The illusion of data-driven decision making – The mediating effect of digital orientation and controllers’ added value in explaining organizational implications of advanced analytics

Abstract

AbstractThis study extends existing research on the implications of advanced analytics. Drawing on organizational information processing theory (OIPT), hypotheses are developed for the relationships between information technology orientation, the use of advanced analytical techniques, the ability of information to be utilized in a decision context, and data-driven decision-making. Using survey data from 176 medium-sized and large firms, a mediator model was proposed and tested with structural equation modelling. The data show that the significant direct effect of technology orientation on analytical practice is greatly enhanced by the digital orientation of the firms. As suggested by OIPT, controllers are argued to act as integrators in the sense-making of data-centric mechanisms. The results of the model indicate that the added value of controllers mediates the effect of advanced analytics on the ability of analytical information to be utilized in a decision context. Importantly, the data did not corroborate any relationship between the extent to which available information is able to support decision making and reliance on this information in the decision-making process. It suggests that the strengthening of data-driven decision-making does not overshadow intuition, as assumed based on the expected opposite movement of the two variables. This finding shows the importance of a more detailed and theoretically grounded investigation on how advances in analytical capabilities are (not) changing managerial decision-making processes.