Journal of Business Research 104 (2019) 69–84

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Journal of Business Research

journal homepage: www.elsevier.com/locate/jbusres

Does big data enhance firm innovation competency? The mediating role of T
data-driven insights
Maryam Ghasemaghaei , Goran Calic
⁎

DeGroote School of Business, McMaster University, Hamilton, Ontario, Canada

ARTICLE INFO ABSTRACT

Keywords: Grounded in gestalt insight learning theory and organizational learning theory, we collected data from 280
Big data characteristics middle and top-level managers to investigate the impact of each big data characteristic (i.e., data volume, data
Descriptive insight velocity, data variety, and data veracity) on firm innovation competency (i.e., exploitation competency and
Predictive insight exploration competency), mediated through data-driven insight generation (i.e., descriptive insight, predictive
Prescriptive insight
insight, and prescriptive insight). Findings show that while data velocity, variety, and veracity enhance data-
Innovation competency
driven insight generation, data volume does not impact it. Additionally, results of the post hoc analysis indicate
that while descriptive and predictive insights improve innovation competency, prescriptive insight does not
affect it. These results provide interesting and unique theoretical and practical insights.

1. Introduction Gaining critical business insights by analyzing large sizes of various

Data refers to the raw facts that reflect the characteristics of an
entity or event (Detlor, Hupfer, Ruhi, & Zhao, 2013). With so much
valuable insight residing inside information, firms have started to uti-
lize big data, which has been regarded as the new oil for today's digital
economy (Sivarajah, Kamal, Irani, & Weerakkody, 2017). Characterized
by velocity, variety, veracity, and volume (Ohlhorst, 2012), big data is
increasingly becoming a critical firm resource – a resource that could
help firms to generate business insights (Ghasemaghaei, 2019a; Wamba
et al., 2017). Insights generated from big data could become crucial for
firms seeking to innovate. However, many firms do not successfully
improve their outcomes (e.g., innovation competency) through big data
(Johnson, Friend, & Lee, 2017), and others still wonder whether they
can generate valuable insights from massive amounts of heterogeneous
data they collect from various sources (LaValle, Lesser, Shockley,
Hopkins, & Kruschwitz, 2011). In fact, while 48% of firms invested in
big data in 2016 (3% > 2015), the number of firms that are willing to
invest in this area in the next two years fell from 31% to 25% in 2016
(Van der Meulen, 2016). Existing research focuses on anecdotal evi-
dence, and there is a lack of understanding about the impact of big data
on generating data-driven insight. Additionally, enhancing firm in-
novation competency is a critical factor for firms to gain a competitive
advantage (Tan, Zhan, Ji, Ye, & Chang, 2015). Thus, in this study, we
investigate the impact of big data on firm innovation competency
mediated through data-driven insight generation.
data is becoming a necessity for firms (Gunasekaran et al., 2017).
Hence, recent studies pointed out that there should be a better under-
standing of the impact of big data on data-driven insight generation
(Chen, Schütz, Kazman, & Matthes, 2017). In the world of big data,
valuable insight generation is the ultimate goal of data analysis
(Ghasemaghaei, Ebrahimi, & Hassanein, 2016; Tan et al., 2015). Using
current and historical data to move from not knowing how to solve a
problem to knowing how to solve it is defined as data-driven insight.
Data with high volume, high veracity, high velocity, and high variety
could help firms to uncover huge potential value. For example, 600
billion dollars potential annual value can be obtained in generating
insight from processing highly reliable personal location data around
the world in a timely manner (Tan et al., 2015). Many firms are trying
to understand whether big data can help them to better understand
what is happening now (descriptive insight), what is likely to happen in
the future (predictive insight), and what actions they need to take to get
optimal results (prescriptive insight) (Ghasemaghaei et al., 2016;
LaValle et al., 2011). Therefore, the first objective of this study is to
investigate the impact of big data characteristics (i.e., velocity, variety,
veracity, and volume) on data-driven insight generation (i.e., de-
scriptive insight, predictive insight, and prescriptive insight).
In the world of big data, generating valuable insight from data could
be an important driver of innovation (Tan et al., 2015; Xu, Frankwick,
& Ramirez, 2016). Accessing and utilizing big data from different
sources (e.g., click streams, social media, videos, and tweets) help firms

⁎
Corresponding author.
E-mail addresses: ghasemm@mcmaster.ca (M. Ghasemaghaei), calicg@mcmaster.ca (G. Calic).

