In the digital era, data has become a pivotal factor of production, and promoting inter-firm data sharing is a key avenue for unlocking data’s latent value and enhancing overall social welfare. However, data security issues—particularly those arising from partner opportunism—severely hinder such sharing. Therefore, it is of great significance to examine how data security issues induced by partner opportunism affect inter-firm data sharing and, on this basis, to propose corresponding countermeasures.

Drawing on the incomplete contract theory, this paper develops a business cooperation model that incorporates data sharing to analyze the impact of data security issues on inter-firm data sharing. In the theoretical framework, the non-rivalry nature of data and its low-cost replicability expose the data-sharing party to a “data hold-up” risk once the data is shared with a partner. This risk alters the sharer’s outside options and compels it to cede a portion of surplus to the partner. Theoretical analysis yields the following main conclusions: (1) Data sharing reduces final product pricing and improves output levels, thereby maximizing the joint profits for both parties in data sharing. (2) “Data hold-up” arising from data security issues dampens firms’ incentives to share data, impedes inter-firm data sharing, and consequently reduces the equilibrium volume of shared data. (3) Even in the presence of “data hold-up”, firms will still opt to share data when final products exhibit lower dependence on data, market competition is relatively intense, and specialization advantages are sufficiently strong.

To address the data-sharing dilemma, this paper proposes three feasible solutions: (1) mitigating contractual incompleteness through appropriate digital security technologies; (2) constraining partner opportunism via relational contracts; and (3) increasing the partner’s default costs by structuring complex trading networks. These approaches offer complementary theoretical rationales for promoting inter-firm data sharing.

This paper makes the following contributions: First, it examines impediments to inter-firm data sharing from the novel perspective of data security. Second, it elucidates the mechanisms of data security from the angles of contract design and enforcement, thereby providing a micro-foundation for understanding how data security shapes micro-level behavior. Third, it extends the application frontier of the incomplete contract theory to the domains of data security and data sharing, deepening the explanatory power of this theory in the digital era. The findings offer meaningful insights for advancing data circulation, improving data trading mechanisms, and achieving high-quality development of the digital economy.