Enhancing performance through dynamic capabilities: the role of data-driven decision-making and environmental dynamism

In today’s rapidly evolving business environment, organizations increasingly develop dynamic capabilities to effectively respond to unprecedented challenges and enhance firm performance. Data-driven decision-making (DDDM) has emerged as a critical strategy, enabling organizations to leverage comprehensive data analysis to guide decision-making and promote evidence-based management. Drawing on the dynamic capabilities view (DCV), this study extends existing research by examining how advancements in information and communication technology (ICT) and business analytics (BA) capabilities support DDDM, thereby facilitating the transformation of big data into improved operational performance. Additionally, we investigate the pivotal role of environmental dynamism in promoting DDDM supported by dynamic capabilities.To validate the proposed model, we conducted a survey among senior managers from medium and large Australian organizations operating at varying levels of dynamic capabilities. The findings demonstrate that dynamic capabilities enhance operational performance through the mediating role of DDDM. We also provide novel insights into the moderating effect of environmental dynamism on the relationship between BA capabilities and DDDM, offering a deeper understanding of how external conditions shape DDDM processes.