https://doi.org/10.1016/j.jbusres.2019.07.006
Received 23 December 2018; Received in revised form 3 July 2019; Accepted 4 July 2019
Available online 11 July 2019
0148-2963/ © 2019 Elsevier Inc. All rights reserved.
M. Ghasemaghaei and G. Calic
to extract new ideas and better understand their consumers' needs
(Anderson, Potočnik, & Zhou, 2014). To improve innovation compe-
tency, firms can extend their existing product innovation skills, pro-
cesses, and knowledge (exploitation competency), or they can renew
their product innovation knowledge and skills (exploration compe-
tency) (Atuahene-Gima, 2005). Although the extant literature identifies
big data as the “next big thing in innovation” (Gobble, 2013), there is a
lack of understanding whether the insights generated from big data
would considerably improve firm innovation competency (i.e., ex-
ploitation competency and exploration competency). Therefore, the
second objective of this paper is to investigate the impact of data-driven
insight on firm innovation competency.
To address the above gaps and objectives, we employ gestalt insight
learning theory (Köhler, 1970) and organizational learning theory
(Huber, 1991). The gestalt insight learning theory is adopted because it
provides a solid foundation for generating new insights by discovering
relations through processing new data. In addition, organizational
learning theory is used as this theory focuses on the need for firms to
build a capacity to innovate (Sobrero & Schrader, 1998) by gaining new
insights in processing data (Seleim & Khalil, 2007). Particularly, these
theories help us to answer: Do big data characteristics impact firm in-
novation competency, as mediated through data-driven insight gen-
eration? To answer this question, we collected data from 280 middle
and top-level manages and empirically evaluated the relations in the
research model. The results help researchers to understand the yet
unanswered question of assessing the impact of big data on firm data-
driven insight generation, which could eventually impact firm in-
novation competency. The findings of this study also provide novel
insights for managers to understand how to successfully utilize big data
characteristics within their firms.
2. Relevant literature
2.1. Data-driven insight
While studying the cognitive behaviors and processes involved in
problem-solving, Köhler, in the 1910s, identified the phenomenon of
“insight”. Insight has been defined as an experience during a problem
solving attempt, in which a solution will be found with a belief that the
solution is true (Topolinski & Reber, 2010). According to Topolinski
and Reber (2010), insight is a set of feelings of accuracy, pleasure, ease,
and confidence in problem solving. Luo and Niki (2003) defined insight
as “the reorientation of one's thinking, including breaking of the un-
warranted ‘fixation’ and forming of novel, task-related associations
among the old nodes of concepts or cognitive skills” (Ash, Jee, & Wiley,
2012; p. 316). Köhler (1970) suggests that the problem solver could
gain insight through understanding the relationships between the ele-
ments of a problem within a context, model, or scenario. In the context
of data analytics, managers can enhance their data-driven insight
generation by collecting data from different sources (Ghasemaghaei
et al., 2016). As firms often process large sizes of sensitive data about
their customers, employees, and market, they need to maintain control
over their privacy while they are extracting patterns from such data
(Kshetri, 2014). Using current and historical data to move from not
knowing how to solve a problem to knowing how to solve it is defined
as data-driven insight. Increasing data-driven insight helps managers to
improve their business strategies and decision making processes
(Janssen, van der Voort, & Wahyudi, 2017; Sivarajah et al., 2017).
Firms generate three main types of data-driven insights, including
descriptive insight, predictive insight, and prescriptive insight.
Descriptive insight focuses on understanding what has happened in the
past. To generate descriptive insight, firms mainly use historical data to
identify patterns from the reporting of trends. This is the most common
type of insight that is generated within firms (Ghasemaghaei et al.,
2016). Descriptive insight helps firms to better understand the current
state of a business situation in a way that exceptions, patterns, and
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Journal of Business Research 104 (2019) 69–84
developments become evident in the form of reports (Sivarajah et al.,
2017). For example, firms often use dashboards, scorecards, and other
types of visualization to gain insight about what has happened in the
past.
Predictive insight is the understanding of what will happen in the
future (Ghasemaghaei et al., 2016). To generate predictive insight,
firms analyze relationships between data to predict future probabilities
and trends (Deka, 2016). For example, statistical and forecasting
models help firms to understand future possibilities. Forecasting
models, as an example, show what sales could be for the next six
months, considering a variety of conditions (e.g., a price change, new
media mix, sporting event, and weather conditions).
Prescriptive insight is finding the best course of actions to get the
optimal results for taking advantage of a circumstance (Appelbaum,
Kogan, Vasarhelyi, & Yan, 2017). For example, firms can generate
prescriptive insight by using optimization testing to examine how they
can increase their service levels while reducing expenses. Another ex-
ample is simulations that would evaluate alternative scenarios and
would recommend optimal solutions and approaches. For instance, si-
mulations could inform firms about the best media to introduce new
products to specific customer segments.
With the advancement of new technologies, firms are trying to
collect data from internal and external sources to enhance their data-
driven insight generation (Abbasi, Sarker, & Chiang, 2016). For ex-
ample, some firms have started to leverage Hadoop, a popular open
source framework, to handle a large volume of data. Moreover, some
firms have begun to use cloud-based services to quickly gain insight
from large sizes of heterogeneous data. Utilizing data with high volume,
high veracity, high velocity, and high variety enable firms to develop
sharper insights about their markets, customers, environment, and
businesses (Ghasemaghaei et al., 2016). Thus, in this paper, the gestalt
insight learning theory is utilized to understand the role of big data in
data-driven insight generation, which, according to organizational
learning theory, may impact firm innovation competency.
2.2. Gestalt insight learning theory
Gestalt insight learning theory (Köhler, 1970) states that insights
could be generated by discovering certain new relations among dif-
ferent elements. Gestalt psychologists describe insight as a flash of
understandings and ideas that happen when a problem solver identifies
how parts of a problem match together to make a Gestalt (a coherent
whole) (Ghasemaghaei et al., 2016). Gestalt insight learning theory
views learning as an exploitative, purposive, creative, and imaginative
process of developing new insights (Chowdhury, 2006). Particularly,
according to this theory, all the problems with which we are confronted
and the solutions to those problems are matters of understanding re-
lations. For example, insight could be generated by the analysis of
various related “what-if” analyses of mathematical models to find new
relationships between different factors. Insight could be generated by
validating and testing the new relationships in a proper context (Newell
& Marabelli, 2015). Herschel and Jones (2005) argue that insight oc-
curs suddenly when decision makers discover new relations within their
previous knowledge as a result of problem solving processes that re-
structure that knowledge.
In the context of this study, we use the gestalt insight learning
theory to understand whether big data could help firms to generate
data-driven insight. Utilizing big data may enable firms to better dis-
cover what has happened in the past (descriptive insight), to predict
what will happen in the future (predictive insight), and to optimize the
best course of actions (prescriptive insight). Particularly, to generate
insight, firms need to integrate different formats of large amounts of
data from different sources quickly to be able to discover new patterns
in a timely manner; this may enable them to better solve their problems
(e.g., Ash et al., 2012; Herschel & Jones, 2005). The gestalt insight
learning theory emphasizes enhancing insight generation by obtaining
M. Ghasemaghaei and G. Calic
Big Data
Characteristics
Volume H2a
Data-Driven Insight
Velocity H2b - Descriptive Insight
H2c - Predictive Insight
- Prescriptive Insight
Variety H2d
Veracity
Fig. 1. Research model.
data from both internal and external sources; this will enhance learning
by better making sense of the relationships that exist in the data (Ellis,
2013). Thus, processing big data may help firms to solve their problems
by discovering certain relations within the data. For example, firms that
collect a large variety of consumers' data from both transactional in-
formation and social media may be better able to discover new patterns
regarding their consumers' needs and preferences compared to when
they only consider a single source of data. Uncovering hidden consumer
insights enables firms to better understand and predict consumer be-
havior and continuously respond to the changes in the market en-
vironment (Erevelles, Fukawa, & Swayne, 2016). Therefore, big data
utilization is an opportunity for firms to enhance their learning by
tracking new signals from various sources. In particular, using high
velocity, high volume, high variety, and high veracity of data helps
firms to extract value and insight which are supported by new models
and patterns generated from analyzing such data (Akerkar, 2014).
Thus, the gestalt insight learning theory helps us to examine the re-
lationships on the left side of the proposed model by assessing whether
processing big data would lead to enhancing the insight generation
within firms.
2.3. Organizational learning theory
Organizational learning theory (Huber, 1991) focuses on a firm's
learning capability that could not be easily imitated by competitors
(Day, 1994). This theory suggests that processing new data and gaining
insight from it improve firms' learning which is a basis for their in-
novation competencies (Johnson et al., 2017). Innovation is relevant to
organizational learning, as innovation involves the integration of new
data to generate new information and knowledge (Calantone, Cavusgil,
& Zhao, 2002). In particular, innovation implies the implementation of
new processes, ideas, services, or products, which is closely related to
generating insights within firms (Calantone et al., 2002). Gaining in-
sight occurs mainly through organizational interaction with the en-
vironment. Insight generation can enhance firm innovation capability
because when firms generate insights by processing large amounts of
data from internal and external sources, they would not likely to miss
the opportunities created by the market demand as the firm has the
insight regarding customer needs. According to the organizational
learning theory, to innovate successfully, firms need to consider gen-
erating insight as a dynamic process; this will drive the enhancement of
learning capabilities which will enable firms to innovate successfully
(Real, Roldán, & Leal, 2014). Recently, many firms have invested in big
data to utilize and process large sizes of heterogeneous data in almost
real time (Ghasemaghaei, Ebrahimi, & Hassanein, 2017a). Processing
big data enables firms to extract new ideas and better understand
markets, customers, products, and services which are crucial to in-
novate and help firms to improve their capabilities in developing new
products or refining the existing ones (Tan et al., 2015).
In general, there are two strategies of organizational learning –
exploration and exploitation (March, 1991). While exploration is re-
lated to activities such as experimentation and search, exploitation
concerns efficiency and execution (Rosing & Zacher, 2017). Both forms
of innovation entail combining insights; exploration leverages dispersed
