Publications
Publications
- 2023
- HBS Working Paper Series
Data Governance, Interoperability and Standardization: Organizational Adaptation to Privacy Regulation
By: Sam (Ruiqing) Cao and Marco Iansiti
Abstract
The increasing availability of data can afford dynamic competitive advantages among data-intensive
corporations, but governance bottlenecks hinder data-driven value creation and increase regulatory risks.
We analyze the role of two technological features of data architecture that facilitate internal data governance
– Application Programmatic Interfaces (APIs) that publish interdepartmental data and standardization of
identity and access management (IAM) software – in shaping large data-intensive corporations’ adaptation
to privacy regulation. Using annual establishment data for the largest U.S. financial services corporations
and the enforcement of the General Data Protection Regulation (GDPR) in 2018 as a natural experiment,
we show that internal data APIs and standardization of IAM software significantly mitigate establishments’
revenue loss and IT budget reduction in response to GDPR enforcement. Compliance costs measured by IT
hiring increased substantially after GDPR enforcement only for firms without internal data APIs. Our
findings highlight the importance of interoperability and standardization as technical conditions that
facilitate dynamic integrative capability, allowing large data-intensive corporations to ensure proper data
governance and adapt to privacy regulation.
Keywords
Organizations; Information Technology; Performance Productivity; Growth and Development; Transformation
Citation
Cao, Sam (Ruiqing), and Marco Iansiti. "Data Governance, Interoperability and Standardization: Organizational Adaptation to Privacy Regulation." Harvard Business School Working Paper, No. 21-122, May 2021. (Revised November 2023.)