Government data accessibility and firm dynamics: Encouraging entrepreneurship or accelerating exit?

Data monopolies erode a firm’s competitive vitality and threaten the sustainable growth of developing economies. Open government data (OGD) provides a crucial supplementary channel for firms to fairly access data resources. However, past work knows little about how OGD reshapes firm dynamics (firm entry and firm exit). To investigate this, we employ a difference-in-differences model on a comprehensive dataset of high-precision firm registry and OGD launch data. This method leverages the staggered adoption of OGD platforms across Chinese cities, allowing us to isolate the causal effect on firm dynamics. Our findings evidence that while OGD accelerates firm entry, it also triggers risks of firm exit and declining survival rates. Improving the public data support level, especially the quantity and scope of datasets, will effectively mitigate the adverse effects. In terms of data utilization, we emphasize that insufficient algorithmic reserve capacity will accelerate firm exit, while, conversely, entrepreneurship benefits from high reserves in algorithms and computing power. Moreover, we evidence that OGD’s impact on firm dynamics is related to firm scale, industry, and operational models. Grounded in dynamic capability theory, we reveal that digital talent reserves, productivity, and information friction costs are the underlying mechanisms of OGD’s impact on firm dynamics. Nevertheless, we demonstrate that OGD has promoted the allocation of digital talent in non-digital sectors, increased average wages, but at the cost of greater labor displacement. Our findings provide new insights for emerging economies to enhance market competitive vitality through developing public data, while also highlighting the risks of OGD in accelerating the exit of vulnerable firms and unemployment.