71
Journal of Business Research 104 (2019) 69–84
Innovation Competency
- Exploitation Competency
H1 - Exploration Competency
and varied insights in new ways while exploitation employs existing
knowledge in well-understood ways (Gupta, Smith, & Shalley, 2006).
To exploit, firms harness their current capabilities and improve their
product offerings, whereas exploration requires considerable efforts to
generate unique and novel products through the new insights they
generate. Studies argue that both exploitation and exploration is crucial
to innovate successfully in firms (e.g., Sheremata, 2000; Tushman &
O'Reilly III, 1996). Levinthal and March (1993) argue that the basic
problem firms confront is engaging sufficiently in both exploration and
exploitation. The need to have an appropriate balance between ex-
ploitation and exploration has been conceptualized as ambidexterity
(Tushman & O'Reilly III, 1996). An ambidextrous firm is capable of
operating simultaneously to exploit and explore (He & Wong, 2004). To
obtain competitive advantage, firms need to enhance their innovation
competency by being able to simultaneously explore new opportunities
and exploit their existing competencies (Chou, 2018; Müller, Påske, &
Rodil, 2019). Based on the organizational learning theory, firms can
process big data to improve their learning capabilities by generating
insights about how to extend their existing product innovation skills,
processes, and knowledge (exploitation competency) and how to renew
their product innovation knowledge and skills (exploration compe-
tency) simultaneously (Raisch, Birkinshaw, Probst, & Tushman, 2009).
Thus, in this study, we used this theory to understand whether pro-
cessing big data enables firms to enhance their innovation competency
through increasing the insight generation.
3. Research model and hypotheses
Fig. 1 shows the proposed research model which maps the hy-
pothesized relationships between big data characteristics (i.e., variety,
veracity, velocity, and volume), data-driven insight (i.e., descriptive
insight, predictive insight, and prescriptive insight), and firm innova-
tion competency (i.e., exploitation competency and exploration com-
petency).
Innovation competency refers to a firm's ability to extend its new
product offerings, ranging from line extensions to making entirely new
products (Yalcinkaya, Calantone, & Griffith, 2007). The continuous
introduction of new products is considered a key to gaining a compe-
titive advantage (Yalcinkaya et al., 2007). In fact, a firm's success can
be directly related to the degree of new product innovations
(Szymanski, Bharadwaj, & Varadarajan, 1993). From generating of a
new idea to launching a new product, exploitation and exploration
competencies are a central theme of firm innovation competency
(Atuahene-Gima, 2005; Yalcinkaya et al., 2007). While exploitation
competency is defined as a firm's ability to invest resources to extend
and refine its existing product innovation skills, knowledge, and pro-
cesses, exploration competency refers to the ability of a firm to invest
resources to obtain new skills, knowledge, and processes. Exploitation
competency focuses on improving the reliability and efficiency of ex-
isting activities, whereas exploration competency focuses on obtaining
novelty and flexibility in product innovation (Atuahene-Gima, 2005).
According to organizational learning theory (Huber, 1991), in-
tegrating and processing new data to gain new insights is the basis for
firms' innovation capabilities (Johnson et al., 2017). Generating insight
M. Ghasemaghaei and G. Calic
is a firm capability which enables decision makers to discover defi-
ciencies in the firm and explore emerging market opportunities that
may require the firm to develop new capabilities (Ghasemaghaei,
2019b; Ghasemaghaei & Calic, 2019). A firm's capability to discover
relationships and patterns in data enables it to better interact with the
market and take advantage of the available opportunities. Day (1994)
argues that superior market-sensing capabilities enhance the firm's
product development capabilities. Other studies also suggest that dis-
covering relationships between different elements of the environment
plays a critical role in building competencies for innovation (Atuahene-
Gima & Ko, 2001; Sorescu, Chandy, & Prabhu, 2003). For example, the
awareness of the changing consumer needs can inform a firm that the
current practices in the firm are not adequate and that the firm needs to
refine current routines or to make innovations (Atuahene-Gima, 2005).
Particularly, deeper insights about the customers, market, competitors,
and environment may enable firms to better improve their compe-
tencies in extending or refining their current products or obtaining new
knowledge in developing entirely new products.
In the context of data analytics, firms can gain data-driven insights
by discovering patterns in historical data like variations in sales of
different products, and customer buying preferences. For example,
firms can use simple techniques such as drawing charts to discover
patterns in the data, using regression to understand the correlation
between different variables, or visualize data to better understand the
data (Pusala, Salehi, Katukuri, Xie, & Raghavan, 2016). These de-
scriptive insight generations may improve a firm's ability to properly
develop new products or extend current product lines.
Firms can also integrate massive amounts of data from various
sources to predict future events and trends (Ghasemaghaei et al., 2016).
This predictive insight allows firms to forecast their sales trends and
overall performance, which may lead to developing new products or
refining existing products. For example, online vendors can use cus-
tomer online behavior, customer purchase history, like page views, time
spent on each page to generate predictive insight by forecasting con-
sumer behavior in the case of developing new products. Moreover,
understanding the best course of action through generating prescriptive
insight enables firms to optimize their exploration or exploitation
processes. For example, firms can use simulations to examine different
scenarios and find the optimal solutions in refining current products.
Therefore, firms that successfully generate business insights are able to
improve their innovation competency. Thus, we hypothesize that:
H1: Data-driven insight is positively associated with firm innovation
competency.
Big data refers to the data that has high velocity, high volume, and
high variety (Ghasemaghaei, Ebrahimi, & Hassanein, 2017a). Often,
data veracity, which addresses the uncertainty of the data (Hartmann
et al., 2016), is added to this definition. Firms have invested in big data
utilization to generate valuable business insights in order to improve
firm outcomes (Chen, Preston, & Swink, 2015; Wang & Hajli, 2017).
Gestalt insight learning theory states that insights could be generated
by discovering certain new relationships among different elements
(Köhler, 1970). In the context of this study, utilizing a large amount of
heterogeneous reliable data in a timely manner could help firms to
discover new patterns and relationships in data and generate data-
driven insights.
Data volume is defined as the size of data. The amount of data is
increasing significantly each year, expecting to have 44 zettabytes of
data by 2020, 300 times more data than the amount of data in 2005
(Phillips-Wren & Hoskisson, 2015). Firms are attempting to process
large sizes of data to generate data-driven insight and improve their
decision making. For example, many firms (e.g., eBay, Amazon) have
started to analyze large volumes of social media data (e.g., consumer
comments) to discover patterns in data in providing personalized offers
to their customers (Akter & Wamba, 2016). Netflix, as an example,
utilizes > 1 billion consumer reviews to forecast customers' movie
tastes and suggest movies that best fit their preferences (Akter &
72
Journal of Business Research 104 (2019) 69–84
Wamba, 2016).
The development of advanced technologies (e.g., cloud computing,
sensor technology, network communication technology, smart mobile
devices, and wireless transmission technology) has enabled firms to
process large amounts of data (Côrte-Real, Oliveira, & Ruivo, 2017;
Zhou, Fu, & Yang, 2016). To analyze such data, firms use these tech-
nologies to generate new discoveries and business insights from highly
rich, detailed, and contextualized data (Chen, Chiang, & Storey, 2012).
For example, firms generate descriptive insights by using visualization
tools to provide a visual summary of large sizes of data. Dashboards, as
an example, can be used to understand a firm's expenses during the last
five years under a variety of different conditions (e.g., introducing new
products, and new stores). Firms can also generate predictive insight
from analyzing large sizes of historical data. For example, firms can use
data mining tools to predict new product development success after
analyzing consumers' historical purchase as well as consumers' online
reviews about a firm's products and services. Firms can also generate
prescriptive insights from large volumes of data. For example, to create
new promotions, firms could use simulations to analyze current and
historical data about their consumers in order to evaluate alternative
scenarios to identify the optimal approaches.
Processing large sizes of data enables firms to better capitalize on
unexplored opportunities, sense the market, and understand the needs
of the customers (Du & Kamakura, 2012). In particular, surging vo-
lumes of data in a single data set helps firms to enhance their knowl-
edge about their customers (e.g., what they like, what they purchase,
and where they purchase). Thus, the utilization of large volumes of data
improves firm insight generation. According to the gestalt insight
learning theory, firms can generate insights by discovering new rela-
tions among different elements (Köhler, 1970); without having suffi-
cient data, firms may not be able to accurately find new patterns in
data. Thus, we hypothesize that:
H2a: Data volume is positively associated with data-driven insight
generation.
Data velocity is defined as the speed at which data is processed and
analyzed, which can come from various sources such as customer
transactions and the Internet of Things (Ghasemaghaei, Ebrahimi, &
Hassanein, 2017a). Advances in intelligent methods and systems have
made it feasible to process data in real time (Phillips-Wren, 2012). For
example, more than one billion new tweets are generated every three
days (Abbasi et al., 2016). Firms with the capability to utilize data in a
timely manner could quickly generate data-driven insights to improve
their decisions efficiently. For instance, a real time track and analysis of
consumers' data (e.g., clickstream data, page visits) can help online
vendors to generate insights by identifying any issues customers face
(e.g., finding items they are looking for) and make quick decisions ac-
cordingly; real-time data assessment and subsequent quick decision
making help firms to attract new customers and gain competitive ad-
vantage. eBay, as an example, has improved its website features (e.g.,
font sizes, images) based on analyzing its customers in real time (Akter
& Wamba, 2016). Analyzing data in real time enables firms to generate
a clear picture of consumer preferences for specific product features in a
timely manner. This insight will help firms to provide personalized
products for their customers, such as Amazon, which has been able to
personalize new product suggestions to their customers by real-time
analysis of the data it receives from its customers.
Based on the gestalt insight learning theory, the problems firms are
confronting could be solved by understanding the relations between
different elements in a particular context (Köhler, 1970). Therefore,
analyzing data in real time helps firms to quickly generate insights
about what is happening now, what is likely to happen in the future,
and what actions they need to take to get the optimal results. This in-
sight generation helps firms to quickly develop new ideas and business
strategies (Erevelles et al., 2016). Thus, we hypothesize that:
H2b: Data velocity is positively associated with data-driven insight
generation.
M. Ghasemaghaei and G. Calic Journal of Business Research 104 (2019) 69–84

