Data Rights Confirmation and Digital Firms’ Innovation: Evidence from China

Data elements are profoundly transforming the innovation paradigm. However, ambiguities in data rights have significantly constrained firms’ ability to fully harness this potential. Taking China’s data rights confirmation policy as a quasi-natural experiment, this study employs the Random Forest method to examine the impact of data rights confirmation on the innovation performance of digital firms, using panel data from Chinese A-share listed companies from 2010 to 2022. The findings indicate that data rights confirmation enhances substantive innovation while inhibiting strategic innovation among digital firms. These effects are particularly pronounced in state-owned enterprises, firms located in economically developed regions, and areas with advanced digital inclusive finance, as clarified data rights help mitigate inefficiencies in state-owned enterprises and enable firms in advantaged regions to leverage data and resources more effectively for innovation. Mechanism analysis reveals three primary channels through which data rights confirmation promotes innovation: facilitating inter-firm data sharing, improving information processing capability, and stimulating digital consumption. Furthermore, data rights confirmation strengthens firm’s long-term innovative capability and generates spillover effects to non-digital firms via data circulation and knowledge diffusion. These findings highlight the critical need for establishing robust data rights policies and offer actionable insights for digital firms seeking to foster innovation effectively.