Understanding the Impact of Business Analytics on Innovation

The advances in Big Data and Business Analytics (BA) have provided unprecedented opportunities for organizations to innovate. With new and unique insights gained from BA, companies are able to develop new or improve existing products/services. However, few studies have investigated the mechanism through which BA contributes to a firm’s innovation success. This research aims to address this gap. From an information processing and use perspective, a research model is proposed and empirically validated with data collected from a survey with UK businesses. The evidence from the survey of 296 respondents supports the research model that provides a focused and validated view on BA’s contribution to innovation. The key findings suggest that BA directly improves environmental scanning which in turn helps to enhance a company’s innovation in terms of new product novelty and meaningfulness. However, the effect of BA’s contribution would be increased through the mediation role of data-driven culture in the organization. Data-driven culture directly impacts on new product novelty, but indirectly on product meaningfulness through environmental scanning. The findings also confirm that environmental scanning directly contributes to new product novelty and meaningfulness which in turn enhance competitive advantage. The model testing results also reveal that innovation success can be influenced by many other factors which should be addressed alongside the BA applications.