The link between information processing capability and competitive advantage mediated through decision-making effectiveness

Guangming Cao, Yanqing Duan, Trevor Cadden

Research output: Contribution to journalArticlepeer-review

59 Citations (Scopus)
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While research underpinned by the resource-based view (RBV) appears to suggest that IT-enabled capabilities are positively linked to competitive advantage, such a link is often seen as a black box as the processes through which competitive advantage can be gained appears unclear. In particular, research appears to suggest that information processing capability is linked to decision-making effectiveness and competitive advantage; however, little research appears to examine the interrelationship among them. This study, drawing on the RBV, develops a mediation model to examine the link between competitive advantage and the key tenets of value, rarity, inimitability and non-substitutability of information processing capability in the context of business analytics; and whether this link is mediated through decision-making effectiveness. Based on data collected from 633 UK companies, this study shows that there is a positive link between the value, rarity and inimitability characteristics of information processing capability and competitive advantage, which is partially mediated by decision-making effectiveness. The findings contribute to the theoretical development of the RBV by developing a mediation model that looks inside the black box. They also contribute to managers’ knowledge and understanding of the mechanism through which the strategic value of information processing capability can be maximized.

Original languageEnglish
Pages (from-to)121-131
Number of pages11
JournalInternational Journal of Information Management
Early online date23 Oct 2018
Publication statusPublished (in print/issue) - 28 Feb 2019


  • Business analytics
  • Competitive advantage
  • Decision-making effectiveness
  • Information processing capability
  • Mediation
  • Resource-based view


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