Journal ArticleDOI
Strength in Numbers: How Does Data-Driven Decisionmaking Affect Firm Performance?
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Evidence that the effect of DDD on the productivity do not appear to be due to reverse causality is found, providing some of the first large scale data on the direct connection between data-driven decision making and firm performance.Abstract:
We examine whether firms that emphasize decision making based on data and business analytics (“data driven decision making” or DDD) show higher performance. Using detailed survey data on the business practices and information technology investments of 179 large publicly traded firms, we find that firms that adopt DDD have output and productivity that is 5-6% higher than what would be expected given their other investments and information technology usage. Furthermore, the relationship between DDD and performance also appears in other performance measures such as asset utilization, return on equity and market value. Using instrumental variables methods, we find evidence that the effect of DDD on the productivity do not appear to be due to reverse causality. Our results provide some of the first large scale data on the direct connection between data-driven decision making and firm performance.read more
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References
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Proceedings Article
Testing Three-Way Complementarities: Performance Pay, Monitoring and Information Technology
TL;DR: A principal-agent model examines how these practices work together as an incentive system that produces the largest productivity premium when the practices are implemented in concert, and finds evidence of three-way complementarities among information technology, performance pay, and monitoring practices.
Proceedings Article
The Extroverted Firm: How External Information Practices Affect Productivity.
TL;DR: In this article, the authors combine detailed survey data on firms' organizational practices with information technology (IT) investment measures to test the hypothesis that in addition to decentralization, external focus is another important determinant of returns to IT investment.