Big data and dynamic capabilities in the digital revolution: The hidden role of source variety

Recent research frames big data as a resource enhancing dynamic capabilities through improved prediction, decision-making, and data-driven innovation. In contrast, this study frames big data as an evolutionary driver that channels firms' knowledge and attention in specific directions, implying that firms need multiple big data sources to be receptive and dynamically capable. I apply this framework to the context of the digital revolution and focus on the impact of big data on firms' digitalization priorities. By leveraging a large-scale survey of more than twenty thousand Italian firms of all sizes, I find that big data improves the digitalization awareness of firms only if they gather big data from more than one source (otherwise, counterintuitively, it may even decrease it). I also find a positive effect of source variety both on the likelihood of prioritizing individual digitalization factors and on the variety of digitalization factors prioritized. Such effects appear to be stronger for small firms relative to their larger counterparts. Given the path dependence of digitalization trajectories, these findings have relevant policy implications in the context of initiatives like the European strategy for data and the SME strategy for a sustainable and digital Europe.