What translates big data into business value? A meta-analysis of the impacts of business analytics on firm performance

Highlights

• A meta-analysis is conducted to examine the impact of BA on firm performance.

• BA resources, capabilities, and organizational culture strongly impact firm performance.

• External factors have only a weak influence on the business value created from BA.

• Performance dimension, economic area, and year show no significant moderating effects.

• Six propositions and ten future research directions are derived based on the findings.

Abstract

The main purpose of this study is to examine the factors that are critical to create business value from business analytics (BA). Therefore, we conduct a meta-analysis of 125 firm-level studies spanning ten years of research from across 26 countries. We found evidence that the social factors of BA, such as human resources, management capabilities, and organizational culture show a greater impact on business value, whereas technical aspects play a minor role in enhancing firm performance. Through these findings, we contribute to the ongoing debate concerning BA business value by synthesizing and validating the findings of the body of knowledge.

Introduction

The disruptive impact of big data on various businesses and industries has been referred to as a “management revolution” [1] or “the next frontier” [2]. Others have even opined that “big data is possibly the most significant ‘tech’ disruption in business and academic ecosystems since the meteoric rise of the Internet and the digital economy” [3]. The advanced techniques and technologies necessary to handle big data are commonly referred to by the terms business intelligence (BI), business analytics (BA), or big data analytics (BDA) [4]. Given the enormous potential of BA to create value for business and society, an increasing number of studies from diverse research disciplines have attempted to examine the value creation mechanism of BA [5,6]. In the BA literature, technical and human resources, as well as management capabilities, are considered essential antecedents to business value creation [7.], [8.], [9.]. Moreover, a data-driven culture [6,10,11] and contextual factors such as the competitive intensity [12] and industry dynamism [13] were found to have a major impact on the value created from BA. Some studies have noted that firms can only create value from BA when they manage to combine their resources and capabilities to gain benefits [14].

Overall, numerous studies with inconsistent results have been published on the business value of BA over the past decades [7,15,16]. Although most studies report a positive relationship between BA and firm performance, for example, by demonstrating the strong impact of data analytics competency on improving firm decision-making [14] or illustrating the major role that BDA use plays in enhancing asset productivity and business growth [17], some studies present a more nuanced picture of the conditions under which BA can create value for firms. In an attempt to explain the mixed results of prior studies, IS scholars have pointed to the essential role of contextual factors, such as a firm's structural readiness, and psychological readiness factors, which are needed to create value from BA [16]. In addition, whether BA is beneficial for firms depends on the fit between different factors, such as BA tools, data, people, and tasks [18]. Some IS scholars have similarly suggested that several factors, such as the inability to capture the indirect benefits of BA use, methodological issues, and inadequate consideration of environmental factors and time lags, are the main reasons for these mixed results [15].

Although the wealth of studies on the business value of BA has undoubtedly contributed to the body of knowledge by providing valuable insights into specific aspects of the value creation mechanism, recent work has highlighted the need for a more consistent picture, especially with regard to the question on how contextual factors influence the performance outcomes due to BA [5]. To date, few research efforts, whether in IS or in other disciplines, have attempted to provide a more integrated and consistent picture on the business value of BA based on empirical findings from prior studies. We address this gap by synthesizing quantitative evidence on this research topic from the rich body of knowledge. Thus, our main research objective is to provide a comprehensive and consistent picture of the main factors that contribute to enhance the business value of BA, resolve the inconsistencies across studies, and achieve an enhanced understanding of the conditions under which BA's has varying impacts on firm performance. In doing so, we aim not only to synthesize qualitative findings from the body of knowledge but also to strive for a more valid picture of these findings based on the quantitative results of former studies. In particular, we aim to answer the following research questions (RQs):

• RQ1: What are the main BA resources and capabilities as well as contextual factors that are critical to create business value from business analytics?

• RQ2: To what extent do these factors contribute to enhancing firm performance and what conditions may cause business analytics to have varying impacts on firm performance?

To answer the RQs, we conduct a meta-analysis of 125 firm-level studies reported in 123 articles spanning ten years of research from across 26 countries and four continents. We consider meta-analysis to be an appropriate method for synthesizing the results of conflicting studies to resolve the inconsistencies [19] and increase the statistical power of these results [20]. The findings are expected to be of high importance for research and practice because answering the questions of how, when, and why it can create value is essential for companies to gain a competitive advantage [6,21]. For researchers, developing an enhanced understanding of the main determinants of the business value of IT would help to advance the development of theory in IS research. In business practice, such an enhanced understanding would help managers to increase the value of IT [22].

The remainder of this paper is structured as follows. In Sections 2 and 3, we explain the theoretical background concerning the business value of BA, describe the scope of our research, and develop the research framework, including identifying the dependent and independent variables of interest. In Section 4, we describe the relevant phases and activities of our meta-analysis research approach. The results of the meta-analysis are presented in Section 5. Implications for research and practice as well as the limitations of this study are described in Section 6. Finally, the concluding Section 7 presents a brief summary of this research.