Navigating regulatory complexity: the role of IT expenditure in shaping enterprise software transitions for e-commerce firms under GDPR

E-commerce firms must choose between proprietary and open-source software while navigating regulatory mandates such as the General Data Protection Regulation (GDPR). These requirements intensify trade-offs among flexibility, cost efficiency, and compliance assurance. This study integrates transition-cost and organizational-inertia perspectives to examine how the post-GDPR period is associated with enterprise database management system (DBMS) transitions and how internal IT expenditure conditions these associations. Using proprietary annual technology-installation panel data from the Aberdeen Computer Intelligence Technology Database (CITDB) on 8,640 French firms with an e-commerce presence observed from 2011 to 2020, we estimate multi-state Cox proportional hazard models to analyze direction-specific transitions between open-source and proprietary DBMS. The results show that, following GDPR, firms exhibit significantly higher status-quo retention and reduced cross-model switching, consistent with transition-cost and inertia mechanisms. In the baseline specification, firms using open-source systems are significantly less likely to transition to proprietary software, whereas the reverse transition is not statistically affected. IT expenditure moderates these dynamics by conditioning the association between the post-GDPR period and direction-specific switching hazards. Firms with greater IT expenditure are more likely to undertake cross-model transitions despite regulatory pressure, with stronger effects for open-source-to-proprietary transitions. These findings contribute to research on IT adoption under regulation by showing that regulatory shocks primarily reinforce technological inertia while allowing resource-rich firms to selectively overcome switching barriers.