The Impact of Cross‐Border Data Flow Restrictions on Export Product Quality: Exploring Innovation‐Driven and Market Expansion Mechanisms

ABSTRACT This study examines the impact of cross‐border data flow restrictions on export product quality. Using data from Chinese A‐share listed companies from 2007 to 2015, we find that cross‐border data flow restrictions enhance export product quality through two key mechanisms: innovation‐driven effect and market expansion effect. Importantly, we also document a significant extensive margin effect: stricter data flow restrictions increase firms' likelihood of entering new export destinations and raise export volumes in newly added markets. Heterogeneity analyses reveal that this positive impact is more pronounced for firms in technology‐intensive industries, those with a high level of digital transformation, and those trading with countries that have high institutional quality. This study offers new insights into the influence of cross‐border data flow restrictions on firm exports and provides actionable pathways for improving the competitiveness of export firms.