How the absorptive capacity could transform data into better decisions: a multilevel perspective to deal with the difference between firm sizes

Purpose - This study aims to investigate organizational learning, represented by the absorptive capacity, as a condition for the firm to learn about marketing data and make more informed decisions. The authors also aimed to understand how the behavior of micro, small and medium enterprises (MSME) businesses differ in this scenario through a multilevel perspective. Design/methodology/approach - Placing absorptive capacity as a mediator of the relationship between business analytics and rational marketing decisions, the authors analyzed data from 224 Brazilian retail companies using structural equation modeling estimated with partial least squares. To test the cross-level moderation effect, the authors also performed a multilevel analysis in RStudio. Findings - The authors found a partial mediation of the absorptive capacity in the relation between business analytics and rational marketing decisions. The authors also discovered that, in the MSMEs firms’ group, even if smaller companies find it more difficult to use data, those that do may reap more benefits than larger ones. This is due to the influence of size in how firms handle information. Research limitations/implications - The sample size, despite having shown to be consistent and valid, is considered small for a multilevel study. This suggests that our multilevel results should be viewed as suggestive, rather than conclusive, and subjected to further validation. Practical implications - Rather than solely positioning business analytics as a tool for decision support, the authors’ analysis highlights the importance for firms to develop the absorptive capacity to enable ongoing acquisition, exploration and management of knowledge. Social implications - MSMEs are of economic and social importance to most countries, especially developing ones. This research aimed to improve understanding of how this group of firms could transform knowledge into better decisions. The authors also highlight micro and small firms’ difficulties with the use of marketing data so that they can have more effective practices. Originality/value - The research contributes to the understanding of organizational mechanisms to absorb and learn from the vast amount of current marketing information. Recognizing the relevance of MSMEs, a preliminary multilevel analysis was also conducted to comprehend differences within this group.