scope: Evidence from the GDPR" (with J. You). Annabelle Gawer (University of Surrey) will discuss. Click the link HERE to register for the 4/18 seminar (abstract is below). We hope you join us!
Please visit this LINK to view and register for other Spring 2024 seminars.
- Tim Folta (UCONN), Maryann Feldman (ASU), and Supradeep Dutta (Rutgers U)
Abstract: The collection and use of personal data has become a key driver of the modern digital economy, and simultaneously data privacy has emerged as a critical strategic and public policy issue. Although prior research has examined many immediate impacts of data privacy protections on firms, the consequences of such protections on the ability of firms to scale has remained unexplored. The impacts of data privacy on scaling is vital for digital firms because it not only affects their core economic model, but may also have follow on strategic implications for important corporate strategies like diversification. To address these questions the current paper exploits the enactment of the GDPR in Europe and examines the effects of privacy protections on the scaling of digital firms, and in turn on firm scope. Differences-in-differences estimates indicate large decreases in scaling associated with stronger privacy protections, and similarly large follow-on impacts on firm scope. These findings have significant implications for the research literatures on data privacy, firm scaling, and firm diversification.