Lynn Wu, Lorin M. Hitt, Bowen Lou
Working Paper
Publication year: 2017

We examine the relationship between data analytics capabilities and innovation using detailed firm-level data. To measure innovative activity, we utilize a survey on process- and innovation- oriented business practices, and we use patent data to analyze the innovative output and characteristics of firms. We find that data analytics capabilities are more likely to be present and are more valuable in firms that are oriented around process improvement and that innovate by recombining existing technologies; data analytics skills have no effect on or are possibly negatively related to value in firms that focus on generating creative and truly novel innovations. We interpret these findings as consistent with data analytics skills being complementary to the exploitation rather than exploration strategies as described in the technology strategy literature.