Elsevier

Journal of Business Research

Volume 93, December 2018, Pages 67-78
Journal of Business Research

Big data, big decisions: The impact of big data on board level decision-making

https://doi.org/10.1016/j.jbusres.2018.08.029Get rights and content

Highlights

  • There is a shortfall in directors' capabilities for dealing with Big Data.

  • Board cohesion can be disrupted by Big Data, compromising the decision-making process.

  • Boards need to develop cognitive capabilities and find new ways to make decisions in the Big Data era.

  • Big Data provides firms with opportunities to enhance their adaptive capabilities.

  • Boards need to work in new ways to meet the challenges that Big Data can present.

Abstract

Big Data (BD) has the potential to ‘disrupt’ the senior management of organisations, prompting directors to make decisions more rapidly and to shape their capabilities to address environmental changes. This paper explores whether, how and to what extent BD has disrupted the process of board level decision-making. Drawing upon both the knowledge-based view, and cognitive and dynamic capabilities, we undertook in-depth interviews with directors involved in high-level strategic decision-making. Our data reveal important findings in three areas. First, we find evidence of a shortfall in cognitive capabilities in relation to BD, and issues with cognitive biases and cognitive overload. Second, we reveal the challenges to board cohesion presented by BD. Finally, we show how BD impacts on responsibility/control within senior teams. This study points to areas for development at three levels of our analysis: individual directors, the board, and a broader view of the organisation with its external stakeholders.

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.

References (98)

  • L.Y. Wu

    Applicability of the resource-based and dynamic-capability views under environmental volatility

    Journal of Business Research

    (2010)
  • A. Abbasi et al.

    Big data research in information systems: Toward an inclusive research agenda

    Journal of the Association for Information Systems

    (2016)
  • V. Ambrosini et al.

    What are dynamic capabilities and are they a useful construct in strategic management?

    International Journal of Management Reviews

    (2009)
  • V. Ambrosini et al.

    Dynamic capabilities: An exploration of how firms renew their resource base

    British Journal of Management

    (2009)
  • R. Amit et al.

    Strategic assets and organizational rent

    Strategic Management Journal

    (1993)
  • B.C. Bailey et al.

    Boardroom strategic decision-making style: Understanding the antecedents

    Corporate Governance: An International Review

    (2013)
  • J.B. Barney

    Is the resource-based “View” a useful perspective for strategic management research? Yes

    The Academy of Management Review

    (2001)
  • V. Barrales-Molina et al.

    Explaining the causes and effects of dynamic capabilities generation: A multiple-indicator multiple-cause modelling approach

    British Journal of Management

    (2013)
  • D. Bawden et al.

    The dark side of information: Overload, anxiety and other paradoxes and pathologies

    Journal of Information Science

    (2009)
  • T.V. Bonoma

    Case research in marketing: Opportunities, problems, and a process

    Journal of Marketing Research

    (1985)
  • N. Brennan et al.

    Bank CEOs, executive hubris and the banking crisis

    Accountancy Ireland

    (2013)
  • N.M. Brennan

    Shades of grey: Directors' dilemma

    (2016)
  • J.C. Camillus

    Strategy as a wicked problem

    Harvard Business Review

    (2008)
  • J.L. Campbell et al.

    Coding in-depth semistructured interviews: Problems of unitization and intercoder reliability and agreement

    Sociological Methods & Research

    (2013)
  • M.A. Carpenter et al.

    Top management teams, global strategic posture, and the moderating role of uncertainty

    Academy of Management Journal

    (2001)
  • S. Chari et al.

    Emergent marketing strategies and performance: The effects of market uncertainty and strategic feedback systems

    British Journal of Management

    (2012)
  • I. Chaston et al.

    Entrepreneurial cognition, entrepreneurial orientation and firm capability in the creative industries

    British Journal of Management

    (2012)
  • W.M. Cohen et al.

    Absorptive capacity: A new perspective on learning and innovation

    Administrative Science Quarterly

    (1990)
  • S. Collinson et al.

    Inertia in Japanese organizations: Knowledge management routines and failure to innovate

    Organization Studies

    (2006)
  • J. Corbin et al.

    Basics of qualitative research: Techniques and procedures for developing grounded theory

    (2008)
  • N. Côrte-Real et al.

    Assessing business value of big data analytics in European firms

    Journal of Business Research

    (2016)
  • C.M. Daily et al.

    Corporate governance: Decades of dialogue and data

    The Academy of Management Review

    (2003)
  • T.H. Davenport et al.

    How big data is different

    MIT Sloan Management Review

    (2012)
  • G.S. Day

    Closing the marketing capabilities gap

    The Journal of Marketing

    (2011)
  • G.S. Day

    An outside-in approach to resource-based theories

    Journal of the Academy of Marketing Science

    (2014)
  • N.K. Denzin

    The research act: A theoretical introduction to sociological methods

    (1989)
  • K.M. Eisenhardt

    Building theories from case study research

    Academy of Management Review

    (1989)
  • K.M. Eisenhardt et al.

    Dynamic capabilities: What are they?

    Strategic Management Journal

    (2000)
  • G.L. Evans

    Disruptive technology and the board: The tip of the iceberg

    Economics and Business Review

    (2017)
  • T. Felin et al.

    The knowledge-based view, nested heterogeneity, and new value creation: Philosophical considerations on the locus of knowledge

    Academy of Management Review

    (2007)
  • I. Filatotchev et al.

    Internal and external corporate governance: An interface between an organization and its environment

    British Journal of Management

    (2010)
  • S. Fosso Wamba et al.

    Big data analytics and firm performance: Effects of dynamic capabilities

    Journal of Business Research

    (2017)
  • G. George et al.

    Big data and data science methods for management

    Academy of Management Journal

    (2016)
  • J. Gill et al.

    Research methods for managers

    (2010)
  • M.E. Graebner

    Caveat venditor: Trust asymmetries in acquisitions of entrepreneurial firms

    Academy of Management Journal

    (2009)
  • M.E. Graebner et al.

    Qualitative data: Cooking without a recipe

    Strategic Organization

    (2012)
  • R.M. Grant

    Toward a knowledge-based theory of the firm

    Strategic Management Journal

    (1996)
  • G. Guest et al.

    Applied thematic analysis

    (2012)
  • A. Hajro et al.

    Knowledge exchange processes in multicultural teams: Linking organisational diversity climates to teams' effectiveness

    The Journal of the Academy of Management

    (2017)
  • Cited by (136)

    View all citing articles on Scopus

    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.

    View full text