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The Short-Run Effects of the General Data Protection Regulation on Technology Venture Investment

Author

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  • Jian Jia

    (Stuart School of Business, Illinois Institute of Technology, Chicago, Illinois 60661)

  • Ginger Zhe Jin

    (Department of Economics, University of Maryland, College Park, Maryland 20742; National Bureau of Economic Research, Cambridge, Massachusetts 02138)

  • Liad Wagman

    (Stuart School of Business, Illinois Institute of Technology, Chicago, Illinois 60661)

Abstract

The General Data Protection Regulation (GDPR) was enacted in the European Union in April 2016 and went into effect in May 2018. We study its impact on investment in new and emerging technology firms. Our findings indicate negative post-GDPR effects after its 2018 rollout on European ventures relative to their counterparts in the United States and the rest of the world, and considerably lesser effects after its 2016 enactment and before implementation. The negative effects manifest in the number of and amounts raised in financing deals, and are particularly pronounced for newer, data-related, and business-to-consumer ventures.

Suggested Citation

  • Jian Jia & Ginger Zhe Jin & Liad Wagman, 2021. "The Short-Run Effects of the General Data Protection Regulation on Technology Venture Investment," Marketing Science, INFORMS, vol. 40(4), pages 661-684, July.
    • Handle: RePEc:inm:ormksc:v:40:y:2021:i:4:p:661-684
    DOI: 10.1287/mksc.2020.1271
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    References listed on IDEAS

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    Cited by:

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    2. Han Bu & Zhou Xun & Sha Cai, 2024. "Big data and inter-firm wage disparities: theory and evidence from China," Economic Change and Restructuring, Springer, vol. 57(4), pages 1-36, August.
    3. Mert Demirer & Diego Jimenez-Hernandez & Dean Li & Sida Peng, 2024. "Data, Privacy Laws and Firm Production: Evidence from the GDPR," Working Paper Series WP 2024-02, Federal Reserve Bank of Chicago.
    4. Wang, Fangjun & Wang, Hao & Li, Jiyuan, 2024. "The effect of cybersecurity legislation on firm cost behavior: Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 86(C).
    5. Pehr-Johan Norbäck & Lars Persson, 2024. "Why generative AI can make creative destruction more creative but less destructive," Small Business Economics, Springer, vol. 63(1), pages 349-377, June.
    6. Carl Benedikt Frey & Giorgio Presidente, 2024. "Privacy regulation and firm performance: Estimating the GDPR effect globally," Economic Inquiry, Western Economic Association International, vol. 62(3), pages 1074-1089, July.
    7. Nishant Chadha & Viswanath Pingali & Daniel Sokol, 2023. "Small Businesses and Digital Platforms," IIMA Working Papers WP 2023-09-01, Indian Institute of Management Ahmedabad, Research and Publication Department.

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