Big Data-based Management Decisions and Start-up Performance

With big data (BD) becoming widely available, the question arises whether big data analytics (BDA) enhances managerial decision-making and firm performance not only for incumbents but also for start-ups. Given their liability of newness and limited resources, adopting this new technology poses significant risks for young ventures. Drawing on a large sample of start-ups in Germany, we examine BDA adoption and its economic impact across multiple performance measures, including survival, costs, sales, employee growth, and access to financing. Our findings show that BDA adoption is a risky strategy with potentially high rewards. Start-ups using BDA face lower survival rates, driven by two interrelated factors: higher operating costs and greater uncertainty in sales. At the same time, conditional on survival, adopters of BDA benefit from higher sales, stronger employee growth, and a greater likelihood of attracting venture capital. For high-performing BDA adopters, sales and employee growth are even more pronounced. Overall, BDA functions as a performance amplifier, yielding higher returns for ventures well-positioned to leverage its potential.

Rodepeter, Elisa, Christoph Gschnaidtner and Hanna Hottenrott (forthcoming), Big Data-based Management Decisions and Start-up Performance, Small Business Economics