Data Analytics Capability Transforms Risk Management and Firm Performance

Abstract

In the contemporary globalized business environment, the escalating complexity in supply chains has led organizations to face an array of burgeoning risk factors. To address these challenges, firms strive to enhance their visibility across various supply chain levels by equipping themselves with the ability to scrutinize operational activities and effectively manage supply chain risks. This study employed a quantitative approach by administering a survey questionnaire to 158 manufacturing companies in Malaysia. Partial least squares structural equation modeling (PLS-SEM) was utilized to examine the anticipated relationships. By drawing on organizational information processing theory principles, this study investigates the influence of supply chain operational reference (SCOR)—based data analytics capability (SCOR-DAC) in bolstering firm performance by developing a more secure, risk-averse enterprise, and improved strategic alignment. Additionally, this study investigates the mediating role of supply chain and risk management performance in the relationship between SCOR-driven data analytics and organizational performance and the interaction between business strategy alignment and SCOR-DAC. The study accentuates the notion that the capacity to manage disruptions, attained through improved risk management performance, positively impacts a firm's performance. Furthermore, the research underscores the importance of the synergy between data analytics and organizational strategies in constructing a holistic approach to risk management and performance enhancement. The findings offer valuable insights for companies aiming to enhance risk management and improve overall performance by increasing investments in data analytics and fostering a data-driven culture for consistent business growth.