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A R T I C LE I N FO A B S T R A C T
Keywords: A central question for information systems (IS) researchers and practitioners is if, and how, big data can help
Big data analytics attain a competitive advantage. To address this question, this study draws on the resource-based view, dynamic
Dynamic capabilities capabilities view, and on recent literature on big data analytics, and examines the indirect relationship between
Operational capabilities a firm’s big data analytics capability (BDAC) and competitive performance. The study extends existing research
Business value
by proposing that BDACs enable firms to generate insight that can help strengthen their dynamic capabilities,
Resource-based view
which, in turn, positively impact marketing and technological capabilities. To test our proposed research model,
we used survey data from 202 chief information officers and IT managers working in Norwegian firms. By means
of partial least squares structural equation modeling, results show that a strong BDAC can help firms build a
competitive advantage. This effect is not direct but fully mediated by dynamic capabilities, which exerts a
positive and significant effect on two types of operational capabilities: marketing and technological capabilities.
The findings suggest that IS researchers should look beyond direct effects of big data investments and shift their
attention on how a BDAC can be leveraged to enable and support organizational capabilities.
⁎
Corresponding author.
E-mail address: [email protected] (P. Mikalef).
https://doi.org/10.1016/j.im.2019.05.004
Received 8 February 2018; Received in revised form 20 May 2019; Accepted 22 May 2019
0378-7206/ © 2019 The Authors. Published by Elsevier B.V. This is an open access article under the CC BY-NC-ND license
(http://creativecommons.org/licenses/BY-NC-ND/4.0/).
Please cite this article as: Patrick Mikalef, et al., Information & Management, https://doi.org/10.1016/j.im.2019.05.004
P. Mikalef, et al. Information & Management xxx (xxxx) xxx–xxx
claim that such investments can be a source of competitive performance collection procedures and measures for each used concept. Next, we
gains requires a deeper analysis. Günther et al. [13] survey literature in present the results of our empirical analysis, followed by a discussion on
the field and identify six areas surrounding big data and competitive the theoretical and practical implication of findings, as well as some
performance. The authors argue that there is a need for more empirical core limitations.
research explicating the mechanisms through which big data analytics
effects are diffused and competitive performance gains are realized. 2. Theoretical background
Similar issues are noted in the trade press, where Marr [15], for in-
stance, highlights that there is still a sizeable number of companies that 2.1. Big data analytics capabilities
fail to outperform their competition from big data investments. A recent
survey of Fortune 1000 companies showed that in spite of investment Past literature has shown that when assessing the business value of
enthusiasm in big data, results vary significantly in terms of success information systems (IS) investments, it is important to take a broader
[16]. These findings from research and practice highlight that the view and capture all the underlying factors that enable effective and
challenge for most companies in realizing performance gains from their efficient use of IT as a differentiator of firm success [23]. The notion of
big data investments is not related to technology. The biggest impedi- IT capability has been widely used when attempting to measure busi-
ments are of an organizational nature and include leveraging big data ness value of investments, and is defined as the “firm's ability to mobilize
analytics to support and shape strategy [17]. and deploy IT-based resources in combination or co-present with other re-
To address these critical gaps in the literature, we ground our study sources and capabilities” [23]. Studies on IT capability typically base
on the notion of big data analytics capability (BDAC), which is defined their theoretical assumptions and operationalization’s on the RBV of the
as the ability of a firm to effectively deploy technology and talent to firm [24,25]. Specifically, the RBV argues that a competitive advantage
capture, store, and analyze data, toward the generation of insight [5]. emerges from unique combinations of resources that are economically
Following the emerging body of research on BDACs [5,6,8,18], this valuable, scarce, and difficult to imitate [26]. These resources are
study argues that big data are a necessary resource but not sufficient heterogeneously distributed across firms, and their innate traits – such
condition to drive competitive performance gains. To orchestrate and as path dependency, embeddedness, and causal ambiguity – enable
leverage big data toward improved competitive performance, firms’ them to deliver a competitive advantage [26]. Similarly, the main as-
need to acquire and develop a unique mixture of technological, human, sumption in the concept of IT capability is that while resources can be
financial, and intangible resources, which will be difficult for compe- easily replicated, distinctive firm-specific capabilities cannot be readily
titors to imitate. While several studies have begun to adopt such a assembled through markets, and can, thus, constitute a source of a
holistic perspective of big data [5,6,19], there is still limited under- sustained competitive advantage [27]. The IT capability literature re-
standing concerning the mechanisms through which a BDAC can result cognizes that the ability to mobilize and deploy IT-based resources can
in competitive performance gains. Recent studies argue that effects of be a source of a competitive advantage and differentiate firms for
BDACs on competitive performance are indirect and are mediated by competition [28].
changes in firm’s organizational capabilities [8,13,20]. In this stream of The literature has defined big data analytics as “a new generation of
work, the dynamic capabilities view has been posited as a relevant technologies and architectures, designed to economically extract value
theoretical perspective to explain effects of BDACs, as structured from very large volumes of a wide variety of data, by enabling high
adoption is seen as an enabler of the underlying processes that comprise velocity capture, discovery and/or analysis” [8]. Nevertheless, this
a firm’s overall dynamic capability and can subsequently facilitate definition does not include the organizational resources that are re-
better evolutionary fitness by renewing operational capabilities and quired to leverage such technologies and data, and to ultimately realize
resulting in competitive performance gains [10,21,22]. To derive any competitive performance gains. As the objective of this study is to
meaningful theoretical and practical implications, as well as to identify identify resources that will enable firms to develop BDACs, the choice
important areas of future research, it is critical to understand if the core of the RBV as the underlying theoretical framework is deemed as sui-
artifacts pertinent to big data analytics lead to competitive performance table. Consequently, building on the RBV and on prior studies on big
gains and through what mechanisms these effects are achieved [2]. data analytics, we define the notion of BDAC as the ability of a firm to
Consequently, this study seeks to answer two closely related re- effectively deploy technology and talent to capture, store and analyze
search questions: data, toward the generation of insight. Consistent with prior studies
that utilize the categorization of Grant [29] concerning the types of
(1) Does a BDAC result in competitive performance gains? resources that are necessary to develop an IT capability [30–32], we
adopt the same approach in relation to building a BDAC. Grant [29]
and distinguishes resources into tangible (e.g., physical and financial re-
sources), human skills (e.g., employee’s skills and knowledge), and in-
(2) Through what mechanism of mediating organizational capabilities are tangible (e.g., organizational culture and organizational learning).
