Abstract
ABSTRACTThis paper analyzes the relationship between firms' use of big data analytics and their innovative performance in terms of product innovations. Since big data technologies provide new data information practices, they create novel decision-making possibilities, which are widely believed to support firms' innovation process. Applying German firm-level data within a knowledge production function framework we find suggestive evidence that big data analytics is a relevant determinant for the likelihood of a firm becoming a product innovator as well as for the market success of product innovations. These results hold for the manufacturing as well as for the service sector but are contingent on firms' investment in IT-specific skills. Overall, the results support the view that big data analytics have the potential to enable innovation.
Highlights
The latest technological trends like connected devices and machines, wearables, and the universal application of sensors as well as online content are drivers of a vast and constantly increasing amount of data
Our paper contributes to the literature in various respects: (i) we provide first large-scale empirical evidence based on representative firm-level data on the role of big data for firm performance in terms of the product innovation activities of manufacturing and service firms. (ii) The paper further contributes to a better understanding of the relationship between data analysis and innovation output across industries and helps to assess the potential benefits of big data analytics
This paper investigates the relationship between the use of big data analytics and firms’ innovative performance
Summary
The latest technological trends like connected devices and machines, wearables, and the universal application of sensors as well as (user-generated) online content are drivers of a vast and constantly increasing amount of data. The gray areas with respect to privacy, data protection, the regulatory environment, or an insufficient internet connection are viewed as the other main barriers to the diffusion of big data and related practices Despite these challenges associated with big data, a widely shared expectation is that the ongoing changes in how data is being generated and made relevant for firms can help to increase business value through profitable use of data, that previously had even been used to be produced as ‘waste’ product of business activity before the surge of big data technologies. Despite the high expectations associated with big data and the prominent position it has gained as a current key technological trend, there is a paucity of empirical evidence on its effect on firm performance overall, and firms’ innovation performance in particular Against this background, we analyze the relation of firms’ use of big data and innovation performance using large-scale firmsurvey data from German manufacturing and services industries.
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