Objective and main results

This study examines the relationship between big data analytics capability (BDAC) and capabilities for radical and incremental innovation. BDAC refers to the ability of an organization to capture and analyse data towards the generation of insights by effectively orchestrating and deploying its data, technology, and talent.

Main findings:

• An organization’s BDAC is found to have an impact on the ability to integrate, build and reconfigure internal and external competencies to address rapidly changing environments (i.e. dynamic capabilities), which in next instance positively influences incremental and radical innovation capabilities.   
• No direct significant effects were found between BDAC and the two types of innovation capabilities. The results hence show that dynamic capabilities fully mediate the effect of BDAC on incremental and radical innovation capabilities.
• Heterogeneity (i.e. the complexity and diversity of external factors, such as the variety of customer buying habits and the nature of competition) is found to positively moderate the relationship between BDAC and dynamic capabilities, and the effect of dynamic capabilities on radical innovation.
• Dynamism (i.e. the rate and unpredictability of environmental change) is found to positively moderate the effect of dynamic capabilities on incremental innovation.

Summary of practical implications

The study shows that big data analytics is more than just mere investment in technology, collection of vast amounts of data, and experimenting with novel analytics techniques. Organizations need to recruit people with good technical and managerial understanding of big data and analytics, foster a culture of organizational learning, and embed big-data decision-making into the fabric of the organization.

Developing BDAC requires top management commitment and a clear plan for firm-wide big data analytics adoption and diffusion. Organizations should therefore strengthen the connection between their organizational strategy and a formal strategy for analytics, and by this develop a data-driven culture. To achieve this, top management should demonstrate that the role of data and analytics should have a more prominent role in decision-making.

Action is required to capitalize on data-driven insights. Organizations must be designed to be able to respond to changes that insight indicate, which requires flexibility in operations, fast redeployment of organizational capabilities and dissolution of any form of inertia that can hinder insight to be transformed into action. Managers need to realize that big data generated insight is only one component of gaining value from big data investments, the other is responsiveness.

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