competitive performance gains attained? Building on the previously mentioned classification, prior studies
have emphasized on specific aspects of big data analytics that are cri-
To answer these questions, we build theoretically on the resource- tical for firms. When it comes to tangible resources, data, technology,
based view (RBV) and dynamic capabilities view of the firms that are and other basic resources are noted as being fundamental to big data
presented in the next section. Further, we define the notion of a BDAC success. The defining characteristics of big data include volume,
and illustrate how it is conceptually developed. Next, we provide an variety, and velocity [33]. Nevertheless, it is frequently mentioned that
argument on how a firm’s BDAC and the resulting insight result in IT strategists and data analysts are particularly concerned with the
competitive performance gains. We hypothesize that a strong BDAC has quality and availability of the data they analyze [34]. While data itself
the potential to impact two distinct types of operational capabilities: is a core resource, it is also important for firms to possess an infra-
marketing and technological capabilities. We theorize that the effect is structure capable of storing, sharing, and analyzing data. Big data call
indirect and is mediated through a firm’s dynamic capabilities, which for novel technologies that are capable of handling large amounts of
help sustain evolutionary fitness, by translating insight from a BDAC to diverse and fast-moving data [5]. One of the main characteristics of
renewed operational capabilities that best fit market needs. In se- such data is that it is in an unstructured format and requires sophisti-
quence, these renewed operational capabilities are the source of a cated infrastructure investments to result in meaningful and valuable
competitive advantage. To examine these associations, we develop a information [35]. Basic resources such as financial support are neces-
survey-based study and in the subsequent sections describe the data sary, especially because big data investments are noted as taking some
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time to result in measurable business value [36]. Concerning human reports that big data analytics have the potential to decrease customer
skills, literature recognizes that both technical- and managerial-or- acquisition costs by 47% and enhance revenues by approximately 8%. A
iented skills are required to derive value from big data investments report by MIT Sloan Management Review shows that companies that
[6,37]. In a highly influential article, Davenport and Patil [38] address are leaders in the adoption of big data analytics are much more likely to
the important role that the emerging job of the data scientist will have produce new products and services compared to those that are laggards
in the context of big data. While one of the most critical aspects of data [49]. Nevertheless, the value that firms realize from big data invest-
science is the ability of data-analytic thinking, such competences are ments is highly contingent upon the idiosyncratic capabilities that they
not only important for the data scientist but also throughout the or- develop in deriving meaningful insight [42]. Adopting a socio-materi-
ganization, particularly, for employees in managerial positions [39]. alistic perspective in conceptualizing a firms BDACs, Wamba et al. [6]
Finally, concerning intangible resources, a data-driven culture and or- find a positive impact on firm performance. Yet, the main premise that
ganizational learning are noted as being critical aspects of effective all of the aforementioned studies build on is that the generation of in-
deployment of big data initiatives [17,40]. In firms engaging in big data sight is insufficient to provide any competitive performance gains
projects, a data-driven culture has been noted as being a key factor in without the necessary transformation of organizational capabilities
determining their overall success and continuation [41]. Nevertheless, [10]. Thus, it is important to examine the effect of a firms’ BDAC on
due to the constantly evolving technological landscape associated with different types of organizational capabilities and how they, as med-
such technologies, it is important that a logic of continuous learning is iating conditions, influence competitive performance [8,13,17].
infused in organizations that invest in big data [17].
While big data-related technologies will continue to be a central 2.3. Organizational capabilities
part of discussions, it is important for firms to focus on other resources
that are needed to develop an inimitable BDA capability. For instance, The competitive benefits that a firm currently has managed to ob-
Janssen et al. [42] argue that the quality of decisions made based on big tain are a result of strengths built in reaction to environmental re-
data-generated insight depends largely on the quality of the inputs and sponsiveness strategies. These strengths can be explained in terms of
on the quality of the process that transforms the inputs into outputs. organizational capabilities, i.e., processes that facilitate the most effi-
The authors conclude that the quality of decision-making based on big cient, effective, and competitive use of a firms’ assets whether tangible
data is heavily dependent on a firm’s overall BDA capability, which or intangible [50]. In this perspective, capabilities represent the po-
includes the capacities and knowledge of persons involved, collabora- tential of a business to achieve certain objectives by means of focused
tion and knowledge exchange processes, the availability of infra- deployment and represent the building blocks on which firms compete
structure and data, as well as well-established collecting and processing in the market. Designing and constructing desired organizational cap-
methods. McAfee et al. [1] stress the importance of fostering a data- abilities is a procedure that unfolds over time and reflects choices made
driven decision-making culture, where managers base their actions on in support to a firm’s long-term competitive strategy. Organizational
insight rather than instinct. Vidgen et al. [17] argue that becoming capabilities emerge through the strategic application and complex in-
data-driven is not merely a technical issue but requires that firms or- teractions of resources that a firm owns or is capable of controlling, and
ganize their business analytics departments and align their analytics the most effective means of orchestrating and deploying them [51].
capability with their business strategy. As such, the notion of BDA Following the definition of Winter [52], a capability can be described as
capability extends the view of big data to include all related organi- a high-level routine (or a collection of routines), with routines com-
zational resources that are important in leveraging big data to their full prising of purposefully learned behaviors, highly patterned, repetitious
strategic potential. or quasi-repetitious, founded in part in tacit knowledge. Past research
in the domain of strategic management has made great strides to de-
2.2. Big data and competitive performance velop and refine different types of organizational capabilities. The
consensus is that capabilities operate quite differently and result in
While empirical studies centered on the competitive performance varying levels of competitive advantage and firm performance based on
gains of developing a BDAC are rather scarce, some research has de- a number of internal and external factors [53]. Based on the idea that
monstrated a positive overall association [5,18,21]. In the broader firms must be both stable enough to continue to deliver value in their
domain of IT-business value research and the emerging IT-enabled or- own distinctive way and agile and adaptive enough to restructure their
ganizational capabilities perspective, there is a growing consensus that value proposition when circumstances demand it, there is a well-
IT enables firms to attain a state of competitive advantage by documented distinction between operational (ordinary) and dynamic
strengthening intermediate organizational capabilities [43,44]. The capabilities.
main premise of this view is that IT capabilities, and as an extension In incomplete markets, heterogeneity among firm capabilities can
BDAC, are central as they develop complementary effects with inter- serve as the basis for developing competitive advantages and rent dif-
mediate organizational capabilities that ultimately lead to competitive ferentials [54]. Operational capabilities are defined as those capabilities
advantage. While these are just some of the early studies that suggest a through which a firm makes its living in the short term [52]. Two key
positive impact of BDACs, more research is required to understand the operational capabilities are marketing (i.e., capabilities needed for
mechanisms through which data-based insight is transformed into ac- addressing customer needs) and technological capabilities (i.e., cap-
tion [45]. The main argument that is put forward in existing research is abilities needed for producing products or services). Nevertheless,
that big data analytics can allow firms to make sense of vast amounts of conditions of high environmental uncertainty, market volatility, and
data and reconfigure their strategies based on trends that are observed frequent change have raised questions regarding the rate to which
in their competitive environment [46]. The importance of big data operational capabilities erode and cease to provide competitive gains
analytics is evident from the increasing investments made from firms, [53]. It is suggested that in such circumstances the focus should be
and particularly those working in complex and fast-paced environments shifted to strengthening capacities of change and re-adjustment of op-
[47]. Managers nowadays are relying ever more on big data analytics to erational capabilities. The dynamic capabilities view has been put forth
inform their decision-making and direct future strategic initiatives [2]. to answer this gap as a neo-Schumpeterian theory of the firm [55]. The
The value of investing in BDACs is clearly reflected in a recent ar- dynamic capabilities view repositions the focus on the renewal of ex-
ticle by Liu [48], who notes that big data analytics constitutes a major isting organizational capabilities as a means of competitive survival for
differentiator between high-performing and low-performing firms, as it the firm [52]. Correspondingly, dynamic capabilities are defined as
enables firms to be more proactive and swift in identifying new business those capabilities used to extend, modify, change, and/or create op-
opportunities and gain a competitive edge. Additionally, the study erational capabilities [52,53]. The main differentiation between
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Table 1
Constructs and definitions.
