Firms continuously report increased competitive value gains from the use of business intelligence and analytics (BI&A), however, little is known about how insights from BI&A are transformed to added value to date. We have conducted fourteen in-depth, semi-structured interviews with a sample of informants in CEO positions, IT managers, CIO, Heads of R&D, as well as Market Managers from nine medium or large-sized European firms. Applying the absorptive capacity’s theoretical lens, we have provided evidence that absorptive capacity’s capabilities are an underlying foundation in the process of transforming BI&A triggered insights into valuable knowledge. Moreover, this process is supported by technological, human, and relationship assets.
The amount of data and information generated on a daily basis continuously increases, forcing firms to increasingly rely on external knowledge and information to enhance firm innovation and performance (Benner & Tushman, 2015; Ireland, Hitt, & Vaidyanath, 2002). With the quick development of computer intelligence as well as the appearance of “big data” concept, business intelligence and analytics has become an increasingly important concept for researchers and practitioners (Chen, Chiang, & Storey, 2012). Although BI&A were initially used for decision-making support activities, they have been increasingly considered for organizational learning and adjustments, improving operational efficiency, and strengthening organizational intelligence (Trieu, 2017). A survey conducted by IBM Institute for Business Value and MIT Sloan Management Review reported that firms are increasingly gaining competitive advantage from analytics (58% of the more than 4500 respondents reported competitive value gains from analytics) (Kiron & Shockley, 2011). Not surprisingly, Gartner's survey on IT Spending found BI&A to be a top priority for most of the analyzed firms and predicted that BI&A would remain one of the top foci for the leading firms (Gartner, 2013). On the other hand, firms have acknowledged the potential of BI&A to generate insights and knowledge from both external and internal sources of knowledge (Shehzad, Khan, & Naeem, 2013; Wang, 2014; Wixom, Watson, & Werner, 2011; Yeoh & Koronios, 2010). As the complexity of the data is increasing, humans have difficulties interpreting the external information due to limited mental capacities (Jansen, Van Den Bosch, & Volberda, 2005; Sammut & Sartawi, 2012). More information is not necessarily beneficial for the organization since its information and knowledge processing capacity is limited as well (Simsek, 2009). As a result, organizations develop information filters and routines to cope with bounded rationality (March, 1978; Nelson & Winter, 1982). BI&A have found it possible to expand the human mental capacity as well as the firm’s absorptive capacity by increasing the ability of individuals and firms to receive, store, analyze and transfer information with fewer errors (Brynjolfsson & Hitt, 2000; Elbashir, Collier, Sutton, Davern, & Leech, 2013; Simon, 1991). While various streams of studies have provided research on the BI&A potential, there has been little attention given to the improvement of understanding the role of BI&A in the process of knowledge generation from external data and with it, the underlying mechanisms that facilitate this process.