Abstract

While many data-driven businesses have seen rapid growth in recent years, their business development might be highly contingent upon data protection regulation. While it is often claimed that stricter regulation penalizes firms, there is only scarce empirical evidence for this. We therefore study how data protection regulation affects startup innovation, exploring this question during the ongoing introduction of the EU General Data Protection Regulation (GDPR). Our results show that the effects of data protection regulation on startup innovation are complex: it simultaneously stimulates and constrains innovation. We identify six distinct firm responses to the effects of the GDPR; three that stimulate innovation, and three that constrain it. We furthermore identify two key stipulations in the GDPR that account for the most important innovation constraints. Implications and potential policy responses are discussed.

Details

Title
How Data Protection Regulation Affects Startup Innovation
Author
Martin, Nicholas 1 ; Christian, Matt 2   VIAFID ORCID Logo  ; Niebel, Crispin 3 ; Blind, Knut 4 

1  Fraunhofer ISI, Karlsruhe, Germany 
2  University of Bern, Institute of Information Systems, Bern, Switzerland 
3  Technische Universität Berlin, Chair of Innovation Economics, Berlin, Germany 
4  Fraunhofer ISI, Karlsruhe, Germany; Technische Universität Berlin, Chair of Innovation Economics, Berlin, Germany 
Pages
1307-1324
Publication year
2019
Publication date
Dec 2019
Publisher
Springer Nature B.V.
ISSN
13873326
e-ISSN
15729419
Source type
Scholarly Journal
Language of publication
English
DOI
https://doi.org/10.1007/s10796-019-09974-2
ProQuest document ID
2324793883
Copyright
Information Systems Frontiers is a copyright of Springer, (2019). All Rights Reserved., © 2019. This work is published under http://creativecommons.org/licenses/by/4.0/ (the “License”). Notwithstanding the ProQuest Terms and Conditions, you may use this content in accordance with the terms of the License.