Construct Definition Source(s)
Big Data Analytics Capability Big Data Analytics Capability (BDAC) is defined as the ability of the firm to capture and analyze Adapted from Gupta and George [5]; Kiron
data toward the generation of insights, by effectively deploying its data, technology, and talent et al. [119]; Wamba et al. [6]
through firm-wide processes, roles and structures
Dynamic Capabilities Dynamic capabilities are defined as the capacity of the firm to (a) sense and shape opportunities Teece [61]
and threats, (b) seize opportunities, and (c) maintain competitiveness through enhancing,
combining, protecting, and, when necessary, reconfiguring the business enterprise’s intangible and
tangible assets
Marketing Capabilities Marketing capabilities are defined as the ability of the firm to serve certain customers based on the Spanos and Lioukas [120]; Wilden and
collective knowledge, skills, and resources related to market needs. Gudergan [73]
Technological Capabilities Technological capabilities are those competencies that are required from the firm to convert inputs Spanos and Lioukas [120]; Wilden and
into outputs Gudergan [73]
Competitive Performance Competitive performance is defined as the degree to which a firm attains its objectives in relation Rai and Tang [121]
to its main competitors
operational and dynamic capabilities is that the former allows firms to through this sequence of associations that the renewal of operational
make a living in the present while the latter enables their modification capabilities is achieved, and firms are able to attain a competitive ad-
in response to the shifting external environment [52]. As such, dynamic vantage.
capabilities are particularly important for the competitive survival of Building on the RBV [26], the dynamic capabilities view [55,61],
firms in contemporary dynamic and quasi-globalized markets [56]. and the emerging literature on big data analytics [1,5,6], this study
Dynamic capabilities are suggested to deliver rents from new combi- proposes an evolutionary fitness view [62], by which a BDAC enables
nations of capabilities and assets, and produce outcomes that are cap- firms to reposition themselves in the face of chancing business en-
able of shaping the marketplace, such as entrepreneurship, innovation, vironments. A strong BDAC alleviates the risk of obsolesce for opera-
and semi-continuous asset orchestration and business reconfiguration tional capabilities as by feeding a firm’s dynamic capabilities, evolu-
[57]. Therefore, the definition of dynamic capabilities specifies that tionary fitness and renewal of operational capabilities are achieved
they can create value indirectly, by changing a firm’s operating cap- [58]. As such, we argue that a firm’s BDAC has an indirect effect on
abilities [58]. marketing and technological capabilities and effectively competitive
performance, which is mediated by an enhanced effect on dynamic
capabilities. The main argument made is that by fostering a BDAC,
3. Research model firms strengthen their ability to sense emerging opportunities and
threats, seize opportunities before competitors, and transform the or-
Drawing on the RBV and dynamic capabilities view of the firm, this ganizational resource base accordingly. The effect of BDAC in this
study proposes the research model shown in Fig. 1. We propose that process is discernible by the deployment of enhanced operational cap-
firms need a combination of tangible, human, and intangible resources abilities, which result in competitive performance gains (Table 1).
to build a BDAC. While tangible resources cannot by themselves create In today’s competitive environment, firms must constantly re-
a BDAC, the same applies for human and intangible resources. There- configure and update the means through which they do business to
fore, BDAC are conceptualized as a higher order concept, comprising of remain competitive. The ability to respond to changes is a complex
tangible resources, human skills, and intangible resources, consistent process that includes sensing emerging threats and opportunities,
with the classification of Grant [29], with each of these dimensions seizing opportunities for development and survival and transforming
consisting of more than one subdimension as illustrated below. The existing modes of operation to better fit market needs (i.e., dynamic
classification of resources into tangible, human skills, and intangible capabilities). Firms that utilize insight generated from big data analy-
has been long used in the IT capability literature [5,23,59,60]. To de- tics are in a better position to identify emerging conditions and re-
velop a strong BDAC, all three types of resources need to be invested in position themselves accordingly [6]. The notion that insight generated
by the firm and contribute to the emergence of the higher order notion. through information technologies such as big data analytics can act as
The study argues that the value of a BDAC stems from its capacity to an enabler of dynamic capabilities has been put forth in management
enhance a firm’s dynamic capabilities. In doing so, a BDAC strengthens literature [63]. According to this view, insight generated through
a firm’s sensing, seizing, and transforming capabilities, which ulti- analytics can help expand the locus of decision making and provide a
mately leads to stronger marketing and technological capabilities. It is
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set of previously unavailable sets of decision options to the firm Although dynamic capabilities may produce competitive perfor-
[10,53]. Furthermore, the processing power enabled by current big data mance gains on their own right, it is suggested in literature that one of
analytics technologies allows for the transformation of raw data into their mechanisms of action is by enabling, or strengthening, existing
actionable insight in much shorter cycle times, contributing toward operational capabilities [58]. As such, dynamic capabilities are defined
improved response speed, effectiveness, and efficiency when dealing as the capacity of the firm to sense and shape opportunities and threats,
with environmental changes and seizing emerging opportunities [64]. to seize opportunities, and to maintain competitiveness through en-
Nevertheless, being able to transform existing modes of operation does hancing, combining, protecting, and, when necessary, reconfiguring the
not boil down solely on the technology itself, Janssen et al. [42] find business enterprise’s intangible and tangible assets [61]. This idea has
that decision-making quality is dependent upon the level to which firms been initiated by the argument made by Eisenhardt and Martin [70],
have developed their BDACs. Essentially, those firms that are better in which states that dynamic capabilities are necessary but not sufficient
transforming their operations are those that have established firm-wide conditions for competitive advantage. According to this perspective,
practices regarding big data analytics and established a data-driven competitive performance does not rely on dynamic capabilities per se
culture [14,17]. but, rather, on the resource configurations created by dynamic cap-
When looking into applications of big data analytics in the organi- abilities. In this sense, dynamic capabilities are perceived as strategic
zational context, it has been shown to enable the identification of new options that allow firms to renew their existing operational capabilities
business opportunities through the combination of diverse data sources when the opportunity or need arises [71]. Zahra et al. [72] supported
[65]. By coalescing data from different sources, insight can be gener- this view proposing that dynamic capabilities impact competitive per-
ated that was previously unobtainable. For instance, Erevelles et al. formance by facilitating changes in operational capabilities. Protogerou
[66] note the example of Southwest Airlines that uses big data analytics et al. [58] also adopt this perspective, demonstrating that dynamic
on interactions between personnel and customers to better understand capabilities create value indirectly by changing and strengthening op-
customer needs. The insight from the speech analytics methods are used erational capabilities. Specifically, theoretical claims and empirical
to sense unrecognized customer needs, develop a deeper understanding findings suggest that dynamic capabilities exert a positive effect on the
of the main requirements of their customers including claims from enhancement of marketing and technological capabilities [58,73]. The
disrupted flights, details about reservations, food and beverage pre- logic behind these mechanisms of action is that firms that regularly
ferences, and offering personalized offers, as well as for training service exercise their sensing processes can strengthen their market knowledge
personnel accordingly. The analytics solution of Southwest Airlines and understand both their customer needs as well as identify under-
allows customer service representatives to understand the nuances of served profitable market segments [73]. In turn, enhanced sensing ca-
every recorded customer interaction. Different metrics guide service pacities of external developments can trigger seizing and transforming
personnel to the best solution in every scenario. Furthermore, South- processes to better adapt to market conditions, thus resulting in im-
west Airlines track sentiment on social media about the airline itself, its proved marketing capabilities [53]. Similarly, by fostering strong dy-
main competitors, and the airline industry as a whole. Insight from namic capabilities, firms are also better able to detect new technolo-
analyzing these types of data allows the airline to stay current with gical advancements earlier [74]. The ability to do so is also suggested to
trends and operate efficiently. In effect, the BDAC that Southwest Air- give an advantage in leveraging such advancements before competition,
lines has managed to develop is utilized toward reconfiguring its ex- thus contributing to improved technological capabilities [75]. We can,
isting means of operation. In a recent report by MIT Sloan Management therefore, hypothesize that:
Review, another interest case is discussed, that is of Nedbank, the
H2. Dynamic capabilities will have a positive effect on marketing
fourth largest bank in South Africa is described [49]. Nedbank devel-
capabilities
oped an impressive niche in creating value-added services for its clients.
