Big data application and firm markups: evidence from China

Area of Science:

• Business Management
• Economics
• Information Systems

Background:

• Firms increasingly adopt big data applications.
• Understanding the impact of big data on firm performance is crucial.

Purpose of the Study:

• To investigate the relationship between big data applications and firms' price markups.
• To analyze the mechanisms driving this relationship.
• To explore heterogeneity in the effects of big data.

Main Methods:

• Development of a heterogeneous firm model with variable markups.
• Empirical analysis using micro-level firm data.
• Mechanism analysis to identify key channels.

Main Results:

• Big data applications significantly enhance firms' price markups.
• Product innovation and production efficiency are key mediating channels.
• The effect of big data varies across organizational, technological, and environmental factors.

Conclusions:

• Big data applications positively influence firms' price markups.
• Complementary resources are essential for realizing the full benefits of big data.
• Findings offer insights into enhancing competitive advantage and market power.