Business Intelligence Capabilities and Firm Performance: A Study in China

Abstract The development of artificial intelligence (AI) technology expands the boundary of business practice, inducing the emergence and application of business intelligence (BI) that has promoted the transformation of information techniques to optimize business decision and operation. However, there is a lack of theoretical consensus and measurement of the technology embedded in BI at present. This study exploratively develops the Sense-Transform-Drive (STD) conceptual model of BI based on dynamic capabilities theory and organizational evolutionary theory to explain the core BI capabilities. By using factoring analysis and structural equation modeling analysis, we extract the latent constructs and empirically verify the validity of the STD model and further examine the correlation and mode of interaction of the three core BI capabilities and the impact of BI application on firm performance in the real economy with a sample contextual to Chinese business practices. The study results show that there are direct and high-intensity cumulative positive effects among the structural components of the STD conceptual model and BI-related dynamic capabilities can enhance operating efficiency and firm performance.