Big Data Analytics, Firm Size, and Performance

Big data analytics (BDA) is one of the most important general-purpose technologies. Despite the increasing pervasiveness of BDA across industries and some preliminary evidence indicating that BDA adoption is positively related to firm productivity, previous studies have not fully investigated how BDA benefits actually materialize. To address this question, we explore the effect of BDA on the innovation process, a key determinant of firm productivity. Our findings indicate that both large and small firms can gain from BDA, yet size is a critical organizational attribute determining the most relevant performance gains captured: BDA benefits for value-added are particularly salient for large firms, whereas benefits for sales are more relevant in small firms. This suggests that the relative propensity to use BDA to decrease costs and enhance efficiency through process innovation vs. to increase sales through product innovation is increasing in firm size.