Can data assets spur corporate R&D investment?

ABSTRACTThis article investigates the impact of data assets on corporate innovation using a sample of Chinese A-share listed firms from 2007 to 2019. We find that data assets significantly increase firms’ research and development (R&D) expenditure. Moreover, this positive impact is stronger for firms with more complex information or facing greater competitive pressures. This pattern of evidence suggests that the data assets can improve firms’ abilities to integrate valuable information and increase their competitiveness, leading to more intensive innovation inputs. Further analysis shows the use of data assets also improves innovation outputs regarding patent applications and grants, especially high-quality innovations.KEYWORDS: Data assetsR&D expenditurecorporate innovationcompetitive pressuresinformation integrationJEL CLASSIFICATION: G30O31O32 AcknowledgementsAll the authors contribute equally.Disclosure statementNo potential conflict of interest was reported by the author(s).Notes1 Deloitte points out that data has become a critical strategic asset. Data is not merely a record of firms’ historical operating performance, but should be managed and leveraged systematically as a core facet of business operations.2 Detailed information on the variable construction of data assets is provided in Appendix A.3 Results hold for another measure of data assets, which equals one for the period after firms first mentioned data assets in the MD&A and equals zero otherwise.4 Results hold when using the Heckman treatment effect model.Additional informationFundingThis work was supported by the National Natural Science Foundation of China [72202035, 72302048]; the Innovation Engineering Laboratory of the International Business School of the University of International Business and Economics [102/78220301]; “the Fundamental Research Funds for the Central Universities” in UIBE [CXTD13-03].