Business Intelligence: An Important Tool to Develop Dynamic Capabilities and Sustainable Innovation in the Digital Age

Abstract

While the issue of business intelligence is rapidly gaining popularity across a wide range of domains, the majority of research treats it as a single capability or technique, such as big data analytics capability. However, as a tool for Big Data Decision-making or technique for enhancing operational research technique, there is still a low amount of work that examines business intelligence as a tool to develop dynamic capabilities of the organization and to contribute to sustainable innovation, in particular in the digital age. Therefore, to address this gap, this chapter aims to discuss how organizations can use technologies, including business intelligence as a tool for creating new knowledge, which in turn helps organizations to improve their dynamic capabilities and achieve sustainable innovation. Recognizing how these firms’ dynamic capabilities are started building, achieved sustained, enlarged, utilized, evolved, and phased out in phrases of their constituent micro-foundations. So, this study suggests business intelligence as a process that helps organizations collect and transform data into information and knowledge, which contributes to building dynamic capabilities. It is important for managers to understand how these firms’ dynamic capabilities are started building, achieved sustained, enlarged, utilized, evolved, and phased out in phrases of their constituent micro-foundations.

1. Introduction

Over the last several years, scholars and practitioners have recognized, considered, and identified how increased digitalization and datafication of social action facilitates new opportunities for arranging and changing patterns of organizations [1, 2, 3]. Among all businesses have an ongoing shift towards further digital forms of work in recent times. Digitalization can indeed be seen as the renovation of controller inputs into digital forms [4, 5]. Nonetheless, the digital revolution changes organizational capabilities by removing or reducing material constrictions related to work, such as time, space, location, or capital requirements. Whilst the work and information exchange could be digitized, it is further appropriate to consider trying to organize as an implementation of change [5, 6]. Once organizations use the digital format nature of work to produce unique forms, they are digitalizing the organization which include increasingly distributed and flexible work arrangements [7]. The automation of administrative task system applications, the adaptation of knowledge management systems [8], and the use of businesses as networking sites [9]. Enterprises can significantly enhance the amount of data that is transparent and inclusive because digitization drives the marginal cost of producing information goods to near zero and digital storage costs continue falling. Digital technology for contemporary businesses is a procedure of digitalization that many see as required to pursue innovation and remain competitive [10, 11].

The advancing technological accessibility enabled by a variety of networks and electronic tools delivers the facilities for digital data to be transmitted comfortably. As the fundamental network process that links individuals are becoming more rigorous, so will expectations for social and organizational internet access [12]. Furthermore, as demonstrated in prior research, the vastly increased accessibility of digital data allows individuals within companies to anticipate ever more social, and business interconnection since work activities are regarded as easily transportable [13, 14], compelling companies to expand the economy in their techniques to overcome to require to ensure levels of information technology connectivity. In simple, digital data contributes to increased requirements for technological and human integration, in which the compound process is repeated to the place where things in companies expect to be continuously connected to each other at all points of time [15].

Digital technologies can provide organizations with rapid access, enormous opportunities, and challenges [16]. Given the growing influences and reliance on digital technologies and applications in various market segments, the relevance and significance of implementing strategic understanding in organizations have a larger effect than ever on the development and sustainability of achieving competitive advantage and value [17, 18]. However, apart from the application of strategic understanding, the previous research on digitally enabled conceptualizations, for example, cloud computing, Internet of things (IoT), big data, and business intelligence sees them as valuable processes for solving challenges, which are frequently linked to attaining and sustaining value for stakeholders [19, 20]. Otherwise, technological innovations and human movement have consistently aided in the management of strategic knowledge and capabilities in businesses. Indeed, some intelligence tools and practices such as business and competitive intelligence can help firms create new knowledge, which contributes to developing dynamic capabilities within firms [21, 22].

Some previous research (e.g., [23, 24, 25] investigated the relationships between certain components related to business intelligence such as the analytical capacity on one side, and the dynamic capabilities, and performance of the organization on the other side. However, there is still a lack of research that examines the impact of business intelligence on certain internal mechanisms of company performance [26], in particular on sustainable innovation. This paper attempts to fill this research gap by examining how business intelligence can contribute to sustainable innovation through dynamic capabilities. This study aims to explore the role of business intelligence in developing dynamic capabilities and its direct and/or indirect contribution to innovation activities and the sustainable organizational performance of companies. More specifically, this study aims to answer the following research question:

Q1—How does business intelligence contributes to the development of dynamic capabilities and, therefore, to the sustainable innovation of organizations?