Table 1 (Akter & Wamba, 2016). Despite significant advances in analytical

Sample characteristics. tools, deriving deep insights from unreliable data remains challenging
Dimension Category Percentage (%) for firms (Abbasi et al., 2016). To illustrate, social media is inundated
with spam and in the online environment, web spam accounts for >
Firm Size Fewer than 100 employees 29.1 20% of all contents (Abbasi et al., 2014). Likewise, clickstreams from
Between 100 and 1000 employees 40.0
mobile traffic and websites are highly susceptible to noise (Abbasi et al.,
Between 1001 and 5000 employees 18.3
> 5000 employees 12.6
2016). Consequently, verification is essential to create relevant and
Industry Type Manufacturing (producer goods) 13.7 authenticated data to generate valuable business insights. As in-
Manufacturing (consumer goods) 18.3 telligence encompasses data interpretation (Sedera & Gable, 2010)
Services 53.7 under the conditions of data uncertainty, firms cannot generate deep
Financial 11.2
insight about what has happened in the past, what will happen in the
Utilities 3.1
Firm Revenue Less than $ 1 million 11.5 future, and what best course of actions they need to take to get optimal
$ 1 million - $ 5 million 14.6 results.
$ 5 million - $ 10 million 17.9 Based on the gestalt insight learning theory, to successfully discover
$ 10 million - $ 20 million 10.7
relationships in data elements, firms need to analyze high reliable data.
$ 20 million - $ 50 million 13.2
$ 50 million - $ 500 million 18.2
Low data quality may lead to finding inaccurate relationships between
$ 500 million - $ 1 billion 5.7 different factors (Ghasemaghaei, Ebrahimi, & Hassanein, 2017a;
More than $ 1 billion 8.2 Popovič, Hackney, Coelho, & Jaklič, 2014; Wamba, Akter, Edwards,
Age 20–29 years old 16.1 Chopin, & Gnanzou, 2015). Having inaccurate data about consumers'
30–39 years old 40.2
purchasing behavior and their profiles may lead to providing inaccurate
40–49 years old 23.2
50–59 years old 12.1 predictive insights about their future buying behavior. Simons, Dávila,
> 60 8.4 and Kaplan (2000) argue that firms should use credible data to be able
Gender Female 47.0 to create new ideas. Yang, Wang, and Cheng (2009) also argue that low
Male 53.0 reliable data could prevent firms to appropriately identify the oppor-
Role Executive Manager 24.6
Vice President 9.5
tunities and challenges the firm confront. Thus, we hypothesize that:
Middle Level Manager 51.2 H2d: Data veracity is positively associated with data-driven insight
Business unit/department Manager 14.7 generation.
Education High School 10.9
College diploma 15.8
4. Research methodology
Bachelor's degree 41.1
Master's degree 28.7
Ph.D. degree 3.5 4.1. Data collection