Nedbank Market Edge pulls together credit and debit card information H3. Dynamic capabilities will have a positive effect on technological
with geolocation, demographic, and other transactional data, and en- capabilities
ables the generation of insight into customers’ behavior that would
In the context of big data analytics, the generated insight has been
have been very difficult to identify without the tool. The analytics so-
suggested to trigger firms in realizing gaps or areas of ignorance, and
lution provided by Nedbank has since been used by its customers which
taking action to adjust their marketing and technological capabilities
among others include McDonalds and Burger King, as well as the bank
[66]. Specifically, by developing strong BDACs, firms have been shown
itself, demonstrating that it can make significant business contributions
to be better positioned to sense emerging market opportunities and
to the banks credit and debit card line of business as well as for retail
threats and to respond appropriately through renewed marketing cap-
and business banking [67]. Although the bank tracked customer prof-
abilities [76]. Insight generated through a strong BDAC can enable
itability by product for many years, when it decided to utilize Market
more precise needs identification through sentiment sensing and social
Edge, it was able to identify and target customers with offers more
media monitoring for instance [46,76], allow for a better understanding
effectively. The BDAC developed by Nedbank enabled it both to de-
of consumer behavior, interactions, and experiences with a product or
velop a new marketable solution to its clients, better capture market
service [77,78], facilitate more detailed and real-time customer seg-
needs, seize the opportunity through highly detailed data, and trans-
mentation by coalescing data from a variety of sources [79,80], and
form its marketing approach by offering personalized discounts and
help to better identify noncustomer groups [46]. In turn, BDACs can
other incentives to increase patronage. Similar case studies showcase
support firms in seizing opportunities, as for example prioritizing target
that a strong BDAC can not only help firms identify threats and op-
customers and segments [81], dynamically allocate resources to ac-
portunities, but it can also reinforce seizing of opportunities as insights
commodate consumer needs [82], and support real-time process or-
are backed-up with empirical evidence and transform operations
chestration by translating strategic KPI’s into operational metrics to
through incremental or radical adaptations in existing modes of doing
inform decision-making and guide actions [10]. The outcome of strong
business [41,68]. Consequently, value from a BDAC is a result of im-
BDACs can be discerned as an increased ability to transform marketing
proved decision making and repositioning in relation to external needs
approaches, reshaping the way marketing is performed, customers are
and opportunities [69]. Nevertheless, the quality of decision making,
identified and approached, as well as the extent to which products and
and as an extension a firm’s ability to sense, seize, and respond, is
services are adapted to suit their needs.
largely dependent upon the BDAC that they are able to develop [42].
Nevertheless, being able to do so requires more than just the data
From the foregoing discussion, we hypothesize that:
and the technology to analyze it. Janssen et al. [42] argue that it is
H1. BDAC will have a positive effect on dynamic capabilities important for decision-makers to have the skills to interpret outcomes
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of big data analytics and take actions upon them. Sharma et al. [14] mobile data, allow energy power generation forecasting, system fault
underscore the importance of fostering appropriate decision-making identification, and user energy consumption forecasting, thus sup-
structures, essentially enabling a data-driven culture to diffuse porting the decision-makings of different participants in energy sys-
throughout the firm. The point of culture and organizational learning is tems. As a result, a large number of companies are now developing
also highlighted by Erevelles et al. [66], who note that it is critical to BDACs to harness the power of data and radicalize their technological
develop the necessary structures and processes around big data analy- capabilities by introducing data-driven smart energy management
tics that will enable the firm to generate and utilize innovative ideas. [101]. Realizing technological capability improvements in the energy
This underscores the importance of both human capital and organiza- industry however requires more than the physical infrastructure and
tional capital resources in extracting hidden insights from big data that the data itself. Literature consistently highlights that realizing techno-
can help revamp a firm’s marketing capability. An example of such an logical capability improvements in any industry, including energy and
effect of a firm utilizing its BDAC to enhance its marketing capabilities infrastructure, requires employees with the appropriate technical and
is Tipp24 AG, a service that places bets on European lotteries and makes business skill-set [102], as well as a data-driven culture and an or-
predictions. Tipp24 AG has managed to harness the power of big data ientation toward organizational learning [103]. A prominent case study
analytics to developed personalized marketing offers, utilizing data that that underscores the potential of BDACs toward improving a firm’s
include transactions, customer characteristics and preferences, as well technological capabilities is that of Intel, the semiconductor manu-
as other data that come from interactions with their systems every day. facturer. Intel had to test every chip that came off its production line
Leveraging this data, Tipp24 AG developed predictive models that through a quality check, which meant running roughly 19.000 tests on
could produce analytics much faster, reducing the time needed by 90%. each individual chip [104]. Using its BDAC, Intel managed to change
The speed of these analyses combined with the massive amount and the manufacturing process, significantly reducing the number of tests
variety of data that is inserted into the models enabled the company to required for quality assurance. Intel analyzed historical data collected
revolutionize their marketing capabilities. Tipp24 AG now customizes during manufacturing and was able to identify when a specific step in
and targets each advertisement it sends to customers, with these mes- one of its manufacturing processes deviated from normal tolerances,
sages being produced automatically. From the foregoing arguments, we leading to defects in the produced chips. This data-intensive process has
can hypothesize that: enabled Intel to detect failures in its manufacturing line and revamp its
production process by reducing tests on chips that are produced under
H4. BDAC will have a positive indirect effect on marketing capabilities,
normal manufacturing tolerances. These examples clearly show that a
which will be mediated by a positive effect on dynamic capabilities.
strong BDAC can help firms extract insights from data originating from
Firms that develop strong BDACs are not limited in enhancing their a number of sources and facilitate making decisions and initiating
marketing capabilities, as several cases demonstrate that they can also competitive actions based on newly gained intelligence.
