Firm-level Determinants of Cross-border Data Flows: An econometric analysis based on a variable selection technique

Author Name ITO Banri (Research Associate, RIETI) / TOMIURA Eiichi (Faculty Fellow, RIETI)
Creation Date/NO. July 2023 23-E-052
Research Project Empirical analysis of firms amidst globalization, digitization and the COVID-19 pandemic
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As digital trade involving data transfer including cross-border e-commerce is expanding, firms are actively collecting and utilizing data. This study examines the dynamics of corporate activities related to cross-border data flows based on our questionnaire surveys in 2019 and 2021 of Japanese firms regarding their data collecting activities. The firm entry and exit figures related to foreign data collection activities are quite extreme. Firms active in data collection overseas tend to be more productive. We further explore the variables that are strongly associated with the entry into data collection activities by using the least absolute shrinkage and selection operator technique for variable selection (LASSO). In addition to productivity and firm size, we found that foreign direct investment stock, skill development expenses, intangible assets, and service trade intensity are especially useful for explaining the firms’ entry into overseas data collection activities.