The Effect of Individual Analytical Orientation and Capabilities on Decision Quality and Regret

Abstract

Decision makers are exposed to an increasing amount of information. Algorithms can help people make better data-driven decisions. Previous research has focused on both companies’ orientation towards analytics use and the required skills of individual decision makers. However, each individual can make either analytically based or intuitive decisions. We investigated the characteristics that influence the likelihood of making analytical decisions, focusing on both analytical orientation and capabilities of individuals. We conducted a survey using 462 business students as proxies for decision makers and used partial least squares path modeling to show that analytical capabilities and analytical orientation influence each other and affect analytical decision-making, thereby impacting decision quality and decision regret. Our findings suggest that when implementing business analytics solutions, companies should focus on the development not only of technological capabilities and individuals’ skills but also of individuals’ analytical orientation.