Abstract
Despite growing acceptance of business analytics as a tool to create competitive advantage for firms, there is a lack of study that investigates their acceptance by shareholders. Using an event study methodology, this paper examines how shareholders view business analytics announcements. A framework based on the resource-based view was theorized as a guide to examine resource capabilities that influence shareholder’s perception of the value of implementing business analytics. The results obtained showed evidence that shareholders viewed business analytics to be of value to firms as positive abnormal returns were observed from business analytics announcements. The results also indicated that firms which adopted business analytics systems from vendors that are market leaders obtained a more positive stock market reaction compared to firms which adopted business analytics systems from vendors that are non-market leaders. A further analysis into firm characteristics also found that firms which provided higher compensation for top executives and firms with stronger employee involvement generated higher and more significant abnormal returns when market-leading vendors were selected. Implications for research and practice are discussed.
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