have positive effects on technological capabilities. Technologically
H5. BDAC will have a positive indirect effect on technological
competent firms are able to develop systems and processes that allow
capabilities, which will be mediated by a positive effect on dynamic
them to engage in shared problem solving, implement and develop
capabilities
prototype products and services, and absorb technological knowledge
from outside firm boundaries [58]. Firms that invest in developing their Effective operational capabilities are necessary for achieving and
BDACs are shown to be better positioned in identifying inefficiencies in sustaining a competitive advantage [105]. Prior literature in the man-
their internal and external operations [83]. When it comes to internal agement and IT domain clearly shows that strong operational cap-
sensing, big data analytics can enable firms to identify inefficiencies in abilities contribute positively to attain and sustain competitive perfor-
processes [84], detect deviations from quality controls, and best prac- mance [53]. The positive effect that operational capabilities have on
tices such as anomaly detection [85], and proactively locate cases of competitive performance has been documented in multiple ways, such
high risk and fault occurrence [77,86]. With regards to external process as by increasing revenue [106], reducing costs associated with devel-
sensing, BDACs can contribute toward identifying bottlenecks or other oping and delivering products [107], as well as improving the quality of
potential hazards in supply chains [87], detect market disturbances and a firm’s existing processes and products [108]. Specifically, each type of
monitor the financial environment [88,89], and help predict prices and operational capability contributes to competitive performance in dif-
availability of key resources for production [90,91]. Such capabilities ferent ways. Marketing capabilities allow firms to better understand
can, in turn, enable firms to seize emerging opportunities or avoid their customers current and future needs, as well as to effectively re-
threats through real-time process orchestration [87], dynamic resource position themselves in light of competitor’s actions [58]. On the other
allocation, and financial risk assessment [92,93]. The capabilities that hand, strong technological capabilities enable the firm to transform
are enabled through a strong BDAC can facilitate technological cap- inputs into outputs in an effective and efficient way. By having this
ability transformation by allowing temporal process reconfiguration ability, firms are in a better position to achieve and sustain a state of
and adjusting operational inefficiencies [47]. Applications of BDACs competitive advantage as they are more capable of meeting an in-
toward renewal of technological capabilities can be found in a range of creased variety and change frequency of market expectations, while at
industries including healthcare [94,95], manufacturing [96,97], bank the same time being able to limit excessive costs, time-to-produce, and
and financial institutions [98], energy and communication infra- organizational disruptions [73]. Firms that are not effective in renewing
structure providers [99], as well as in the oil and gas sector amongst their technological capabilities may find that their product and service
others [100]. offerings fail to create commercial success [109]. Equally, a weak
The example of smart energy systems serves to demonstrate the marketing capability may negatively impact competitive performance
impact that BDACs can have in improving technological capabilities of by hindering a firm’s understanding of customer needs, as well as
firms. Zhou et al. [99] highlight the convergence of the internet and the limiting it in reaching a broad consumer base and creating customer
various intelligent devices spread throughout energy systems. In such satisfaction and loyalty [110]. In other words, we argue that the more a
smart grids, the main source of data comes from the advanced metering firm is equipped with capabilities of producing product and service
infrastructure, which deploys a large number of smart meters and other offerings that are in alignment with customer needs and expectations,
measuring terminals at the end-user side. These smart meters enable the and the better it is translating these into value positions, the greater its
collection of massive amounts of data, and in combination with data competitive success will be. Thus, we hypothesize the following:
from other smart devices on the grid, such as sensors and thermostats
H6. Marketing capabilities have a positive effect on competitive
used throughout the whole process of power generation, transmission,
performance
distribution, substation and consumption, as well as weather and
6
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7
P. Mikalef, et al. Information & Management xxx (xxxx) xxx–xxx
4.2. Measurements customers and suppliers, market knowledge, control over distribution
channels, and strong “installed” customer base. We asked respondents
The scales for the various constructs were adopted from prior lit- to evaluate their effectiveness in marketing capabilities through a total
erature and have therefore been previously tested in empirical studies. of four items on a 7-point Likert scale.
Appendix A provides a summary of the scales used, their descriptive Technological Capabilities (TC) reflect the organizational capacity to
statistics, and the supporting literature. employ technologies to convert inputs into outputs [125]. The items
BDAC was defined in accordance with the study of Gupta and used to measure firms’ technological capabilities include efficient pro-
George [5] as a firm’s capability to assemble, integrate, and deploy its duction department, technological capabilities and infrastructure, and
big data-based resources. This definition clearly distinguishes and se- economies of scale and technical experience. The measurement of
parates the process of orchestrating big data-related resources from any technological capabilities was based on the scale of Spanos and Lioukas
performance outcomes [8]. As such, BDAC is conceptualized and de- [120] and has been empirically confirmed to be reliable in multiple
veloped as a third-order formative construct. The three underlying other studies [73]. Respondents were asked to evaluate their effec-
pillars that comprise a BDAC are big data-related tangible, human skills, tiveness in several aspects pertaining to technological capabilities
and intangible resource constructs, which, in turn, are formulated as through a total of three items on a 7-point Likert scale.
second-order formative constructs, comprising of seven first-order Competitive Performance (CP) is developed conceptually as the de-
constructs. Specifically, the tangible big data-related components of a gree to which a firm performs better than its key competitors [121].
BDAC include basic resources (e.g., financial), technology (e.g., soft- Respondents were asked to evaluate the relative performance of their
ware and hardware), and data [6], which are represented as formative firm in terms of profitability, market share, growth, innovativeness,
first-order constructs. Human skills are developed as a Type II second- cost leadership, and delivery cycle time [121,126]. Following the ar-
order construct (first-order reflective and second-order formative) gument that competitive performance can be measured by subjective
consisting of two dimensions. These are technical skills that are con- data, we measured the construct as a formative latent variable com-
cerned with the ability to handle the technological components and prising of seven indicators [120]. Respondents were asked to assess the
analytical requirements of big data, and managerial skills that are degree to which they believed that their firm performed better than
mostly revolved around recognizing the value of big data and under- their main competitors on a 7-point Likert scale (1 – Totally disagree; 7
standing where to apply insight efforts [76]. Finally, intangible re- – Totally agree).
sources were conceptualized and developed as a Type II second-order Control Variables. Firm size was measured as an ordinal value in
construct (first-order reflective and second-order formative), with the accordance with the recommendations of the European Commission
underlying dimensions being a data-driven culture and organizational (2003/361/EC) into micro (0–9 employees), small (10–49 employees),
learning. A data-driven culture describes the level to which organiza- medium (50–249 employees), and large (more than 250 employees).
tional members make decisions based on insight derived from data Firm age was measured as the age since the inception of the firm.
analysis [1]. Organizational learning on the other hand refers to the Industry subtypes were controlled as they can capture different condi-
concentrated efforts of firm members to exploit existing knowledge and tions of the environment that influence the firms’ responsiveness in
continuously explore new knowledge to keep up with unpredictable deploying marketing and technological capabilities and were oper-
market conditions [122]. The development of the BDAC construct and ationalized as dummy variables. Finally, we measured ownership
the dimensions and subdimensions that comprise it are depicted in structure as a binary control variable, differentiating between private
Table 3. and publicly controlled firms.
