Big data, big decisions: The impact of big data on board level decision-making
Introduction
The potential of new technologies to ‘disrupt’ the management of organisations, including at the most senior levels, has recently been noted by many scholars (e.g. Abbasi, Sarker, & Chiang, 2016; Evans, 2017; Valentine & Stewart, 2013). One striking example of this disruptive effect is the challenging role played by ‘Big Data’ (BD) for directors and decision-makers (Janssen, van der Voort, & Wahyudi, 2017). The sudden rise of BD as a new knowledge source has prompted corporate decision-makers to make decisions more rapidly and to shape their capabilities to proactively address environmental changes (Fosso Wamba, Akter, Edwards, Chopin, & Gnanzou, 2015).
Despite considerable research on making strategic (important, novel and resource hungry) decisions and the characteristics of these processes (Hickson, Butler, Cray, Mallory, & Wilson, 1986; Whittington, Cailluet, & Yakis-Douglas, 2011), there is little research on how BD has influenced the way decisions are made, on the impact of data proliferation on strategic responsibilities (Chari, Katsikeas, Balabanis, & Robson, 2012; Quinn, Dibb, Simkin, Canhoto, & Analogbei, 2016), or on how these data are handled at board level (Nutt & Wilson, 2010). A previous empirical study (Hickson, Miller, & Wilson, 2003) has identified the ‘knowledge base’ used by UK senior managers to inform their strategic decision-making as the single most important factor in the decision's success. However, while this was a large study with 55 UK cases, it mainly spanned a period where information for decisions was largely well-known (extant knowledge), available in hard copy as reports (explicit knowledge), or resided in managers' heads based on their experience or judgement (implicit or tacit knowledge).
The explosion of knowledge which has accompanied increasing access to BD arguably has a large impact on both how and what information senior managers use to inform their decision-making. A key research question is whether or not BD has changed the process of board level decision-making and, if so, how and to what extent? Our research addresses this question at three levels: first, we consider the implications of BD for individual directors; second, we explore BD's influence on the way that the board works; third, we review the impact of BD for the wider organisation and its external stakeholders. Knowledge Based View (KBV) is selected as a suitable theoretical framework because it helps us to understand why a “[l]ack of knowledge about BD sources influences decision-making quality” (Janssen et al., 2017, p. 339). For example, previous research (e.g. Raghunathan, 1999) confirms that the decision-making quality improves when directors have greater knowledge of the relationships among problem variables.
Section snippets
Theoretical approach
We situate our research approach to draw from KBV. In doing so, we explore the implications of BD for strategic decision-making undertaken by the board. For the purposes of our approach, we follow McAfee and Brynjolfsson (2012) by regarding BD datasets as being characterised by high levels of volume, velocity and variety. As such, BD is defined by dataset size (Erevelles, Fukawa, & Swayne, 2016; George, Osinga, Lavie, & Scott, 2016) and the challenges these data place on computing capacity (
Methodology
This research applies a blend of inductive and deductive processes (Graebner, Martin, & Roundy, 2012) to critically evaluate the views of board directors about BD's impact on strategic decision-making. We conducted semi-structured interviews without specific constructs in mind; following Rötzmeier-Keuper, Hendricks, Wünderlich, and Schitmz's (2018) approach, data was analysed using standard thematic qualitative coding techniques. However, during the data analysis, definitions and themes were
First core category: cognitive capabilities
As a knowledge-based resource, we expect BD to trigger the dynamic and adaptive capabilities that support strategic decision-making. We find that this process's effectiveness relies on the efficient integration of BD resources (the data itself) and BD capabilities (the technical ability to capture and manipulate it). Most informants recognised the role that BD could play in this process. As one director commented, ‘…they've all got a realisation they have specific issues and they recognise that
Discussion and conclusions
In this empirical paper, we set out to explore whether BD has changed the process of board level decision-making and, if so, how and to what extent. The study contributes to knowledge by pointing to areas for development relating to the core categories at each of the three levels of our analysis. At the level of the individual directors, we identify a gap in the cognitive capabilities that organisations possess to cope with BD; capabilities that are crucial in avoiding the cognitive biases and
Limitations and a future research agenda
This study is based on rich data gleaned from lengthy interviews gathered at board level in a range of UK-based, global organisations. A distinctive feature of the paper is a rich dataset, based on a senior level of organisational access, that has helped us to unpack complex issues surrounding how strategic decisions are made by boards and how directors respond to the challenges which arise as a consequence.