To test the research hypotheses, we employed a survey approach to

Data variety refers to formats and types of data. Firms are trying to
collect different types of data including structured (e.g., numbers) and
unstructured data (e.g., images, sensor-based data, user-generated text)
(Abbasi et al., 2016). Firms must analyze a large variety of data to
generate valuable business insights. For example, e-commerce firms can
analyze a variety of customer information such as historical data on
purchasing behavior, customer profiles, seasonal and regional buying
patterns, and user generated text on social media to predict consumers'
buying behavior by store, product, and advertising activities (Biesdorf,
2013). Akter and Wamba (2016) suggest that the variety of data has the
potential to generate value for firms. Particularly, the business insights
generated from analyzing a large variety of data drive fact-based de-
cisions, planning, management, execution, and learning (Akter &
Wamba, 2016). Credit card companies use different data types from call
center operations and website click-stream data to generate insights
about their customers' preferences and customize their offers accord-
ingly (Davenport & Patil, 2012). In addition, firms can use different
types of data about their customers, including purchasing history, real-
time locations, preferences, and demographics to predict customers'
purchasing behaviour and optimize the best course of actions.
Based on the gestalt insight learning theory, processing different
types of data could help firms to better discover new relationships and
patterns in data. Severin (1967) suggests that the number of cues (e.g.,
structured and unstructured data) available to decision makers is as-
sociated with providing deeper insights about a particular problem.
Specifically, collecting various types of data (e.g., numbers, photos,
texts, and pictures) enhances the chance of identifying new and non-
obvious patterns in data (Dong, Liao, & Zhang, 2018). Thus, we hy-
pothesize that:
H2c: Data variety is positively associated with data-driven insight gen-
eration.
Data veracity refers to the reliability and credibility of data. High
data veracity is an important requirement in the context of big data
collect data through a questionnaire. With the help of a national market
research firm, a global leader in digital panel research which helps
researchers gain the views of panel specialists, an invitation to parti-
cipate in the survey was randomly sent to sample of 1286 top and
middle-level managers in the United States who were familiar with the
use of big data within their firms. To make sure that participants were
adequately knowledgeable in answering questions regarding the impact
of big data on firm outcomes, we asked them at the beginning of the
survey about their awareness of big data use in their firms. Participants
that were not familiar were excluded from the dataset (in total 32
participants). Data were collected during two months of April and May
2018 and at the firm level as reported by one manager per firm. This
approach has been used and supported in previous studies (e.g., Akter,
Wamba, Gunasekaran, Dubey, & Childe, 2016; Sun, 2012). After a
careful analysis of all responses, 280 valid surveys (response rate of
about 22%) were considered appropriate for further analysis. Table 1
demonstrates the characteristics of respondents' firms and their demo-
graphic characteristics.
The nonresponse bias has been assessed using Armstrong and
Overton's (1977) guideline. A wave analysis was conducted to compare
the first and last quartile of respondents for the main study variables.
The results demonstrated that both the early and later respondents were
quite similar. Thus, nonresponse bias is not an issue in this study.
4.2. Measures and questionnaire administration
All measurement items, except for data-driven insight and data
veracity, which do not have validated scales, were taken from the ex-
isting literature and were adopted to the context of this study. As shown
in Appendix A, we developed a data-driven insight scale as a second
order construct, and data veracity as a first order construct using Moore
and Benbasat's (1991) guideline (see Appendix B). The survey items and
scales of all the constructs are included in Appendix A.1 We also include

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M. Ghasemaghaei and G. Calic Journal of Business Research 104 (2019) 69–84

Table 2
Interconstruct correlations.
Rliab Eplt Explr Des Pred Pres Var Vel Ver Vol

Exploitation competency 0.92 0.83

Exploration competency 0.94 0.79 0.86
Descriptive insight 0.87 0.54 0.50 0.84
Predictive insight 0.88 0.61 0.54 0.71 0.85
Prescriptive insight 0.88 0.55 0.49 0.76 0.73 0.90
Data variety 0.89 0.56 0.55 0.60 0.58 0.56 0.85
Data velocity 0.92 0.62 0.59 0.59 0.60 0.58 0.68 0.86
Data veracity 0.91 0.61 0.59 0.62 0.60 0.58 0.69 0.73 0.88
Data volume 0.91 0.55 0.50 0.53 0.52 0.52 0.73 0.63 0.69 0.85

Note: Rliab: Reliability; Var: data variety; Vel: data velocity; Ver: data veracity; Vol: data volume; Eplt: exploitation competency; Explr: exploration competency; Des:
descriptive insight; Pred: predictive insight; Pres: prescriptive insight.
Diagonal Value: the square roots of average variance extracted.

control variables (industry type, number of employees, and revenue) to
account for differences among firms.
5. Data analysis and results
To evaluate the nomological validity of the proposed research
model, partial least squares (PLS) version 3.0 (Ringle, Wende, & Will,
2005) was used to analyze the survey data. A two-step approach was
used: 1) the measurement model was examined to measure the relia-
bility and validity of the measures; and 2) the structural model was
examined to measure the strength of the hypothesized relationships
between the constructs.
Our results show that the velocity (accept H2b), variety (accept
H2c), and veracity (accept H2d), but not volume (reject H2a) of big
data are positively and significantly associated with data-driven in-
sights, which in turn is positively and significantly associated with firm
innovation competency (accept H1). The details of our findings are
shown in the following sections.
5.1. Measurement model
The reliability and validity of the scales are measured by assessing
the internal consistency, discriminant validity, and item loadings. The
internal consistencies and item loadings should be larger than the
suggested threshold of 0.70 (Fornell & Larcker, 1981). As shown in
Appendix C, all the loadings meet this guideline. Moreover, as can be
seen in Table 2, the composite reliability scores of all the constructs are
also higher than 0.70.
We followed the guideline recommended by Chin (1998) to measure
the discriminant validity of the measures: 1) the square root of the
average variance extracted (AVE) of the constructs needs to be higher
than the interconstruct correlations, and 2) indicators should have
higher loading on their corresponding construct than other constructs
in the model. As shown in Appendix C and Table 2, the constructs meet
the guideline. Therefore, the findings support the discriminant validity
of the variables in the research model.
The measurement properties for data-driven insight and innovation
competency (the second-order formative constructs) were examined
using Bagozzi and Fornell's (1982) guideline. The weights have been
used to multiply item values and we summed them up for each first
order construct. Then, to create the composite indices, we used the
weighted sum of the first order constructs. The composite indices were
used as the measures for data-driven insight and innovation compe-
tency. The multicollinearity is not a problem for these constructs as the
Variance Inflation Factor (VIF) values for both of them were lower than
the threshold of 3.3 (Diamantopoulos & Siguaw, 2006).
To further ensure the validity of the second-order constructs, as
1
The summary statistics of the constructs are also shown in Appendix A.
recommended by Gefen and Straub (2005), the outer model weights
and their loadings have been examined. The findings showed that the
outer model weights of exploitation competency and exploration
competency (0.24 and 0.23, respectively) on innovation competence
are significant, which shows the importance of both exploitation com-
petency and exploration competency in forming innovation compe-
tency. Furthermore, the results showed that the outer model weights of
descriptive insight, predictive insight, and prescriptive insight (0.40,
0.39, 0.39) on data-driven insight are significant, which shows the
importance of these variables in forming data-driven insight. Findings
also show that the outer model loadings of all the first order constructs
(exploitation competency and exploration competency, descriptive in-
sight, predictive insight, and prescriptive insight) are higher than 0.70,
which indicates the importance of each in forming the second order
constructs (Dwivedi, Choudrie, & Brinkman, 2006).
To establish measurement validity and reliability, considering the
potential effects of common method variance (CMV) on the measure-
ment model is important. To do so, we conducted the correlational
marker variable technique (Lindell & Whitney, 2001), which has been
recommended by many previous studies (e.g., Malhotra, Kim, & Patil,
2006; Pavlou, Liang, & Xue, 2007; Xu, Benbasat, & Cenfetelli, 2014).
Moreover, we conducted Harmon's single-factor test (Podsakoff, 2003),
which also has been suggested by previous studies (e.g., Luo, Ba, &
Zhang, 2012; Sun, 2012). The findings of Harman's single-factor test
showed that CMV is not an issue in this study because several factors
were identified, and the first factor did not have the majority of the
variance. We also conducted the correlational marker variable tech-
nique (Lindell & Whitney, 2001), for which the proposed research
model has been compared against a revised model which included a
marker variable that had no theoretical relationship with the variables
in the proposed research model. We considered gender as a marker
variable in this study as it is theoretically unrelated to the constructs in
the research model. The revised model included paths between gender
and each of the dependent variables. Findings indicate that correlations
and path coefficients were not considerably different between the ori-
ginal and the revised model. In addition, the paths from the marker
variable to each dependent variable were not significant. Therefore, the
findings suggest that common method bias is not an issue in this study.
5.2. Structural model
After evaluating the measurement model, we assessed the structural
model. T-statistics and the bootstrapping technique were employed to
determine the significance of the paths in the research model. Fig. 2
shows the path coefficients for the structural model, and Table 3 in-
dicates the summary of the hypothesis results, which shows that while
H1, H2b, H2c, and H2d are significant, H2a is not significant. In par-
ticular, the results show that data-driven insight explains about 38% of
innovation competency. Moreover, big data characteristics collectively
explain about 53% of data-driven insight.2

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M. Ghasemaghaei and G. Calic Journal of Business Research 104 (2019) 69–84

Big Data
Characteristics
Volume
Data-Driven Insight
Innovation Competency
R2=53%
Velocity 0.249 (t=3.20) R2=38%
- Descriptive Insight
0.613 (t=13.01) - Exploitation Competency
- Predictive Insight
- Exploration Competency
Variety - Prescriptive Insight

Veracity

n= 280

First-Order Factors

Second-Order Factors

Fig. 2. Research results.

