In the era of the digital economy, data elements have become an important engine to promote economic growth, but they also hide data security risks while releasing dividends. Data security governance is related to high-quality economic development, and it is difficult to effectively solve digital security problems only by relying on enterprises themselves. It is urgent for the government to strengthen data security regulation. The implementation of the Data Security Law marks that the data security regulation in China has entered the stage of the rule of law. Its core goal is to resolve data security risks and safeguard high-quality economic development. However, the actual regulatory effectiveness of this law, especially its driving effect on enterprise total factor productivity (TFP), has not been clearly studied.

This paper takes Shanghai and Shenzhen A-share listed enterprises as the research object, and uses the DID method to test the impact of the Data Security Law on enterprises TFP. The results show that the Data Security Law significantly improves enterprise TFP, and after a series of robustness tests, this conclusion remains valid. Mechanism testing reveals that the Data Security Law can give full play to the effect of data security governance, and improve enterprise TFP by promoting technological innovation and optimizing human capital structure. Heterogeneity analysis finds that the driving effect of the Data Security Law on enterprise TFP is heterogeneous due to enterprise characteristics and external environment constraints, as is manifested in state-owned enterprises, high-tech enterprises, enterprises with stronger policy perception capabilities, and enterprises facing lower external environment uncertainty. This paper not only helps to deepen the understanding of the impact of data security regulation on micro-enterprise behavior, but also provides a useful reference for the Chinese government to improve the data security policy and regulation system and achieve high-quality development.