Data-Driven Business Innovation Processes: Evidence from Authorized Data Flows in China

Abstract

The importance of data in current societal activities cannot be overstated, yet we know little about data governance and application. Using the Chinese Government Data Empowerment Initiative, this paper examines the process of data-driven business innovation. Using the staggered DiD model, we found that government data points effectively facilitate firms’ product innovation, with higher-quality data correlating with better innovation performance. Government-authorized data points aid firms in accumulating experience in applying and managing data, thereby enhancing their production performance. Furthermore, these data help firms improve the quality of their product innovations and achieve iterative product upgrades. We also found that government-authorized data points not only generate product innovations for government use but also stimulate the output of commercial product innovations. This research provides important insights into data governance and enterprise data management decisions.