This paper examines the intersection of Big Data and business strategy, tracing the evolution of strategic management from its origins in the 1970s through contemporary technology-driven approaches. Beginning with the shift from managerial capitalism to shareholder capitalism, the paper maps key theoretical contributions from scholars, economists, and behaviorists — including Chandler, Porter, Ansoff, and Ohmae — before analyzing the role of successive technologies, from mainframes and personal computers to networking, cloud computing, and Big Data. The paper argues that Big Data represents the next frontier in business strategy, offering real-time analytics, predictive consumer behavior modeling, and enhanced data integration capabilities that give firms a sustainable competitive advantage in an increasingly data-rich environment.
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The competitive nature of today's business environment is driving companies to use technology-driven business strategies (Berman & Hagan, 2006, p. 28). Big Data and technology are undoubtedly impacting business strategy development. Research indicates that Big Data offers real-time application, which allows businesses to move information to analytics tools from various systems and sources. The ability of a business to analyze consumer behavior based on experiences depends on the capacity of its database system to load, transform, analyze, and present data. Technology is finding wide application in organizations, creating opportunities for strategy formulation, implementation, assessment, and evaluation.
This research identifies key technological advances that are affecting business strategies for today's organizations. To achieve this, the paper maps the development of business strategy from its inception in the 1970s to the current situation, identifying key approaches in the field and developing a road map to show how technology is adopted into the business environment. The goal is to use this road map to demonstrate that the introduction of Big Data represents the beginning of its full-scale application in business strategies in the near future.
The evolution of business strategies has gone hand in hand with the revolution of management approaches. Changes in management occurred mainly in the 1970s, when trustees and managers in control of companies turned to managerial capitalism (Kaen, 2003). Modern capitalism went through two major evolutions: the 1930s-to-1970s era of "managerial capitalism" and the 1980s-to-2000s era of "shareholder capitalism." Managerial capitalism dominated the business scene through its association with innovation and growth driven by trained executives from large international and national firms (Kaen, 2003). In this phase, monopolies under the oversight of labor unions and government shaped the business process. Business strategies led to relatively stable business cycles, which realized increases in investor growth, and the gap between rich and poor decreased.
Currently, evolution in communication and information technology is responsible for the development of management information systems (MIS). The field is designed to assist in acquiring managerial skills necessary for developing strategic capability and supporting the dynamics of businesses and organizations. Information technology systems have led to the need for management approaches that integrate business processes and technology. A manager today requires skills to choose the right business strategy in order to remain competitive — including the development of infrastructure, processes, and systems — while being informed on the use of technology to increase the organization's competitive advantage. Effective business strategy requires an understanding of the functions of management, business processes, and enterprise strategy in order to identify resources and opportunities that Big Data can offer an organization today.
Business strategy has substantially advanced over the last fifty years, from foundational ideals to the present rigorous and integrative approach. Three schools of thought have contributed to the development of strategy as a field: scholars, economists, and behaviorists (Bowman, Singh & Thomas, 2001, p. 31). Scholars from the mid-1960s and early 1970s focused on the elements and process of strategy from top management, both within and outside the company. Thinkers such as Chandler (1962), Rumelt (1974), Mintzberg (1978), and Pettigrew (1987) developed the process approach to strategy. Economists influenced the field in the late 1970s and 1980s by focusing on the industrial structural characteristics that constrain strategies — including cost and price, entry barriers, growth patterns, profitability rates, and economies of scope and scale (Bowman, Singh & Thomas, 2001, p. 31). Later generations of economists developed game theory in strategy by factoring in issues of competitive rivalry and industrial competition. Economists who contributed to business strategy include Dixit and Nalebuff (1991), Saloner (1991), and Camerer (1985) (Bowman, Singh & Thomas, 2001, p. 31). The third contributors to the evolution of business strategy are behaviorists from the 1980s and 1990s, who built on earlier work (Bowman, Singh & Thomas, 2001, p. 31), including Pettigrew (1987), Burt (1997), Hannan and Freeman (1989), and Tversky and Kahneman (1986). Behaviorists have focused on equilibrium, economic optimization, firm survival and functioning, human behavior, and inter- and intra-organizational networks (Bowman, Singh & Thomas, 2001, p. 31). While many of these theories are not used exclusively, each group has contributed to business strategy, with trace influences still evident in today's integrative strategies.
The first definitive business strategy can be traced to Chandler (1962), whose work has roots in business policy, the industrial economic school, and a prescriptive model of objectives for management (Whittington, 2008, p. 267). This "Corporate Strategy" defines the role of management as a deliberate strategy process aimed at achieving organizational goals. The next remarkable contribution was Ansoff's strategy, which focuses on the combination of products and markets and the continued evaluation of markets for effective entry and exit decisions (Moussetis, 2011, p. 103). Corporate strategy later evolved in the 1970s to incorporate organizational and business dynamics such as market penetration, firm size, market share, diversification, acquisitions, mergers, vertical integration, and general portfolio theory (Moussetis, 2011, p. 104).