While this research provides important insights into BD and the decision-making process,
Acknowledgments
We would like to acknowledge the financial support of (1) the Economic and Social Research Council, Digital Social Research programme, and (2) NEMODE, an initiative under the Research Councils UK (RCUK)'s Digital Economy (DE) research programme, in funding this project.
Alessandro Merendino is a researcher (PhD) at the Centre for Business in Society (CBiS) at Coventry University, UK. His research interests lie in the area of corporate governance, the board of directors, stakeholders and the top management team in medium-large companies from different industries. He is also a chartered accountant (member of ICAEW) and internal auditor; he is also a member of the British Academy of Management.
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Alessandro Merendino is a researcher (PhD) at the Centre for Business in Society (CBiS) at Coventry University, UK. His research interests lie in the area of corporate governance, the board of directors, stakeholders and the top management team in medium-large companies from different industries. He is also a chartered accountant (member of ICAEW) and internal auditor; he is also a member of the British Academy of Management.
Sally Dibb is Professor of Marketing in Society at Coventry University (UK), a trustee of Alcohol Research UK, chair of the Academy of Marketing's Segmentation SIG, and a member of the 2014 REF panel. Books include The Private Security State; Marketing: Concepts & Strategies; and Market Segmentation Success! Papers in Long Range Planning, Journal of the Academy of Marketing Science, Work, Employment & Society, European Journal of Marketing, Industrial Marketing Management, European Journal of Operational Research.
Maureen Meadows is Professor of Strategic Management at the Centre for Business in Society (CBiS) at Coventry University, UK. Formerly with the Open University Business School and Warwick Business School, Maureen has over 20 years of experience of working with customer data and analytics, both as a practitioner in the financial services sector and an academic. Maureen is Vice Chair for SIGs (Special Interest Groups) at BAM (the British Academy of Management).
Lee Quinn is Professor of Consumer Insight and Behaviour Change at the Centre for Business in Society (CBiS) at Coventry University, UK. His research agenda revolves around a number of key issues in marketing strategy creation and marketing management practice and he has a particular interest in qualitative methodology. His work is published in academic journals such as the European Journal of Marketing, Marketing Theory, Journal of Marketing Management, Journal of Macromarketing, and the Journal of Strategic Marketing, among others.
David Wilson is Professor of Organisation Studies at the Open University Business School, UK. He is the author of nine books and over ninety peer reviewed articles on strategic decision-making, power in organisations, organisational change and strategy. David is a Fellow of the British Academy of Management and an Academician of the Social Sciences. He was a founder member of the ‘European Group for Organization Studies’, and Editor-in-Chief of the top international journal Organization Studies.
Lyndon Simkin is Executive Director of the Centre of Business in Society at Coventry University (UK), on the Academy of Marketing's Research Committee and is co-chair for the Academy's SIGs in CRM and Market Segmentation/Marketing Strategy. He has authored many books, including The Dark Side of CRM; Marketing: Concepts and Strategies; Marketing Planning and Market Segmentation Success!. With an emphasis on B2B strategy, Lyndon coaches many CEOs and leadership teams.
Ana Canhoto holds a PhD from the London School of Economics, and an MBA from London Business School, UK. Her research focuses on the role of technology in interactions between firms and their customers, focusing on the impact of technology on both customer insight and targeted interactions. Prior to joining Brunel University (London), Ana held academic positions at London School of Economics, Henley Business School (University of Reading) and Oxford Brookes University.