This paper attempt to explain how business intelligence can help to develop technological dynamic capabilities, which in turn contribute to sustainable innovation. Although this paper presents only a theoretical study, it proposes a research model which can guide managers to make the best choices regarding investment in technological resources such as business intelligence.

The remainder of this chapter is structured as follows: (1) this introduction, describing the relevance of the research topic and its context; (2) the definition of business intelligence; (3) the relationship between business intelligence, dynamic capabilities, and sustainable innovation; (4) the implications; (5) the limitations and future research, and; (6) the conclusion.

2. Business intelligence

In recent years, there has been an increasing interest in intelligence activities such as business intelligence, competitive intelligence, and artificial intelligence. In this section, we choose to highlight the need for organizations to build dynamic capabilities by using technologies especially, business intelligence, which helps them to be more competitive and innovative [27].

Business intelligence is a concept that emerged in the early 1970s when transactional information systems could not help managers make decisions. This weakness spurred the development of a set of tools and techniques based on advanced algorithms to process data faster to achieve organizational goals [28]. New decision-support information systems have enabled companies to process large volumes of data requiring rapid storage and access [29]. In their comprehensive literature review, [30] view business intelligence as a combination of policies, processes, cultures, and technologies used to store, manipulate, and analyze data. In addition, four main steps characterize business intelligence: system sources, data acquisition, data warehouse, and reporting and analysis [31, 32].

From another perspective, business intelligence is an umbrella term that can also be defined as a set of data aggregation processing methods from different departments such as marketing, sales, human resources, and finance that assists executives in decision-making [33]. For a long time, data related to different disciplines existed within organizations without being well leveraged. In addition, the emergence of new technologies has greatly contributed to flooding businesses with massive and varied data, which required a tool to help integrate, store, and analyze data in order to create information and knowledge for decision-making. Business intelligence’s main role is to transform data into information, then into knowledge and action [34]. To this end, it is relevant to distinguish between information and knowledge. According to [35], information is factual; it refers to a set of numbers, statistics, and scattered data, among others, on people, and companies, while knowledge is a set of information that has been filtered, analyzed, and then implemented. In the same vein, [36, 37] report that knowledge is the richest form of information. For these authors, knowledge is a set of information on a given subject, which has been interpreted, reformulated, and put into action by an individual based on his expertise and prior knowledge.

3. Business intelligence, dynamic capabilities, and sustainable innovation

Previous studies have reported that knowledge is a key lever for organizational learning, innovation, and developing a set of organizational capabilities, such as dynamic capabilities [38]. For this reason, [39, 40] suggest integrating knowledge flows and organizational learning as a dimension of dynamic capabilities. According to this perspective, intelligence tools and techniques based on information collection, analysis, and dissemination contribute to knowledge generation [41] and the development of dynamic capabilities [42, 43].

The dynamic capabilities approach is now the dominant framework in strategic management for explaining the reconfiguration of resources and competencies through which organizations can respond to changes in their environment and innovate [44]. The dynamic capabilities consist of three categories, identifying and assessing opportunities (sensing), mobilizing resources to take advantage of the identified opportunity (seizing), and continuously reconfiguring resources (transforming) [45]. Dynamic capabilities can be defined as “the firm’s ability to integrate, build, and reconfigure internal and external resources or competencies to address, and possibly shape, rapidly changing business environments” [46, 47]. This definition highlights the importance of reconfiguration of organizational resources that help managers to identify opportunities and threats then act quickly to adjust to frequent changes in the external environment.

A number of researchers consider the relationship between dynamic capabilities and technologies as a bidirectional relation. Indeed, on the one hand, and on the other hand, technologies including analytic tools contribute to developing dynamic capabilities, and the relevance of sensing and learning capabilities can be seen as a trigger of technologies capabilities [47]. In the era of advanced technologies that have invaded all organizations, many researchers consider information technologies capabilities, such as the expertise of staff in technical knowledge, the flexibility of the information technologies infrastructure, and the ability to manage information technologies one among dynamic capabilities dimensions [48]. In the same sense, [49] point out that the development of new technological capabilities helps managers to adapt quickly to the turbulence of the environment [50] suggests that information technologies grant organizations the capacity to transform and bring out new knowledge, which promotes the improvement of their dynamic capabilities. Indeed, to manage dynamic data and information, organizations necessitate having analytic capabilities and a governance plan to maximize value [51].

