Impact of Big Data Analytics on Decision Making and Performance

Publication Type:
Conference Proceeding
Citation:
TBA, 2017
Issue Date:
2017-09-01
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‘Big Data’ has become a major topic of interest and discussion for both academics and professionals in the IT and business disciplines, and case evidence suggests that companies engaging in Big Data outperform others. It has to be noted though that ‘Bigger’ Data as such does not provide any benefits, but it is rather how organisations make sense of data and gain insights from analysing the data. Analytic capabilities and practices are required to convert Big Data (BD) into insights which arguably improve decision-making and thereby organisational performance. While protagonists of such Big Data Analytics (BDA) imply that those effects exist, so far they have not been confirmed by rigorous empirical research. Data was obtained using a cross-sectional online survey which targeted Chief Information Officers and senior IT managers of medium-to-large Australian for-profit organisations and yielded 163 complete responses, which met the standard criteria for measurement reliability and validity. PLS-SEM and multiple bootstrapping methods were used to test the hypotheses, while controlling for firm size. The present study empirically confirms claims made in the literature that BD and related analytics lead to better performance. It also reveals that such benefits are achieved primarily because BDA creates additional incentives for managers to base their decisions on analytics, and that more analytic-based decision making actually leads to superior performance. Finally, the results of our study suggest that managers in organisations which engage in BD are generally more analytics-minded in their decision making, even if the analytic tools and methods used in support of their decisions are not particularly sophisticated. The results provide evidence that neither Big Data nor Big Data Analytics are just ‘hypes’, but they do actually lead to superior performance, partly directly and partly indirectly by creating an incentive for managers to rely on analytics when making strategic or operational decisions. Interestingly, managers in smaller firms are more likely to base their decisions on analytics than larger firms, which suggests that they use analytics to compete against larger firms.
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