Dynamic Capabilities (DC) refer to a firm’s capacity to (a) sense and
shape opportunities and threats, (b) seize opportunities, and (c) main-
5. Analysis
tain competitiveness through enhancing, combining, protecting, and,
when necessary, reconfiguring the business enterprise’s intangible and
To assess the hierarchical research model’s validity and reliability,
tangible assets [61]. Consequently, and following contemporary em-
we applied partial least squares-based structural equation modeling
pirical studies, they are developed as a Type II second-order construct
(PLS-SEM) analysis. Specifically, the software package SmartPLS 3 was
(first-order reflective and second-order formative), with sensing,
used to conduct all analyses [127]. PLS-SEM is considered as an ap-
seizing, and transforming being the underlying dimensions [123]. Items
propriate methodology for this study as it permits the simultaneous
for each dimension were adopted from prior empirical research that
estimation of multiple relationships between one or more independent
measures the specific notions of dynamic capabilities [58]. We asked
variables, and one or more dependent variables [128]. PLS-SEM is a soft
respondents to evaluate their effectiveness in each of the three di-
modeling technique and is variance-based, with the advantage for al-
mensions/capabilities through a total of nine items on a 7-point Likert
lowing (i) flexibility with respect to the assumptions on multivariate
scale.
normality, (ii) usage of both reflective and formative constructs, (iii)
Marketing Capabilities (MC) represent a firms outward-based com-
the ability to analyze complex models using smaller samples, (iv) the
petencies [120]. They refer to the capacity of the firm to link with and
more robust estimation of formative constructs, and (v) the potential
serve particular customer groups [124]. The questions used to measure
use as a predictive tool for theory building [129]. PLS-SEM is widely
marketing capabilities were based on Spanos and Lioukas [120] scale
used in analyzing data for the estimation of complex relationships be-
and include items such as building privileged relationships with
tween constructs in many subject areas including in business and
Table 3
Big Data Analytics Capability (BDAC) and sub-dimension development.
Third-order Type Second-order (sub-dimensions) Type First-order (sub-dimensions) Type
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Table 4
Assessment of reliability, convergent, and discriminant validity of reflective constructs.
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13)
9
P. Mikalef, et al. Information & Management xxx (xxxx) xxx–xxx
the Edward adequacy coefficient for each were again greater than the dynamic capabilities (R2 = 0.368), 39.8% for technological capabilities
limit of 0.50 [139]. A mixture of the repeated indicator approach and a (R2 = 0.398), 24.3% for marketing capabilities (R2 = 0.243), and
use latent variables scores in a three-stage approach was applied, in 34.7% for competitive performance (R2 = 0.347). These coefficients of
coherence with the guidelines of [140]. In the first stage, the repeated determination represent moderate to substantial predictive power
indicator approach was used to obtain latent variable scores for the [142]. In addition to examining the R2, the model is evaluated by
first-order constructs, which in the second stage served as manifest looking at the effect size f2. The effect size f2 allows us to assess an
variables in the measurement model of the second-order constructs. exogenous constructs contribution to an endogenous latent variable R2,
This was then repeated for the higher order construct based on latent and as all direct values are above the thresholds of either 0.15 or 0.35,
variables scores of the second-order constructs. Next, we examined the we can conclude that they have moderate to high effect sizes. Con-
extent to which the indicators of formative constructs presented mul- sistent with IS studies, we also examined the influence of control
ticollinearity. Variance inflation factor (VIF) values below 10 suggest variables on competitive performance; however, their relationship with
low multicollinearity; however, a more restrictive cut-off of 3.3 is used the dependent variable was found to be nonsignificant in all cases.
for formative constructs [141]. All values were below the threshold of To validate our results, we tested the model with objective perfor-
3.3, indicating an absence of mutlicollinearity. mance data collected from several sources such as Morningstar Inc.,
PROFF.no, and Purehelp.no. We ran four models with ROA (%), ROE
(%), ROIC (%), and net margin (%) as indicators of firm performance.
5.2. Structural model All performance variables were for the last two quarters of 2017. The
outcomes of these models were largely consistent with our original
The structural model from the PLS analysis is summarized in Fig. 2, analysis. The relationships between BDAC, dynamic, and operational
where the explained variance of endogenous variables (R2) and the capabilities retained their effect which continued to be positive and
standardized path coefficients (β) are presented. The structural model is significant. Specifically, dynamic capabilities continued to exert a
verified by examining coefficient of determination (R2) values, pre- highly positive and significant effect on both marketing and technolo-
dictive relevance (Stone-Geisser Q2), and the effect size of path coeffi- gical capabilities, while BDAC positively fed a firm’s dynamic cap-
cients. The significance of estimates (t-statistics) is obtained by per- abilities. The four models account for approximately 12 percent of the
forming a bootstrap analysis with 5000 resamples. As depicted in Fig. 2, variance for performance (13.1% for ROA, 12.2% for ROE, 11.7% for
six of the seven direct hypotheses were empirically supported. A firms’ ROIC, and 10.9% for net margin). The effects of marketing and tech-
BDAC is found to have impact on dynamic capabilities (β = 0.606, nological capabilities remain significant for the first three models, while
t = 10.546, p < 0.001) and on a firm’s technological capabilities for the last, only marketing capabilities continue to have a significant
(β = 0.279, t = 2.971, p < 0.01). Contrary, no such significant effect effect. Overall, we found that for the four proposed models, the no-
was found on the impact of BDAC on marketing capabilities (β = 0.085, mological network fits the data quite well as there is consistency of
t = 0.615, p > 0.05). Additionally, dynamic capabilities are positively results which reinforces the validity of findings (Table 6).
associated with both technological capabilities (β = 0.422, t = 5.051,
p < 0.001) and marketing capabilities (β = 0.437, t = 5.051, p <
0.001). As hypothesized, marketing capabilities exert a positive and 5.3. Test for mediation
significant effect on competitive performance (β = 0.324, t = 3.130,
p < 0.01), as do technological capabilities (β = 0.231, t = 2.683, To examine if the impact of big data analytic capability on mar-
p < 0.01). The structural model explains 36.8% of variance for keting and technological capabilities is direct or is mediated by
Table 6
Summary of hypotheses and results.
a
Structural path Effect t-value Ratio to Total Effect (%) Bias corrected 95% confidence interval Conclusion
a
* significant at p < 0.05; ** significant at p < 0.01; *** significant at p < 0.001 (two-tailed test).