There have been several types of research reports that business intelligence and dynamic capabilities are significantly correlated in the area of business and management studies. Although most researchers in the field consider business intelligence a single capability, such as Big Data Analytics Capability [52], a tool of Big Data Decision-making [53], or a technique for enhancing Operational Research [37], it can be considered a trigger of dynamic capabilities [19]. Business intelligence plays an important role in creating knowledge and developing dynamics capabilities within firms. It improves the collection of relevant information on the needs of customers and external partners, which helps develop organizations’ sensing capacity [40].

Previous studies highlight several advantages of dynamic capabilities within organizations [53] reports that the dynamic capabilities approach helps managers to create a competitive advantage. In the same vein, the dynamic capabilities strategy is asserted to be an encouraging approach to improving the understanding of critical innovation management for environmental sustainability [54]. Businesses should start to consider their fundamental actions in order to integrate, coordinate, build, and reconfigure their resources and competencies in the context of external sustainable development innovations [11]. Dynamic capabilities enable a company to align its resources and competencies with strategic environmental policies and the general business environment. To look at it another way, a company’s dynamic capabilities evaluate its capacity and willingness to implement these changes in its competencies and resources in order to participate in the transformation to a more sustainable industry [44, 55]. Thus, it highly suggests that dynamic capabilities be evaluated particularly for various tasks because there are numerous multiple kinds of dynamic capabilities for carrying out various tasks, ranging from new product development to post-acquisition incorporation (e.g., see [46]).

Giving to past studies, businesses are indeed successful in bringing new technologies and products for environmental protection to the industry when they establish and organize their innovation capability around sustainable solutions [56, 57]. The implementation of clean and energy-efficient technologies is dependent on businesses’ opportunity to develop dynamic capabilities for this function. As a result, more studies on businesses’ dynamic capabilities for environmentally responsible advancements have indeed required the kind of dynamic capabilities that should be developed to successfully overcome starting to emerge emerging issues [58]. Therefore, continued studies make the argument that, while much progress was made in understanding organizational capabilities, the reasoning behind these shared occurrences takes account of these constructs’ micro-level, or “micro-foundations.” A micro foundations method is concerned with unpacking dynamic capabilities in terms of fundamental different elements [50, 59]. Dynamic capabilities should always be described in terms of organizational structures and managerial ways of implementing business models. The managerial and organizational practices related to how things are done in businesses are also known as procedures or patterns of current practice and learning, [6, 60] characterizes micro foundations as “distinct skills, processes, procedures, organizational structures, decision rules, and disciplines” that serve as the overall organizational underpinning for resources and capabilities.

To attain sustainable growth, businesses are progressively considering the importance of the building and advancement of environmentally sustainable innovations [4, 61]. Sustainable innovation is considered an innovative and principal characteristic of business operations that confront the existing system in order to develop innovative products and processes that not only produce value-added economic performance but also advantage the environmental ecosystems [62]. For instance, immaculate technology solutions are indeed a type of environmentally sustainable innovation that aims to minimize dependence on renewable sources while also promoting environmental sustainability through the development of many more produces more power advanced technology [63]. Sustainable innovation as a business enabler allows businesses to implement sustainable development concerns regarding their techniques whereas strengthening their competitiveness [64]. Since a wide range of stakeholders is involved in the design process, incorporating environmental policies complicates businesses’ innovation strategies. The sophistication of the innovation process influences everything from concept development to marketing practices [65]. According to [66, 67], this complexity is triggered by the robust and sophisticated innovation of operations and product higher-level technology and the ambiguity and variety of the technological and business domains in which businesses usually start competing.

