Organizational Barriers to Transforming Large Finance Corporations: Cloud Adoption and the Importance of Technological Architecture

Sam Ruiqing Cao and Marco Iansiti

No 10142, CESifo Working Paper Series from CESifo

Abstract: This paper studies the impact of technological architecture around data storage and processing on the performance of large financial corporations after being exposed to more stringent data privacy regulations. A modular approach to cloud adoption – which reflects in the lack of data interoperability and reliance on microservices architecture – significantly constrains corporations’ ability to adapt after the GDPR became enforceable. We hypothesize that a modular approach to cloud adoption leads to uncontrolled scaling and data silos that hinder coordination and regulatory compliance. Using a difference-in-differences regression design, we find that establishment revenues lower by 30% among corporations substantially exposed to GDPR. Other corporations do not experience similar losses. We also find evidence consistent with theory using two alternative measures based on cloud vendor configurations.

Keywords: technological architecture; cloud computing; ecosystem; GDPR; organisation design (search for similar items in EconPapers)
Date: 2022
New Economics Papers: this item is included in nep-pay
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_10142

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