Online seminar – The value of information in competitive markets: The impact of big data on small and medium enterprises

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• Ricard Gil, Associate Professor and Distinguished Faculty Fellow of Business Economics, Smith School of Business, Queen’s University
• Wednesday 24 November 2021, 15:00-16:00
• Via Zoom.

If you have a question about this talk, please contact Emily Brown.

Meeting ID: 880 9681 5173 Password: 130612

A firm may gain competitive advantage over its rivals through access to market information. Yet, evidence thus far suggests only large firms invest in technology that facilitates access to information, potentially increasing their leverage over smaller competitors. This paper aims to fill a gap in the literature by empirically investigating how the performance and decision making of small and medium size enterprises change when gaining access to strategically valuable market information. To do so, we evaluate the impact of an unprecedented Big Data information service diffused at zero cost by a large European bank among its small and medium size business customers. Upon programme adoption, adopting firms had monthly access to reports elaborated by the bank with rich information about each firm’s clientele portfolio and that of its competitors analysing Big Data credit card transactions. Using first differences, we find adoption is associated with a 4.5% increase in establishment revenue, whereas IV estimation results show that adoption causally increases revenue by 9% for those establishments whose adoption decision is most strongly affected by the instrument. The main mechanism behind this result appears to be the information technology prompting establishments to target existing, yet unexploited, business opportunities. Consistent with this mechanism, we find that adopting establishments increase their sales to customer segments from underrepresented gender age groups in their customer portfolio prior to adoption. Our evidence also suggests that adopting establishments improved their resource allocation efficiency between weekly peak and off peak times. These findings suggest that small and medium enterprises obtain substantial returns from information access, and therefore, managerial inattention and high adoption costs are likely to be key barriers preventing small firms from investing in resources to acquire and analyse market information.

This talk is part of the Economics & Policy Seminars, CJBS series.

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