Beware the Pitfalls of Data Resources Acquisition Understanding the Role of Data Analytics and Data-Driven Culture in Achieving Product Innovation

Abstract

When confronted with substantial volumes of data, companies often struggle to achieve the expected performance returns, especially in the AI era, where data plays a crucial role. This is due to the cumbersome nature of data resources, leading to the potential pitfalls of amassing excessive amounts of data. Based on dynamic capability theory, which emphasizes market adaptation and product innovation, this study uses multi-period, matched-pair survey data from CEOs and product development directors to investigate how data resources influence product innovation. The findings show that: (1) dynamic capability mediates the relationship between data resources and product innovation, with an inverted U-shaped curve indicating that excessive data may hinder innovation; (2) enhancing data analytics capability and fostering a data-driven culture help mitigate the negative effects of excessive data. Data analytics capability has a more immediate impact on dynamic capability, while data-driven culture requires a lag of one or two periods to show its full effect; (3) a heterogeneity analysis of the primary model, examining the impact of external factors on dynamic capability from three dimensions: market competition, institutional environment, and technology change. Our findings reveal that in the context of intense market competition and flexible institutional environment, the influence of data resources on dynamic capability still follows an inverted U-shaped pattern. However, the positive effect overall is more pronounced. Technological change does not significantly alter this relationship. This research provides theoretical and managerial insights for companies to navigate the dark side of data resources and strategically enhance their dynamic capabilities for product innovation.

Keywords: Data resource, Dynamic capability, Data analytics, Data-driven culture, Product innovation