This unpredictability complicates strategic directions, particularly one‘s innovation schemes and performance because this requires to face changes and be able to adapt the business’s capabilities to its environment [15, 68]. Given to [69], environmental sustainability innovation regularly encompasses a departure from the existing body of knowledge and is therefore competence-destroying. Sustainable innovation frequently necessitates a disruptive technological transformation or a complete solution overhaul [70]. Also, [71] contends that environmentally sustainable innovation varieties from responsibility affect so otherwise to doing completely diverse things. As a result, mainstream, market-driven perspectives to advancement are insufficient for smartly improving and maintaining innovation for environmental sustainability [72, 73].

As we mentioned above, the digital transformation age represents a set of opportunities that should be sensed and seized. To do so, firms must reconfigure their technological resources and mobilize their organizational capabilities, including business intelligence [74, 75]. Indeed, business intelligence as a tool for collecting and analyzing information helps to identify opportunities, predict market trends, and helps to anticipate external changes by reconfiguring internal resources, particularly technological resources. In the same manner, [76] reports that to take advantage of emerging big data opportunities, firms must continually renew and reconfigure their technological resources. Based on the discussion above, we propose the research model below (Figure 1).

Figure 1.

Research model.

4. Implications

Some previous research investigated the relationships between certain components related to business intelligence such as the analytical capacity on one side, the dynamic capabilities, and the performance of the organization on the other side. However, there is still a lack of research that examines the impact of business intelligence on certain internal mechanisms of company performance [26, 77], in particular on sustainable innovation. This paper contributes to fill this research gap by examining how business intelligence can contribute to sustainable innovation through dynamic capabilities. It aims to explore the role of business intelligence in the development of dynamic capabilities and its direct and/or indirect contribution to innovation activities and the sustainable organizational performance of companies. Precisely, this study proposes a research model which shows the importance of business intelligence to build the technological dynamic capabilities that led to sustainable innovation. Although this paper presents only a theoretical study, it proposes a research model which can guide managers to make the best choices regarding investment in technological resources such as business intelligence [78].

Practically, to achieve global performance and be more competitive, firms’ managers need to question the ability of their organizations to innovate, which leads them to mobilize the dynamic capabilities for developing innovative products and services that lead to disrupting and energizing the market [79]. The research of [68, 80] using a survey of 175 Greek companies highlights that dynamic capabilities play a mediator role in the relationships between business intelligence and innovation (incremental and radical innovation). Given the importance of business intelligence in creating new knowledge [81, 82] and its contribution to developing dynamic capabilities [71], which lead to sustainable innovation, firms need to consider and give more attention to investing in digitalization and analytical technologies. Dynamic capabilities help firms to reconfigure resources continuously and achieve sustainable growth [6, 9, 83].

5. Limitations and future research

This study presents some limitations that can be seen as an opportunity for further research. First, the proposed research model in this paper may be considered in the future more qualitative and quantitative empirical investigations can be developed in the future to expand and validate our recommendations. As this will help to improve the understanding related to sustainable innovation, as it’s an important component of the economy of all countries. Second, our paper does not specify the context if it is in large companies or SMEs because business intelligence and the technological reconfiguration of resources require a large investment, which it’s limited in the SMEs context. Therefore, future research could examine and compare the research model by considering the firm as a control variable. Finally, researchers can also widen and strengthen this research area by recognizing businesses’ strategy catalysts, assessing their platform-based innovation management levels, and analyzing the influence on their performance, such as revenues development and customer attrition. Second, Future research may list the appropriate capabilities (e.g., digital analysis, network orchestrating, value co-creation skills) required for businesses to operate platform-based PSI systems, improving our knowledge of platform-based servitization’s operational characteristics.

6. Conclusion

In the age of digitalization, new technologies influence organizational capabilities, which allow the firm’s managers to develop prospecting and foresight techniques and practices to face environmental changing. Among these practices, many studies suggest business intelligence as a process that helps organizations collect and transform data into information and knowledge, which contributes to building dynamic capabilities. As mentioned above, dynamic capabilities refer to an organization’s ability to voluntarily create, expand, or change its resource base to address threats associated with the volatility of the business environment. Therefore, it is important for managers to understand how these firms’ dynamic capabilities are started building, achieved sustained, enlarged, utilized, evolved, and phased out in phrases of their constituent micro-foundations [84, 85].

Acknowledgments

The authors thank Université de Québec à Trois-Rivières for supporting this research.

Conflict of interest

No potential conflict of interest was reported by the author.