How Business Analytics Improves Firm Performance

What is it about?

This study examines, in simple terms, when and how business analytics really helps firms perform better. The main finding is that value does not come from investing in analytics tools alone. Instead, performance improves when firms combine high-quality data, appropriate analytical tools, human skills, and business understanding in ways that fit their organizational context. The study also shows that decision quality is the key link between analytics capabilities and firm performance. In addition, firm size matters, because smaller and larger firms do not benefit in the same way from the same combinations of capabilities. Overall, the message is that analytics creates value when it is embedded in the way a firm makes decisions, rather than treated as a stand-alone technology investment.

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Photo by Vitaly Gariev on Unsplash

Photo by Vitaly Gariev on Unsplash

Why is it important?

This study is important because it moves beyond the common assumption that business analytics improves performance simply through greater investment in data or tools. Instead, it shows that firms create value when they combine complementary analytics capabilities in ways that fit their organizational context, with decision quality acting as the key link to firm performance. It also adds a timely perspective by showing that firm size matters: smaller and larger firms do not benefit from the same capability combinations in the same way. Methodologically, the study combines PLS-SEM and fsQCA to capture both net effects and alternative pathways to success.

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