Business strategy evolved further in the 1970s with the contribution of Bruce Henderson's Boston Matrix. In this framework, business strategy focuses on growing a firm's market share in expanding markets as a profitable objective (Allio, 2010, p. 30). The Boston Matrix has various adaptations to fit multiple market conditions, including the off-the-shelf strategy used in American corporations, the McKinsey Matrix, and the General Electric matrix (Allio, 2010, p. 32). This led to new strategies such as George Steiner's systematic approach to strategic planning, which requires strategy to be embedded in management. The 1980s were shaped by Michael Porter's Five Forces Theory (Grundy, 2001, p. 247). Porter's approach postulates three methods through which businesses can gain a competitive advantage: low-cost production, differentiated production, and focused production. His theory shifted strategic thinking away from market share toward firm and product differentiation (Grundy, 2001, p. 247). A significant strategy that emerged during this period was Kenichi Ohmae's 3C's Framework, in which the basis of strategy is customers, competition, and the corporation. In the 3C's approach, corporation-based strategies strive to develop the company's strengths relative to competitors across all functional aspects of business (Bowman, Singh & Thomas, 2001, p. 34). Customer-based strategies entail consumer preferences and market segmentation and should form the basis of all other strategies. Competitor-based strategies involve the search for sources of differentiation in a firm's business processes.
The 1980s also marked the adoption of military strategies in business. This approach drew on Sun Tzu's The Art of War, where military strategy aims at defeating and gaining advantage over the enemy by fighting as few battles as possible (Bowman, Singh & Thomas, 2001, p. 35). The military strategy analogy is less common today but has wide application in Philip Kotler's model. The mid-1980s and 1990s hold historical significance for the evolution of business strategy, as the period marks the beginning of innovation-driven approaches. Dynamic business strategies arose from the need to keep pace with rapid technological developments, especially in communications, information technology, and computing (Bowman, Singh & Thomas, 2001, p. 36). Innovative strategy is not limited to the technology industry but also manifests as innovative management. Rothwell and Christensen postulated innovative strategic management to address responsiveness and flexibility in the face of change.
To these theorists, business strategy means following strategic intent by recognizing that a lack of resources is not an obstacle to development and growth — rather, ambition is important because it drives a businessperson to find ways around obstacles (Eckhardt & Shane, 2003, p. 334). Business strategy therefore ceased to be about formal planning and the sequential development of objectives, missions, action plans, and tactics. Strategy became the "fly-by-wire" approach, where learning occurs during execution. Opportunity-based strategy found its place in today's world following the effects of a continuously changing business environment. This strategy is particularly applicable today, as information technology and computing touch every aspect of business (Eckhardt & Shane, 2003, p. 334). An opportunity-based strategy also encompasses technology-driven strategies that make use of available technology to support business objectives. Big Data strategies are a practical example, as they overcome the challenges posed by an explosion of information through advanced database management technologies (Lovas & Ghoshal, 2000, p. 876).
Today's businesses are driven by the motivation to gain competitive advantage by continuously assessing and reformulating their strategies to fit an ever-changing environment (Eckhardt & Shane, 2003, p. 875). Often, success introduces complacency, rigidity, and overconfidence that eventually erode a firm's capability and product relevance. Arie de Geus (1997) identified four main traits of a successful firm: the ability to change with a changing environment, the capacity to create community vision, purpose, and personality, the ability to develop and maintain working relationships, and the use of conservative financing strategies paired with the ability to self-perpetuate (Lovas & Ghoshal, 2000, p. 875). Self-perpetuation is identified in this study as a necessary characteristic for current business strategies to survive in today's market.
"Mainframes, PCs, networking, and cloud computing in strategy"
"Big Data capabilities, tools, and real-world business applications"
This literature review evidently depicts that there is no agreed-upon definition of strategy. Business strategy is therefore multidimensional and situational, depending on the market, firm, industry, competition, time, and place, among other factors. This is evident in Michael Porter's integrated operational strategies, which incorporate management approaches, business and organizational strategies, and competitor and consumer dynamics. It is also evident in the use of technology-driven business strategies. Research indicates that Big Data offers real-time application, allowing businesses to move information to analytics tools from various systems and sources. The ability of a business to analyze consumer behavior based on experiences depends on the capacity of its database system to load, transform, analyze, and present data. Technology is finding wide application in organizations, creating opportunities for strategy formulation, implementation, assessment, and evaluation.
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