Table 3 relationships within the research model. Particularly, we assessed the

Summary of hypothesis tests.
Hypotheses Support for hypotheses
H1: Data-driven insight → Innovation competency Supported⁎⁎⁎
H2a: Data volume → Data-driven insight Not Supported
H2b: Data velocity → Data-driven insight Supported⁎⁎
H2c: Data variety → Data-driven insight Supported⁎⁎
H2d: Data veracity → Data-driven insight Supported⁎⁎
⁎⁎
P < 0.01.
⁎⁎⁎
P < 0.001.
As explained earlier, we included three control variables (industry
type, number of employees, and revenue) to examine whether they
have a significant impact on innovation competency. Results show that
number of employees, industry type, and revenue did not significantly
impact innovation competency (β = −0.063; p > 0.05; β = −0.003;
p > 0.05; β = 0.071; p > 0.05, respectively).
We conducted further analyses to understand whether the impact of
big data characteristics on innovation competency is partially or fully
mediated through data-driven insight. Following Baron and Kenny's
(1986) guideline, results showed that the direct impact of data velocity,
data variety, and data veracity on innovation competency is significant
(β = 0.294, p < 0.001 and β = 0.144, p < 0.05, β = 0.254,
p < 0.001, respectively), whereas the direct impact of volume on in-
novation competency is not significant (β = 0.081, p > 0.05). Next,
we added data-driven insight as a mediator between big data char-
acteristics and innovation competency. Findings showed that the im-
pact of data variety on innovation competency was no longer significant
(β = 0.085, p > 0.05). However, the impact of data velocity and data
veracity on innovation competency was still significant (β = 0.233,
p < 0.01 and β = 0.185, p < 0.05, respectively). Furthermore, the
impact of data volume on innovation competency was still not sig-
nificant (β = 0.069, p > 0.05). The findings indicate that data-driven
insight fully mediates the impact of data variety on innovation com-
petency, while it partially mediates the impact of data veracity and data
velocity on innovation competency. Data volume, interestingly, did not
significantly impact either data-driven insight or innovation compe-
tency.
5.3. Post hoc analyses
We conducted post hoc analyses to further examine the
2
We calculated the effect size (Chin, 2010) to further investigate the impact
of big data characteristics on data-driven insight. The results demonstrated that
while data volume has no impact on data-driven insight generation, data ve-
locity, data variety, and data veracity have similar impacts (0.05, 0.05, 0.06,
respectively) on generating data-driven insight.
impact of each big data characteristic on each data-driven insight (i.e.,
descriptive insight, predictive insight, and prescriptive insight). In ad-
dition, we examined the impact of each data-driven insight on ex-
ploitation competency and exploration competency. Fig. 3 shows that
while, interestingly, the impact of data volume on descriptive insight,
predictive insight, and prescriptive insight is not significant, the im-
pacts of data velocity, data variety, and data veracity are significant on
all data-driven insight types. This means that utilizing various types of
reliable data in a timely manner is important to generate data-driven
insights. However, having large sizes of data does not necessarily en-
hance data-driven insight generation.
Furthermore, as can be seen in Fig. 3, whereas descriptive insight,
and predictive insight impact exploitation competency as well as ex-
ploration competency, interestingly, prescriptive insight marginally
impacts exploitation competency3 and it does not significantly impact
exploration competency. This means that generating insight about the
past and current issues as well as predicting future happenings help
firms to extend their existing products as well as renew them. However,
generating insight (regarding the actions firms need to take) to get the
optimal results marginally enhances exploitation competency and does
not significantly enhance exploration competency.
As explained above, the findings showed that unlike other big data
characteristics, data volume does not significantly impact data-driven
insight generation. We conducted further analyses to explore whether
data volume has a moderating role in the impact of data velocity, data
variety, and data veracity on data-driven insight types. To do so, the
Interaction software package4 was used to understand the role of the
data volume in these relationships.
The resulting plots are presented in Figs. 4-6 in which the t-values
and their significance levels are shown on the regression lines. The
figures show interesting insights regarding the interaction between the
impact of volume and other big data characteristics on each data-driven
insight type. In particular, Fig. 4a, b, and c show that at lower levels of
data volume the impact of data velocity on descriptive insight, pre-
dictive insight, and prescriptive insight is not significant. However, as
the size of data increases, we see a significant and positive relation
between data velocity and insight generation. This means that in order
to achieve maximum levels of data-driven insight generation, quickly
utilizing data may not necessarily enhance the insight generation at the
lower levels of data volume.
Fig. 5a, b, and c show similar results. Particularly, they illustrate
that the descriptive insight, predictive insight, and prescriptive insight
generation are at their highest level when data volume and data variety
3
Recent studies has referred to (0.05 < p < 0.1) as ‘modest’ or of ‘marginal’
significance (e.g., Dimoka, Hong, & Pavlou, 2012).
4
See www.danielsoper.com

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M. Ghasemaghaei and G. Calic Journal of Business Research 104 (2019) 69–84

0.015 (t=0.19)
Volume 0.030 (t=0.36) 0.154(t=2.15)
Descriptive Insight
R2 = 50% Exploitation Competency
R2 = 40%
Velocity 0.253(t=2.92)
0.249(t=2.68) Predictive Insight
R2 = 44%

Variety 0.19(t=2.10)
Prescriptive Insight Exploration Competency
R2 = 41% 0.11(t=1.39) R2 = 32%

Veracity

Fig. 3. Research results (considering all variables as first-order constructs).

Fig. 4. Interaction of volume on data velocity-data driven insight.

are at their highest levels. Interestingly, at lower levels of data volume,
the impact of data variety on insight generation is not significant. This
means that for firms to generate maximum levels of business insights,
they not only need to process different types of data (e.g., structured
and unstructured data), they also need to utilize high volume data to
generate the highest levels of business insight.
Similar to Figs. 4 and 5, Fig. 6a, b, and c show that the descriptive
insight, predictive insight, and prescriptive insight generation are at
their highest level when data volume and data veracity are at their
highest level. However, at the lower levels of data veracity, insight
generation is at its lowest level, and in this case processing large sizes of
data leads to having the lowest level of business insights. This means
that if firms utilize large volumes of unreliable data, the result would be
the lowest level of insight generation. On the other hand, if firms pro-
cess highly reliable data, they could generate high levels of insights as
long as data volume is also high.
6. Discussion
Big data, which is characterized by volume, velocity, variety, and
veracity (Ohlhorst, 2012), is a critical firm resource in generating data-
driven insight and enhancing firm innovation competency. However,
many firms could not successfully improve their outcomes through big
data (Johnson et al., 2017), and many others are still not sure if big data
would improve their outcomes (LaValle et al., 2011). Therefore, the
number of firms that are willing to invest in big data within the next
few years has dropped by 6% (Van der Meulen, 2016). Existing research
has mainly focused on anecdotal evidence about the effect of big data
on business insight generation. Additionally, studies suggest that in the
world of big data, generating valuable insight from data can be an

