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Unblackboxing the effects of privacy regulation on startup innovation

: Martin, Nicholas; Matt, Christian

Association for Information Systems -AIS-:
39th International Conference on Information Systems, ICIS 2018. Proceedings. Online resource : December 13-16, 2018, San Francisco, USA
AIS Electronic Library (AISeL), 2018
ISBN: 978-0-9966831-7-3
Paper 11
International Conference on Information Systems (ICIS) <39, 2018, San Francisco/Calif.>
Fraunhofer ISI ()
compliance innovation; Data Protection and Privacy Regulation; Innovation; regulation-exploiting innovation; Startup

Data-centric businesses have seen rapid growth in recent years, but their development is partly shaped by data protection and privacy regulation (DPPR). While it is often claimed that stricter regulation penalizes firms, there is scarce empirical evidence for this. Drawing on models from innovation economics and taking the example of startup innovation, we use a set of expert interviews to obtain first empirical evidence as a basis for our research. Our emerging results indicate that while DPPR has some negative effects on innovation, these are modest overall, partly because of lax enforcement. Moreover, there is evidence for systematic sectoral variation, with DPPR mildly hindering innovation in certain B2C and B2B markets, but spurring innovation in others. After completion, our work will provide a framework for firms and policy makers to assess the effects of DPPR on innovation.