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Business analytics (BA) has emerged with the premise that data-driven decision-making will lead firms to sustain competitive advantage (Abbasi et al., 2016; Seddon et al., 2017). Envisioning a better future, organizations have invested more resources in BA to cope with constant demands for innovation. In following the course of action, firms have reached a consensus that investments in information technology (IT) alone cannot result in expected benefits (Gupta & George, 2016; Joseph et al., 2017). As the success of BA does not dwell on building technical capabilities only, it is required to aim to create a scheme whereby a firm embeds value chain creation, converting data into relevant information and, ultimately, into knowledge for effective action. This process is called value chain creation in BA, defined here as a series of activities by which a firm makes good decisions to deliver valuable products or services.
The theory of the information value chain provides a theoretical foundation for this study. It is described as “the cyclical set of activities necessary to convert data into information, and subsequently, to transform information into knowledge … which individuals use to make decisions and take actions. The decisions and actions then result in outcomes such as business value and additional data” (Abbasi et al., 2016, p. iii). The theory also contends that the intertwined interaction of technology, people, and organizational context plays a significant role in the value creation. Drawing upon the theory, this study investigates the impact of organizational resilience, absorptive capacity, and analytical IT capabilities on BA value chain creation. Although the theory suggests the interdependence of technology, people, and organizational context, the literature awaits more studies that holistically integrate those crucial components and relate them to BA outcomes. This study fills the research gap in the field of BA, and refined research questions are as follows:
RQ1: What is the role of organizational resilience and how does it turn BA into meaningful outcomes in decision-making and analytical benefits?
RQ2: What is the role of absorptive capacity in the BA value chain model and how do analytical IT capabilities enhance absorptive capacity?
RQ3: When it comes to BA outcomes, how can the pillars of BA (i.e., IT, people, and organizational context) translate into analytical decision-making and net benefits in value chain creation?
By addressing the research questions, this paper makes novel contributions to the literature. First, this study explores organizational resilience in BA value chain creation. The literature acknowledges that organizational aspects play a pivotal role in the BA chain model and help realize the full potential of BA (Abbasi et al., 2016). Strategic, operational decisions are increasingly supported by BA, and a proper organizational climate needs to be understood for effective value creation through BA. In particular, organizational resilience is a firm’s ability to face adverse circumstances and transform them into opportunities (Ambulkar et al., 2015). Despite its growing significance and relevance, there are few studies on organizational resilience in the context of BA.
Second, this study illustrates the role of absorptive capacity in the BA value chain creation. Value chain studies suggest that technical capability cannot generate intended value by itself; it needs to be accompanied by proper dynamics (Drnevich & Croson, 2013). In other words, BA tools generate reports through sophisticated techniques, but we contend that the technology should be aligned with a firm’s capability to identify valuable knowledge, assimilate it into their decision-making loop, and apply it for innovation (Iyengar et al., 2015). To the best of our knowledge, this theoretical link to absorptive capacity has not been adequately investigated in the context of BA.
Third, this study examines how desired outcomes can be derived in the value chain creation. A recent survey of Fortune 1,000 C-level executives reports that firms do not see big returns from their investments in big data (NewVantage Partners, 2017) while some reap positive outcomes (Krishnamoorthi & Mathew, 2018). As these mixed results call for more inquiries, we argue that BA’s desired outcomes result from achieving congruence among organizational structure, IT, and human agency. Furthermore, we theoretically and empirically examine how a firm can generate desired outcomes via BA value chain creation.