Creating official markets to trade company data actually makes businesses come up with worse ideas.
March 26, 2026
Original Paper
Data Element Marketization and the Quantity–Quality Divergence in Cross-boundary Digital Innovation: Evidence from China’s Data Trading Platforms among Traditional Firms
SSRN · 6469721
The Takeaway
While policy makers assume that 'marketizing' data will spark a digital revolution, this study of Chinese firms found that the establishment of data trading platforms led to a surge in low-quality, 'flashy' patents. Managers essentially engaged in innovation theater, chasing short-term metrics to impress investors rather than performing the deep research the data was supposed to enable.
From the abstract
As data increasingly become a strategic production factor in corporate researching and operating, data element marketization (DEM) has emerged as an important institutional reform influencing corporate technology innovation behaviors. Traditional firms, in particular, face growing pressure to engage in cross-boundary digital innovation (CDI) in response to rapid technological change and increasingly blurred industry boundaries. However, limited attention has been paid to how data element marketi