Big Data and Firm Dynamics

16 Pages Posted: 5 Mar 2019

See all articles by Maryam Farboodi

Maryam Farboodi

Massachusetts Institute of Technology (MIT) - Sloan School of Management; National Bureau of Economic Research (NBER)

Roxana Mihet

New York University (NYU), Department of Economics, Students

Thomas Philippon

New York University (NYU) - Department of Finance; National Bureau of Economic Research (NBER)

Laura Veldkamp

Columbia University - Columbia Business School; National Bureau of Economic Research (NBER)

Date Written: January 1, 2019

Abstract

We study a model where firms accumulate data as a valuable intangible asset. Data accumulation affects firms’ dynamics. It increases the skewness of the firm size distribution as large firms generate more data and invest more in active experimentation. On the other hand, small data-savvy firms can overtake more traditional incumbents, provided they can finance their initial money-losing growth. Our model can be used to estimate the market and social value of data.

Keywords: Big Data, Data Feedback Loop, Active Experimentation, Industry Competition

JEL Classification: E21, G11, G14, L1, L15

Suggested Citation

Farboodi, Maryam and Mihet, Roxana and Philippon, Thomas and Veldkamp, Laura, Big Data and Firm Dynamics (January 1, 2019). NYU Stern School of Business, Available at SSRN: https://ssrn.com/abstract=3334064 or http://dx.doi.org/10.2139/ssrn.3334064

Maryam Farboodi

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

100 Main Street
Cambridge, MA 02142
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Roxana Mihet (Contact Author)

New York University (NYU), Department of Economics, Students ( email )

New York, NY
United States

Thomas Philippon

New York University (NYU) - Department of Finance ( email )

Stern School of Business
44 West 4th Street
New York, NY 10012-1126
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Laura Veldkamp

Columbia University - Columbia Business School ( email )

3022 Broadway
New York, NY 10027
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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