Josh Blackman » “Publicly-traded companies that were more data-driven were about 5% more productive than their competitors, a statistically significant difference.”

“Publicly-traded companies that were more data-driven were about 5% more productive than their competitors, a statistically significant difference.”

October 20th, 2011

Check out this paper, and this blog post:

We examine whether performance is higher in firms that emphasize decisionmaking based on data and business analytics (which we term a data-driven decisionmaking approach or DDD). Using detailed survey data on the business practices and information technology investments of 179 large publicly traded firms, we find that firms that adopt DDD have output and productivity that is 5-6% higher than what would be expected given their other investments and information technology usage. Using instrumental variables methods, we find evidence that these effects do not appear to be due to reverse causality. Furthermore, the relationship between DDD and performance also appears in other performance measures such as asset utilization, return on equity and market value. Our results provide some of the first large scale data on the direct connection between data-driven decisionmaking and firm performance.