How data barriers shape international strategy

Abstract Research Summary Parallel with the growing volume and value of data in business operations, governments increasingly impose restrictions on the use, storage, and transfer of data across borders. In this paper, we examine how these data barriers can influence firms' global strategies. First, we propose a conceptual framework specifying five key dimensions of data barriers: the type of data, the data action they restrict, their source , motivation , and direction . Using an institutional perspective, we discuss how these features can influence the relative attractiveness of host countries, entry decisions, and important contingencies. We propose strategies that firms can pursue to respond to these constraints and develop a research agenda for further work in this area, thereby contributing to the literature on institutional strategy and global digital strategy. Managerial Summary Digitalization has become essential to firms' operations, yet governments increasingly impose restrictions on the unobstructed use, transfer, and storage of data. For firms that operate in different countries, adhering to these regulations requires them to understand the trade‐offs involved in this process. In this paper, we explain what data barriers are and how and when these influence firms' foreign investment choices. In particular, we discuss how and when data barriers may require firms to physically locate in host countries, what the consequences are for firms' global footprint and innovation, and how they can strategically respond to mitigate the effects of data barriers.