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dynamic capabilities, a bootstrapping approach is employed, a non- observations are normalized and construct scores are created using the
parametric resampling procedure that imposes no assumptions on training sample estimations. The next step involves normalizing the
normality of sampling distribution [142,143]. Based on the guidelines construct scores of the holdout sample and then using them to create
of [142], we first confirm that the mediated paths (BDAC→DC→MC prediction scores. The results confirm the predictive validity of the
and BDAC→DC→TC) are significant. By then, including the direct paths model as the R2 for the holdout is close to that of the training sample for
(BDAC→MC and BDAC→TC) in the model, we find that the former is all the dependent variables of the model. Even though model fit as-
nonsignificant (β = 0.085, t = 0.615, p > 0.05), an indication of full sessment criteria are not a prerequisite in PLS analyses, researchers
mediation, while the later retains its significance (β = 0.279, t = 2.776, have called for the development of evaluation criteria that can better
p < 0.01). In Table 5, we present the outcomes of the mediation support the prediction-oriented nature of PLS-SEM [149].
analysis, associated with hypotheses H4 and H5. To test for the med-
iation hypotheses, we used the parameter estimates from the boot- 6. Discussion
strapping procedure in PLS, based on a resampling of 5000 subsamples,
and calculated the standard error of each mediation effect. We then While the hype around big data is continuously growing, the me-
calculated the t-statistic for each mediation path by dividing the effect chanisms and conditions under which it results in business value remain
of the indirect path (i.e., the product of each indirect path), by the largely unexplored in empirical research. The overall value of big data
standard error of mediation effects. This approach of assessing the investments has also come into question in some articles as it is noted
significance of indirect paths provides the advantage of not imposing that only a small percentage of companies have been capable of rea-
any distributional assumptions of the indirect effects. In addition, it lizing the true potential of their big data investments [150]. This
allows for the calculation of the entire indirect effect simultaneously in finding seems surprising when considering the numerous articles of
the presence of multiple mediating effects rather than isolating part of business publications that talk about the transformative power of big
the structural model. As the direct effect of BDAC on MC is found to be data analytics. Gupta and George) [5] argue that this phenomenon can
nonsignificant and the mediating path is found to be significant, we can be largely attributed to the fact that most of literature on big data has
conclude that dynamic capabilities fully mediate the effect of BDAC on been drafted by consultants, which generally lacks in theoretical and
marketing capabilities. On the other hand, as the direct effect of BDAC large-scale empirical validity.
on TC is still significant and the mediating path is also significant, we
demonstrate that dynamic capabilities partially mediate the effect of 6.1. Implications for research
BDAC on technological capabilities. These results lend support to our
theoretical claim that a firm’s BDAC can explain substantial variance in This study aims to address this issue and understand if, and through
both marketing and technological capabilities through the renewing what mechanisms, big data can result in any measurable business value.
effect of dynamic capabilities. Nevertheless, strengthened operational To this end, we build on the notion of a BDAC as a necessary capacity
capabilities can also be explained by other means other than as effects that firms must cultivate to derive any substantial outcomes from their
of BDACs, such as introduction of new production infrastructure and investments. We ground this notion on the well-established RBV and
machinery, which may bear little influence from big data analytics emphasize that BDA is not solely a technical capability but requires
practices. several other nontechnical resources to create a BDAC. Furthermore,
the value of a BDAC, and big data in general, have mostly been anec-
5.4. Predictive validity dotal to date, with the exception of some early studies on its business
value [5,6]. We addressed this shortcoming in literature by yielding
In addition to examining the R2, the model is assessed by examining empirical support for the theoretical framework of BDAC. Using survey
the Q2 predictive relevance of exogenous variables [144]. This indicator data from 202 Norwegian executive-level technology managers, this
measures how well-observed values are reproduced by the model and study empirically explored the relationship between firms’ BDAC and
its parameter estimates, verifying as such the model`s predictive va- two types of operational capabilities: marketing and technological. This
lidity through sample re-use [145]. The technique is a synthesis of study makes an important contribution to big data literature by pre-
cross-validation and function fitting and examines each constructs senting how BDAC positively affects a firm’s dynamic capabilities,
predictive relevance by omitting selected inner model relationships and which, in turn, strengthen both marketing and technological cap-
computing changes in the criterion estimates (q2) [146]. Values of the abilities, two core pillars of competitive performance.
Q2 predictive relevance that are greater than 0 imply that the structural This assertion, theoretically, distinguishes BDAC from IT cap-
model has predictive relevance, whereas values below 0 are an in- abilities by highlighting that the value lies primarily in gaining new
dication of insufficient predictive relevance [142]. From the outcomes insight and generating intelligence and evidence to support transfor-
of the analysis we find that dynamic capabilities (Q2 = 0.166), mar- mation or adaptation of the firm’s operations. Our empirical findings
keting capabilities (Q2 = 0.159), technological capabilities support this assumption, particularly in the positive and significant
(Q = 0.251), and competitive performance (Q2 = 0.171) have sa-
2
effect that BDAC has on a firm’s dynamic capabilities. In effect, the
tisfactory predictive relevance. Being an exogenous construct, BDAC value of a strong BDAC can be associated with the move toward a di-
does not have a Q2 predictive relevance score. In addition, q2 value gital business strategy noted in the special issue editorial of Bharadwaj
ranges from moderate to high revealing (above 0.15 and 0.35 respec- et al. [69]. Firms that foster the development of a strong BDAC utilize it
tively) an adequate effect size of predictive relevance. in driving strategy and informing decisions made by top executives. In
To examine model fit, a test of composite-based standardized root other words, a BDAC does not operate as a subordinate of business
mean square residual (SRMR) was performed. The SRMR value is ob- strategy but helps shape strategies in a fusion between technology and
tained through the difference between the observed correlation and the business. The insight, which is generated through big data analytics,
model implied correlation matrix. The current SRMR yields a value of works not only to inform sensing of opportunities and threats but also
0.071, which is below the threshold of 0.08, thus confirming the overall as an anchor point on which decisions can be made. Strong big data-
fit of the PLS path model [147]. To further establish the predictive generated insight reinforces managers decisions so that they can more
validity of the model, this study employs cross-validation with holdout confidently seize and transform operations according to market de-
samples [146]. Following the process described by Carrión et al. [148], mands. This finding is in coherence with the qualitative study of
the sample is randomly divided into a training sample (n = 121) and a Janssen et al. [42], who argue that the quality of decisions made by top
holdout sample (n = 81). The training sample is initially used to cal- managers, and the extent to which they rely on big data-generated in-
culate the path weights and coefficients. Then, the holdout sample sight, largely depends on the maturity of the firms overall BDAC.
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P. Mikalef, et al. Information & Management xxx (xxxx) xxx–xxx
Although there is a rich theoretical discussion and anecdotal evi- from the market, others, and especially a data-driven culture, would
dence on the regenerating role that a BDAC has on firm’s operations, to need planning and a well-documented process to form. Therefore, an
date, there have been very few large-scale empirical examinations to additional theoretical implication concerns the calculation of the time
verify this claim. What is less understood is the mediating role of dy- and complexity that some resources require to develop, which man-
namic capabilities on the relationship between a firm’s BDAC and op- agers should think about well before they expect any measurable out-
erational capabilities. Our study tested the mediating effect of dynamic comes from their big data investments.
capabilities, which helps explain how value from BDAC is delivered to Finally, the results of our study show that even by fostering a strong
the firm. Specifically, we show that it is essential for firms to examine BDAC, business value is not directly achieved. In other words, while
all complementary dimensions related to big data, including non- firms may be producing solid data-driven knowledge as a result of their
technical ones, and that their synergistic effect is what drives renewal of BDACs, action is required to capitalize upon it. Data-driven insight is
operational capabilities. The findings add to literature on how in- only a component of a firm’s ability to sense, seize, and reconfigure, and
formation technology can enable the development of dynamic cap- doing so successfully means that the organization must be designed so
abilities, and specifically, on the importance of BDAC in repositioning as to be able to respond to changes that insight indicate. This requires
the firm in the competitive landscape. The impact that a BDAC has on flexibility in operations, fast re-deployment of organizational cap-
marketing capabilities is shown to be fully mediated by dynamic cap- abilities, and dissolution of any form of inertia that can hinder insight to
abilities, hinting that big data fundamentally change the way firms be transformed into action. Managers need to realize that big data-
approach and manage their customers. On the other hand, the partial generated insight is only one component of gaining value from big data
mediation of dynamic capabilities on the relationship between BDAC investments, and the other is responsiveness.