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M. Ghasemaghaei and G. Calic
Fig. 5. Interaction of volume on data variety-data driven insight.
important driver of innovation (Tan et al., 2015). However, to the best
of our knowledge, previous studies have not explored these relations.
As such, this study attempted to address this unknown in the literature
and empirically investigated it. In particular, we utilized the gestalt
insight learning theory and the organizational learning theory and
collected data from managers who were familiar with big data utili-
zation within their firms to explore the role of big data characteristics
on data-driven insight, which eventually impacts firm innovation
competency. Gestalt insight learning theory provided a solid foundation
for understanding how new insights could be generated by discovering
relations through processing big data. Organizational learning theory
provided a basis for understanding how firms could improve their in-
novation competencies through data-driven insights.
One of the novel contributions of this study is exploring the impact
of each big data characteristic on data-driven insights (i.e., descriptive
insight, predictive insight, and prescriptive insight). Surprisingly, re-
sults show that data volume does not significantly impact any types of
insights generated within firms. However, data velocity, data variety,
and data veracity significantly impact data-driven insights generated
within the firm. To better understand this interesting finding, we con-
ducted further analyses and used an interaction plot to explore whether
data volume has a moderating role in the impact of data velocity, data
variety, and data veracity on data-driven insights. Our findings show
that, interestingly, at the lower levels of data volume, the impacts of
other main big data characteristics (data velocity, data variety, and data
veracity) on data-driven insights (i.e., descriptive insight, predictive
insight, and prescriptive insight) are at the lowest level. These results
are theoretically important given the need to have a better under-
standing of the impact of each big data characteristic on data-driven
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Journal of Business Research 104 (2019) 69–84
insight generation within firms.
This study also provides novel findings for the impact of each data-
driven insight on exploitation competency and exploration competency.
Specifically, the results show that while descriptive insight and pre-
dictive insight significantly impact both exploitation competency and
exploration competency, surprisingly, prescriptive insight marginally
impacts exploitation competency and it does not significantly impact
exploration competency. This means that generating insights regarding
past and current issues, as well as future happenings, help firms to
extend their existing products, process, and knowledge, and to renew
them. This could be due to the fact that discovering patterns (e.g.,
variation in costs, expenses, and revenue) in the historical and current
data and predicting future events and trends may help firms to improve
their competencies in refining the existing products or developing new
ones. However, firms that only rely on analytical tools to find the best
course of action may be able to identify the best solutions in renewing
their existing products, but not in developing new ones.
To sum, this study provides unique insights by investigating the
mediating role of data-driven insight on the impact of big data char-
acteristics on firm innovation competency. The results suggest that big
data characteristics do not necessarily have similar impacts on firm
outcomes, and thus researchers should not consider big data as a hol-
istic variable. This study provides interesting and valuable guidelines
for researchers interested in understanding the impact of big data on
firm outcomes.
6.1. Theoretical contributions
The findings extend theoretical perspectives on big data value, data-
M. Ghasemaghaei and G. Calic
Fig. 6. Interaction of volume on data veracity-data driven insight.
driven insight generation, and innovation competency literature. First,
these findings extend the big data literature by differentiating among
the role of big data characteristics in firm outcomes, rather than con-
sidering big data as a holistic variable. In particular, our findings show
that while data velocity, data variety, and data veracity impact data-
driven insight generation, interestingly, data volume does not sig-
nificantly impact it. This means that although some studies identified
the size of the data as the main characteristic of big data (Demchenko,
Grosso, De Laat, & Membrey, 2013) our findings show that other big
data characteristics (i.e., velocity, variety, and veracity) play more
critical roles in insight generation within firms. Thus, while the positive
impact of data velocity, volume, and variety on data-driven insight
dimensions reinforces gestalt insight learning theory, the non-sig-
nificant impact of data volume on the data-driven insight dimensions
may require different theorizing. These results suggest that perhaps
utilizing large sizes of data is a complex task that may generate in-
formation overload for decision makers, as they need to utilize large
volumes of data to generate insight from big data (Letsholo & Pretorius,
2016). Hence, these findings extend the gestalt insight learning theory
by showing that integrating large volumes of data does not always help
in discovering certain new relations among different elements. Al-
though data volume does not have a direct impact on data-driven in-
sight dimensions, our post hoc analyses suggest that at the lower levels
of data volume, the impacts of other main big data characteristics (data
velocity, data variety, and data veracity) on data-driven insights (i.e.,
descriptive insight, predictive insight, and prescriptive insight) are at
the lowest level. These results make the first strides toward under-
stating the impacts of big data characteristics on data-driven insights.
We call for future studies to open the black boxes we unravel here and
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Journal of Business Research 104 (2019) 69–84
evaluate the mechanism through which different characteristics of big
data influence data driven insight generation within firms.
Second, this study contributes to the literature by validating, con-
ceptualizing, and operationalizing the data-driven insight scale using
Moore and Benbasat's (1991) guideline. Although there are many
conceptual papers regarding the possible impact of big data on business
insight generation, to date there is no study that has developed and
empirically validated this important scale. As there are three main types
of business insights that could be generated through the use of big data
(Appelbaum et al., 2017; Ghasemaghaei et al., 2016), in this study we
developed and validated the scales for these three types, including
descriptive insight, predictive insight, and prescriptive insight. In ad-
dition, this study validated and operationalized a scale for data vera-
city, as it does not have a validated scale in the literature. Hence, this
study provides theoretical contributions by developing important scales
in the context of big data.
Third, this study extends the big data literature by examining the
mediating role of data-driven insight in the impact of big data char-
acteristics on firm outcomes (here innovation competency). This per-
spective represents the integration of gestalt insight learning theory on
the left side of the model with the organizational learning theory of the
firm on the right side of the model. This novel perspective can explain
the mixed findings regarding the value of big data in firms and resolve
existing discussions in the literature regarding why big data does not
always generate positive outcomes (Ghasemaghaei, 2018a;
Ghasemaghaei, Ebrahimi, & Hassanein, 2017a; Ghasemaghaei,
Hassanein, & Turel, 2017b). Specifically, our findings indicate that
data-driven insight fully mediates the impact of data variety on in-
novation competency, while it partially mediates the impact of data
M. Ghasemaghaei and G. Calic
veracity and data velocity on innovation competency. Data volume,
interestingly, did not significantly impact either data-driven insight or
innovation competency. Additionally, the results demonstrated that
while data volume has no impact on data-driven insight generation,
data velocity, data variety, and data veracity have similar impacts on
generating data-driven insight. This suggests that future research
should consider not only the positive effects of big data on firm out-
comes but also its possible non-significant effects.
Fourth, while calls have been issued to investigate the impact of big
data-driven insight dimensions on firm outcomes (Brynjolfsson, Hitt, &
Kim, 2011; Grover, Chiang, Liang, & Zhang, 2018; LaValle et al., 2011),
little empirical research in this domain has been conducted. The mar-
ginal impact of prescriptive insight on exploitation competency and its
non-significant impact on exploration competency reinforce the need to
understand the impact of data-driven insight dimensions on firm out-
comes, as their effects can vary. Our findings extend prior research in
understanding the importance of big data insight generation on firm
outcomes (here innovation competency), and our research is the first to
empirically illuminate the importance of data-driven insight dimen-
sions in influencing firm innovation competency. This paper also re-
presents an extension of the gestalt insight learning theory and the
organizational learning theory to the new context of big data, which
paves the way for further integrating big data research with the orga-
nizational behaviour literature.
Fifth, our study contributes to the broader organizational innova-
tion literature. This early work raises the question about the target,
rather than the quantity, of investment (Henderson & Clark, 1990).
While only suggestive, our study implies that how organizations target
their investments in big data matters for innovation performance. For
instance, incumbent firms are more likely than new entrants to have
larger volumes of data (i.e., customer information), as a function of
market power, than are new entrants. Therefore, incumbents may
mainly invest in and leverage data volume rather than veracity, velo-
city, and variety of data, all of which play important roles in innovation
competency. Our findings may shed light on how great firms can fail
(Christensen, 1997). Future research should explore the decisions of
firms to invest in different types of big data characteristics described in
this study.
To conclude, this study extends big data literature, gestalt insight
learning theory, organizational learning theory, and the broad in-
novation literature by exploring the role of each big data characteristic
in enhancing firm innovation competency through insight generation
within firms.
6.2. Practical contributions
This study provides interesting insights for practice. Our results
highlight the importance of the main big data characteristics in gen-
erating business insights. Our findings suggest that to discover new
relations and patterns between different factors in firms, managers need
to utilize various types of reliable data in a timely manner (i.e., variety,
veracity, velocity). It is important to know that just focusing on utilizing
large amounts of data (i.e., volume) does not help firms to increase their
business insight generation. This could be due to the fact that although
the development of advanced technologies (e.g., smart mobile devices,
cloud computing, sensor technology) has enabled firms to utilize large
sizes of data (Zhou et al., 2016), firms need to also have the ability to
clean the data (i.e., veracity), process data from various sources (i.e.,
variety), and utilize the data in real time (i.e., velocity) in order to
effectively discover new patterns. Particularly, firms can extract new
ideas and better understand their markets and customers when they
quickly analyze large sizes of datasets, which include reliable and dif-
ferent types of data (e.g., image, text, numbers). The ability of firms to
access data, generate insights from it, and act accordingly is crucial for
enhancing innovation competency within firms (Janssen et al., 2017).
Firms can process big data by integrating various datasets from
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Journal of Business Research 104 (2019) 69–84
multiple unstructured and structured sources and use advanced tech-
nologies to analyze and manage the data (Janssen et al., 2017). With
the proliferation of Hadoop systems, the popularity of in-memory da-
tabases, and the advent of data lakes, firms are attempting to collect
huge amounts of data (Abbasi et al., 2016). However, as explained
earlier, focusing only on collecting large sizes of data about customers is
not the key to generating any types of business insights. Firms should
also focus on a real time track of collecting consumer data from various
sources (e.g., historical data of purchasing behavior, user generated text
on social media). To discover patterns in a timely manner, firms can use
real-time big data platforms (e.g., Storm (Gulisano, Jimenez-Peris,
Patino-Martinez, Soriente, & Valduriez, 2012), and SQLstream (Chen &
Zhang, 2014)). They may also use cloud-based services such as plat-
form-as-a-service, infrastructure-as-a-service, and database-as-a-service
(Buytendijk, 2014). New technologies such as the Internet of Things
and social media platforms allow firms to analyze different types of
data such as sensor-based data, user-generated content, consumers'
emotions, opinions, and geographic information (Abbasi et al., 2016).
In addition, firms can use different methods such as cleansing, pruning,
and filtering to control the veracity of data.
The findings provide actionable insights for firms regarding the
impact of data volume on the impact of data velocity, data variety, and
data veracity on data-driven insight generation. The results of the post-
hoc analyses suggest that to have the highest levels of business insights
(i.e., descriptive insight, predictive insight, and prescriptive insight),
firms should utilize large amounts of different types of data (i.e., high
volume, and high variety), large sizes of reliable data (i.e., high volume,
and high veracity), and large volumes of data in a timely manner (i.e.,
high volume, and high velocity). This is an important guideline for
firms intending to maximize their business insight generation by uti-
lizing big data.
The findings also provide unique insights for firms on how to im-
prove their innovation competency through the insights generated by
utilizing big data. In particular, the findings suggest that to effectively
extend existing products or to successfully develop new products, firms
need to discover patterns related to past and current issues and accu-
rately predict future trends and events. For example, firms can use
simple techniques such as drawing charts to understand the variations
in their revenue, sales, and consumer buying patterns (Pusala et al.,
2016). These descriptive insights help firms improve their competencies
in successfully developing new products or extending their current
products. Furthermore, firms can use forecasting and data mining tools
to predict future trends and events (Ghasemaghaei et al., 2016). This
predictive insight will help firms to improve their innovation compe-
tency. However, surprisingly, although discovering the best courses of
actions may improve exploitation competency, it does not enhance the
exploration competency. This could be due to the fact that only relying
on analytical tools to find the best solutions through analyzing current
data may not allow firms to think outside the box in generating ideas to
develop new products. The findings provide useful guidelines for firms
intending to improve their innovation competencies.
Finally, the findings provide insights into the types of organizational
capabilities firms should develop in order to capture opportunities. Our
results suggest that resources generally available in more abundance
(e.g., volumes of data about customers and markets) may provide less of
an advantage than management believes. In fact, only focusing on data
volume, a valuable, rare, and costly to imitate resource (Barney &
Clark, 2007), may lead to competitive disadvantage if innovation
competency is an important factor of organizational performance. The
managerial implication is that a more nuanced view is necessary than
the resource based view would suggest when managers are considering
investments in big data.
In sum, this study provides valuable and unique insights regarding
the impact of each big data characteristic on generating business in-
sights, which lead to enhanced firm innovation competency. Although
the extant literature identified big data as the “new oil” for today's
M. Ghasemaghaei and G. Calic
digital economy (Sivarajah et al., 2017), the existing research mainly
focuses on anecdotal evidence on the impact of big data on firm busi-
ness insight and consequently firm innovation competency. The find-
ings provide novel guidelines for firms to better understand whether the
investment in each big data characteristic eventually improves their
firm outcomes. Particularly, as the findings showed the difference be-
tween the influences of each big data characteristic on generating firm
insights, managers could use the results of this study to better under-
stand the role of each big data characteristic in enhancing innovation
competency through increasing insight generation within their firms.
Additionally, the findings help managers to better understand whether
they should invest in all the main big data characteristics (i.e., data
volume, data variety, data velocity, and data veracity) in utilizing big
data, or if investing in some would be sufficient to enhance their out-
comes.
6.3. Limitations and future research
We note some potential limitations of this study. First, the research
model is tested using cross-sectional data. Future studies could use
panel data to explore its stability. Second, this study collected data only
from firms in the United States. Future studies could expand this study
by collecting data from other countries to discover whether country-
level differences impact the findings of this study. Third, some studies
(e.g., Dijcks, 2012; Iview, 2012; Wamba et al., 2015) extended the Vs
and suggested other characteristics (e.g., data value, data variability).
For example, value, which refers to the importance of extracting eco-
nomic benefit from data, has emerged as another characteristic of big
data (Ghasemaghaei, Ebrahimi, & Hassanein, 2017a). However, many
studies argue that value should be considered as the endogenous vari-
able of big data. For example, Lam, Sleep, Hennig-Thurau, Sridhar, and
Saboo (2017) suggest that processing large volumes of different variety
of reliable data in a timely manner enables firms to interact with their
consumers on a continuous basis and make real-time adjustments to
their offerings, which lead to enhancing the extraction of economic
benefits from the data (i.e., data value). According to Shafer (2018),
studies have extended the “4 V's” we considered in this study and added
42 dimensions to big data characteristics. However, as supported by
previous studies (e.g., Camacho, Macia-Fernandez, Diaz-Verdejo, &
Garcia-Teodoro, 2014; Chen et al., 2017; Raghupathi & Raghupathi,
2014), we characterized big data by data velocity, data variety, data
veracity, and data volume, as the nucleus of the concept of “big data”
can be expressed by them. Future studies could develop scales for other
Vs and validate the impact of them on firm outcomes. Fourth, in this
study, we examined the role of big data characteristics in enhancing
firm innovation competency because big data is increasingly becoming
a critical firm resource, and volume, veracity, velocity, and variety are
considered to be the main characteristics of big data. However, pre-
vious work has considered several other firm resources that are not
considered here, but could also enhance firm innovation competency.
These antecedents can be broadly divided into environmental factors
and organizational antecedents. For instance, by creating support
business-unit contexts, leaders can shape individual behaviors in an
organization that enable innovation competency. As another example,
structural elements related to the two underlying concepts of spatial
separation and parallel structures can determine innovation compe-
tency. Future studies could examine the role of these resources on im-
proving firm innovation competency as well as how these factors in-
teract with big data characteristics as one antecedent of organizational
innovation. Fifth, the impact of big data characteristics on firm in-
novation competency could be mediated by factors other than data-
driven insights. Future studies could explore the mediating impact of
other variables (e.g., decision making quality, knowledge sharing) on
80
Journal of Business Research 104 (2019) 69–84
the impact of big data characteristics on firm outcomes. Sixth, one of
the main challenges in big data utilization is the privacy concern in-
volved with big data collection and aggregation (Ghasemaghaei,
2018b). Future studies could examine which big data characteristic
(i.e., volume, velocity, veracity, volume) has a more critical role in
triggering privacy concerns and whether such concerns would influence
firm innovation competency. Furthermore, future work should examine
the trade-offs firms make when utilizing big data for performance. This
includes the cost to individual privacy when utilizing big data to en-
hance different types of firm performance. Seventh, in this study, the
proposed research model is generally developed for firms with different
types and sizes. We controlled for firm size, industry type, and firm
revenue, but these variables did not significantly impact firm innova-
tion competency. Future studies could examine how big data influences
firm innovation competency for more specific types of firms (e.g.,
multinational corporations, small and medium-sized enterprises). Fi-
nally, in this study, we considered the impact of the characteristics of
data instead of the data itself. Future studies could consider the impact
of the actual dataset on firm outcomes and examine whether it would
influence them.
7. Conclusion
This study addresses an important gap in the literature on whether
big data characteristics improve data-driven insight generation, which
consequently impacts firm innovation competency. In particular, this
study provides a nomological network that examines the effect of data
volume, data velocity, data variety, and data veracity on descriptive
insight, predictive insight, and prescriptive insight which lead to im-
proving firm innovation competency (i.e., exploitation competency and
exploration competency). The findings provide a theory-based under-
standing of the impact of big data on firm outcomes, while also pro-
viding guidelines for managers to understand the role of each big data
characteristic in generating business insights. The results provide novel
and unique insights about the importance of each big data character-
istic on descriptive insight, predictive insight, and prescriptive insight.
Specifically, the findings show that while data volume does not sig-
nificantly impact generating data-driven insights, data veracity, data
velocity, and data variety have positive impacts on enhancing data-
driven insights. Moreover, while descriptive and predictive insights
have a significant impact on firm exploitation competency and ex-
ploration competency, prescriptive insight marginally impacts ex-
ploitation competency and it does not significantly impact exploration
competency. One of the interesting findings of this study is the ex-
ploration of the moderating impact of data volume on the impact of
other big data characteristics on firm data-driven insight. Collecting
large volumes of data enables firms to have the highest level of insight
generation when they invest in other big data characteristics. In sum,
understanding the impact of each big data characteristic on firm out-
comes helps firms to better invest in each big data characteristic and to
have a better understanding of how each characteristic can improve
their outcomes.
Declaration of Competing Interest
None.
Acknowledgment
This work was supported by the Arts Research Board Major Seed
Grant from McMaster University [grant number 20008720] and by the
Social Sciences and Humanities Research Council of Canada [grant
number 20006922].
M. Ghasemaghaei and G. Calic Journal of Business Research 104 (2019) 69–84

