The data dilemma: how availability can threaten the competitive advantage of data-based firms

What is it about?

Digital pioneers built their competitive advantage on the internet arena by successfully harvesting and exploiting scarce, rare and proprietary user-data pools both, online and offline. However, casualties among digitally-born and once well-established companies reveal that business model transformation originated by the increased availability of data can seriously challenge the competitive position of firms. Building on the cases of IBM and Yahoo! we unpack a successful and a failed business model transformation where data was a central resource for business model value creation. We illustrate how the increased data availability can threaten the competitive positioning of data-based firms and find that dual-purpose merges and acquisitions (oriented towards data and data-processing activities) are key in the process of business model transformation of data-based firms.

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