and technological capabilities indicates that they are used for both in-
cremental and radical changes. 6.3. Limitations and future research
Finally, our analysis demonstrates the nomological network of as-
sociations through which a BDAC results in competitive performance Despite the contributions of the present study, it is constrained by a
gains. While previous research has assumed a direct effect of a BDAC on number of limitations that future research should seek to address. First,
firm performance [5], our results show that the effect on performance is as noted already, self-reported data are used to test most of our research
indirect and contingent upon how dynamic capabilities are exercised on hypotheses. Although considerable efforts were undertaken to confirm
operational capabilities. This finding raises several important implica- data quality, the potential of biases cannot be excluded. The perceptual
tions for practice and research. Specifically, understanding the speed nature of the data, in conjunction with the use of a single key in-
and the ways in which managers use big data-generated insight could formant, could suggest that there is bias, and that factual data do not
help explain the derived business value from such investments. While coincide with respondents’ perceptions. We have attempted to remedy
the development of a strong BDAC may be prerequisite in realizing any this by instructing respondents to consult other employees in their or-
substantial returns, the effect that it has on competitive performance ganizations that might be better equipped to answer certain questions.
should be examined under the prism of actions it leads to. In this re- Although this study relies on top management respondents as key in-
spect, it is important to understand the level to which insight is utilized, formants, sampling multiple respondents within a single firm would be
particularly when compared to instincts of top managers, which may useful to check for interrater validity and to improve internal validity.
overrule the suggestions obtained from big data analytics. Second, although we examine the value of BDACs on competitive per-
formance, through the mediated effect of dynamic capabilities on op-
6.2. Implications for practice erational capabilities, we do not factor in contextual and environmental
conditions. It is highly likely that the value of directing big data in-
The outcomes of this study also present several interesting im- itiatives may be more beneficial in some cases than in others. This is an
plications for practice. First, this study shows that big data analytics is area that future research should seek to address, and it is of increased
much more than just investments in technology, collection of vast practical value, particularly considering the costs of deploying big data
amounts of data, and allowing the IT department to experiment with initiatives. The main argument that a BDAC is necessary but not a
analytics. Important elements of gaining business value out of big data sufficient condition to lead to competitive performance gains remains
investments include recruiting people with good technical and man- subject to several internal and external factors, which hopefully will be
agerial understanding of big data, fostering a culture of organizational addressed in subsequent research studies. Finally, although the theo-
learning, and embedding big data decision making into the fabric of the retical grounding of the research dictates the directions of effects, it is
organization. It is the combined effect of these resources and effective important that future research confirms these, removing the possibility
orchestration that will help a firm develop a BDAC. This of course re- that effects are a result of reserved causality.
quires a multitude of processes to be put into action, which necessitates
top management commitment and a clear plan for firm-wide big data 7. Conclusion
analytics adoption. A number of studies have already began to em-
phasize on the importance of all these factors and provided managers This study was largely motivated by the great interest of scholars
with guidelines on how to develop and mature their BDACs [17]. and practitioners on the phenomenon of big data. While there has been
By clearly outlining the main resources that are needed to develop a extended discussion on the side of practitioners on the value and core
BDAC, this study can help managers develop an assessment tool of their elements relating to big data adoption, academics have been lagging in
organizations’ strengths and weaknesses. The main pillars can help examining organizational aspects of big data projects, and empirically
expose areas that have been underdeveloped or insufficiently funded. verifying if, and under what conditions, these investments pay off. As a
Particularly resources on the intangible part, such as intensity of or- result, much of what has been written about big data focuses on specific
ganizational learning, and data-driven culture, can provide managers aspects, or individual cases of big data success, but not much is known
with an understanding of the importance of these aspects and help them about the full range of resources that are required to develop a BDAC,
form strategies to strengthen them throughout the firm. Given that and the overall business value it can produce. This study is built on the
many companies are still at an inaugurating stage in their big data RBV and dynamic capabilities view, as well as on recent big data
projects, it is important to have a good overview of all the areas that analytics research. The empirical results highlight the importance of
should be invested in to derive value, as well as to calculate expected investing on all complementary big data resources (i.e., tangible,
costs and gains. In addition, while some resources such as technical, human, and intangible), that jointly help develop a BDAC. By doing so,
data, and even human skills can be quite easily and quickly acquired firms manage to develop evolutionary fitness as insight generated
12
P. Mikalef, et al. Information & Management xxx (xxxx) xxx–xxx
through BDAC supports a firm’s dynamic capabilities, which, in turn, [31] J.-L. Chen, The synergistic effects of it-enabled resources on organizational cap-
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least squares structural equation modeling in marketing research, J. Acad. Mark. EU-funded projects that support SMEs to innovate, network and grow by promoting in-
Sci. 40 (3) (2012) 414–433. novation through collaboration platforms. Pappas has been a Guest Editor for the journals
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in business research by means of pls path modeling: introduction to a Jbr special Journal of Marketing, Computers in Human Behavior, Information & Management,
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Paul A. Pavlou is the Milton F. Stauffer Professor of Information Technology and Strategy
at the Fox School of Business at Temple University. He also serves as the Associate Dean of
Patrick Mikalef is an Associate Professor in Data Science and Information Systems at the Research, Doctoral Programs, and Strategic Initiatives. He also directs the university-wide
Department of Computer Science of the Norwegian University of Science and Technology Big Data Institute at Temple University. Paul received his Ph.D. degree from the
(NTNU). He received his B.Sc. degree in Informatics from the Ionian University, his M.Sc. University of Southern California. He was ranked first in the world in publications in the
degree in Business Informatics from Utrecht University, and his Ph.D. degree in IT two top MIS journals (MISQ and ISR) for 2010-2014. His work has been cited more than
Strategy from the Ionian University. His research interests focus the on strategic use of big 20,000 times by Google Scholar. Paul was recognized among the “World’s Most
data analytics, information systems and IT-business value in turbulent environments. He Influential Scientific Minds” by Thomson Reuters based on analysis of “Highly Cited”
has published work in over 80 international conferences and peer-reviewed journals in- authors during 2002–2012 period. Paul won several Best Paper recognitions for his re-
cluding the Journal of Business Research, British Journal of Management, Information search, including the Maynard Award nomination for the “Most Significant Contribution
and Management, Industrial Management & Data Systems, and Information Systems and to Marketing” in the Journal of Marketing in 2015, the ISR Best Paper award in 2007, and
e-Business Management. He is also a recipient of the Marie Skłodowska-Curie post-doc- the 2006 IS Publication of the Year award, and others.
toral research fellowship. Patrick Mikalef directs the Big Data Observatory at NTNU and
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