Appendix A. Constructs and survey items

Table A1
Measurement items for variables.

Construct names Measurement items (7-point scale) Mean SD Resource

Big data character- 7-point Likert scales ranging from “strongly disagree” to “strongly agree”.
istic Please indicate the extent to which you disagree or agree with the following statements:
Volume • In my firm, we analyze large amounts of data. 5.47 1.06 Johnson et al.
• In my firm, the quantity of data we explore is substantial. (2017)
• In my firm, we use a great deal of data.
• In my firm, we scrutinize copious volumes of data.
Velocity • In my firm, we analyze data as soon as we receive it. 5.34 1.08 Johnson et al.
• In my firm, the time period between when we get new data and when we analyze it is short. (2017)
• In my firm, we are fast in exploring our data.
• In my firm, we analyzes data speedily.
Variety • In my firm, we use several different sources of data to gain insights. 5.56 0.93 Johnson et al.
• In my firm, we analyzes many types of data. (2017)
• In my firm, we examine data from a multitude of sources.
Veracity • In my firm, we deal with precise and certain data. 5.57 1.01 Developed
• In my firm, we analyze high quality data.

Data-driven insight
• In my firm, we process data that is reliable and consistent.
7-point Likert scale from “Strongly disagree” to “Strongly agree”. Developed
Please indicate the extent to which you disagree or agree with the following statements:
Descriptive insight • In my firm, the relationship between what has happened in the past and current tasks is well understood. 5.51 0.94
• In my firm, past issues related to tasks at hand are understood in detail.
• In my firm, there is good insight into tasks at hand.
Predictive insight • In my firm, there is a good understanding of how the tasks at hand will lead to future outcomes. 5.57 0.94
• In my firm, there is a good predictive understanding of possible future outcomes.
• In my firm, there are good insights into each potential future outcome.
Prescriptive insight • In my firm, there is a good understanding about the optimal sets of actions to be done in relation to tasks at hand. 5.58 0.86
• In my firm, there is a good prescriptive understanding of what should be done in relation to tasks at hand.

Innovation compe-
• In my firm, there are good insights into the best course of action to improve future outcomes related to tasks at hand.
7-point Likert scale from “Not at all” to “To a very great extent”.
tency Please indicate to what extent has your firm
Exploitation com- • Upgraded current knowledge and skill for familiar products and technologies. 5.35 1.03 Atuahene-Gima
petency • Invested in exploiting mature markets and technologies. (2005)
• Enhanced competencies in searching for solutions to customer problems that are near to existing solutions rather
than completely new solutions.
• Upgraded skills in which your firm already possesses significant experience.
• Strengthened knowledge and skills for projects that improve efficiency of existing activities.
Exploration compe- • Acquired new-to-the-firm technologies and skills. 5.28 1.16 Atuahene-Gima
tency • Learned skills and processes entirely new to the industry. (2005)
• Acquired entirely new managerial and organizational skills.
• Invested in exploring new markets and technologies.
• Strengthened innovation skills in new areas.

Appendix B. Instrument development process

In this study, we used Moore and Benbasat's (1991) guideline to operationalize and validate data-driven insight and data veracity, as their scales
do not exist in the literature. After reviewing the literature, we developed the scales by first identifying the measurement items for each scale. Then,
we used a panel of graduate students and asked about their opinion and feedback on the selected items. After we updated the measurement items
based on the feedback and comments we received from graduate students, all the items in the survey were presented to three PhD students randomly,
who were then asked to categorize the items for each construct. After we received feedback from the students, we refined the items accordingly.
Finally, we asked another 3 PhD students to categorize the items for each construct; we received a high agreement between the judges (95%). This
process helped us in establishing reliable and valid measurement items for data-driven insight and data veracity. The final measurement items for
these constructs are shown in Table A1 and were further tested in the measurement model validation.

Appendix C. Loading of measures

Table C1
Loading of measures.

Var Vel Ver Vol Eplt Explr Des Pred Pres

Data Variety1 0.84 0.63 0.61 0.65 0.50 0.49 0.52 0.56 0.46
Data Variety2 0.87 0.55 0.58 0.60 0.46 0.43 0.51 0.47 0.52
Data Variety3 0.85 0.55 0.56 0.60 0.47 0.48 0.50 0.43 0.46
Data Velocity1 0.58 0.86 0.68 0.55 0.57 0.56 0.52 0.51 0.52
Data Velocity2 0.58 0.82 0.57 0.48 0.47 0.48 0.47 0.44 0.46
Data Velocity3 0.61 0.89 0.67 0.61 0.56 0.51 0.55 0.59 0.53
Data Velocity4 0.56 0.86 0.59 0.52 0.51 0.49 0.47 0.50 0.48
Data Veracity1 0.58 0.68 0.86 0.60 0.54 0.48 0.57 0.51 0.50
(continued on next page)

81
M. Ghasemaghaei and G. Calic Journal of Business Research 104 (2019) 69–84

Table C1 (continued)

Var Vel Ver Vol Eplt Explr Des Pred Pres

Data Veracity2 0.60 0.61 0.88 0.64 0.53 0.54 0.52 0.52 0.50
Data Veracity3 0.63 0.64 0.88 0.58 0.55 0.52 0.55 0.56 0.52
Data Volume1 0.60 0.52 0.61 0.86 0.48 0.42 0.44 0.45 0.44
Data Volume2 0.62 0.55 0.61 0.85 0.47 0.42 0.46 0.46 0.44
Data Volume3 0.66 0.54 0.59 0.86 0.44 0.42 0.49 0.44 0.47
Data Volume4 0.59 0.56 0.54 0.84 0.48 0.46 0.39 0.41 0.42
Exploitation Competency1 0.51 0.57 0.57 0.49 0.86 0.72 0.55 0.57 0.52
Exploitation Competency2 0.47 0.52 0.52 0.44 0.81 0.70 0.43 0.46 0.41
Exploitation Competency3 0.47 0.48 0.44 0.43 0.79 0.60 0.44 0.47 0.43
Exploitation Competency4 0.46 0.51 0.51 0.47 0.88 0.72 0.46 0.54 0.48
Exploitation Competency5 0.44 0.47 0.51 0.45 0.82 0.69 0.38 0.49 0.42
Exploration Competency1 0.52 0.56 0.59 0.48 0.69 0.88 0.48 0.53 0.49
Exploration Competency2 0.49 0.54 0.50 0.44 0.68 0.87 0.41 0.45 0.37
Exploration Competency3 0.39 0.47 0.39 0.35 0.67 0.83 0.36 0.39 0.37
Exploration Competency4 0.48 0.44 0.49 0.44 0.69 0.85 0.43 0.49 0.41
Exploration Competency5 0.48 0.55 0.54 0.45 0.67 0.89 0.46 0.46 0.45
Descriptive Insight1 0.55 0.54 0.51 0.48 0.47 0.41 0.84 0.56 0.61
Descriptive Insight 2 0.50 0.51 0.58 0.46 0.49 0.47 0.87 0.66 0.68
Descriptive Insight 3 0.47 0.44 0.49 0.39 0.41 0.38 0.81 0.58 0.64
Predictive Insight 1 0.51 0.47 0.48 0.47 0.47 0.37 0.61 0.80 0.60
Predictive Insight 2 0.48 0.55 0.53 0.43 0.55 0.51 0.59 0.88 0.61
Predictive Insight 3 0.48 0.50 0.52 0.41 0.52 0.48 0.61 0.85 0.63
Prescriptive Insight 1 0.51 0.44 0.48 0.46 0.42 0.37 0.65 0.55 0.82
Prescriptive Insight 2 0.48 0.51 0.46 0.40 0.50 0.45 0.63 0.66 0.88
Prescriptive Insight 3 0.45 0.53 0.52 0.47 0.46 0.41 0.65 0.62 0.83

Note: Var: data variety; Vel: data velocity; Ver: data veracity; Vol: data volume; Eplt: exploitation competency; Explr: exploration competency; Des: descriptive
insight; Pred: predictive insight; Pres: prescriptive insight.
Bold numbers: loadings of the items on their assigned constructs.

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Maryam Ghasemaghaei is an Assistant Professor of Information Systems at DeGroote
School of Business at McMaster University. Her research interests relate to technology
adoption, and the use of data analytics in organizations. Her research activities have
resulted in over 20 peer-reviewed articles in academic journals such as MIS Quarterly,
Journal of Strategic Information Systems, Information & Management, Decision Support
Systems, Computers in Human Behavior, Journal of Computer Information Systems,
International Journal of Information Management, Enterprise Information Systems,
Behaviour & Information Technology, and Communications of the Association for
Information Systems.
Goran Calic is an Assistant Professor of Strategic Management, with associate member-
ship in Information Systems, at McMaster University. He holds a PhD in Strategic
Management from Purdue University. Goran Calic's research focuses on understanding
why some individuals are more creative and some organizations are more innovative than
others. His area of research is primarily concerned with early-stage entrepreneurship. His
work on creativity in organizations was awarded the 2015 Max Henri Boisot Award. He
has written in a variety of academic publications, such as the Journal of Management
Studies, Rutgers Business Review, the Academy of Management Learning & Education,
and The Oxford Handbook of Organizational Citizenship Behavior. Goran Calic worked
for four years in Osnabrück, Germany at Georgsmarienhütte GmbH. During this time, he
was involved in activities related to market research, sales, and organizational strategy.