The Impact of Big Data on Firm Performance: An Empirical Investigation
- (pp. 33-37)
Abstract
We examine the impact of "big data" on firm performance in the context of forecast accuracy using proprietary retail sales data obtained from Amazon. We measure the accuracy of forecasts in two relevant dimensions: the number of products (N), and the number of time periods for which a product is available for sale (T). Theory suggests diminishing returns to larger N and T, with relative forecast errors diminishing at rate 1/sqrt(N)+1/sqrt(T). Empirical results indicate gains in forecast improvement in the T dimension but essentially flat N effects.Citation
Bajari, Patrick, Victor Chernozhukov, Ali Hortaçsu, and Junichi Suzuki. 2019. "The Impact of Big Data on Firm Performance: An Empirical Investigation." AEA Papers and Proceedings, 109: 33-37. DOI: 10.1257/pandp.20191000Additional Materials
JEL Classification
- C53 Forecasting Models; Simulation Methods
- C55 Large Data Sets: Modeling and Analysis
- L25 Firm Performance: Size, Diversification, and Scope
- L81 Retail and Wholesale Trade; e-Commerce