The Role of Data Analytics in Startup Companies: Exploring Challenges and Barriers

Abstract

The advancement in technology is transforming societies into digital arenas and paves the way towards the achievement of digital transformation. With every transaction in the digital world leading to the generation of data, big data and their analytics have received major attention in various fields and different contexts, examining how they may benefit the different actors in the society. The present study aims to identify how startups that develop products with both software and hardware parts can generate value from data analytics and what challenges they face towards this direction. To this end, we performed a multiple-case study with early-stage startups and employed qualitative analysis on a dataset from 13 startups. Through semi-structured interviews, we examine how these companies use data analytics. The findings show that although the benefits from data analytics are clear, multiple barriers and challenges exist for the startups to be able to create value from them. The major ones are about their resources, including human skills, economical resources, as well as time management and privacy issues.

Eras of Digital Entrepreneurship

“…Third, having access to big data and being able to analyze them could become increasingly important to entrepreneurs and their ventures (Berg et al 2018 ; Kleine-Stegemann 2021 ). The development of big data analytics capabilities, considered as a “company’s abilities to leverage on technology and talent to exploit big data” (Ciampi et al 2021 , p. 2) – could therefore be critical for entrepreneurial actors to compete in highly dynamic and digitalized markets.…”

A study on emerging trends in Indian startup ecosystem: big data, crowd funding, shared economy

“…The digital economy along with Big data analytics has challenged the status quo of well-established business models. Indian startups need to build upon the resources that are their strength, they are people, processes and technology (Berg, 2018).…”

Using Business Analytics for SME Business Model Transformation under Pandemic Time Pressure

“…A third contribution lies with our analytical explanation regarding BA exploitation by SMEs and the relationship between Business Analytics and Dynamic Capabilities in the SME context. Existing studies show that BA is underutilised (Behl et al, 2019 ) by SMEs and mainly present successful exploitation of analytics by SMEs merely for customer relation purposes (e.g., Behl et al, 2019 ; Berg et al, 2018 ; Sayyed-Alikhani et al, 2021 ), but not for other purposes such as improvement of their internal processes and transformation of their business models. In this study we offer evidence on how Business Analytics may alert a start-up with regard to threats and opportunities; signpost them to potential opportunities and ways of responding; and help them assess the viability of envisaged BMs.…”

“…Start-ups tend to underutilise and exploit analytics as means to better understand their customer needs and offer relevant services (Behl et al, 2019 ), e.g., to design customer acquisition and retention strategies (Sayyed-Alikhani et al, 2021 ), for product development purposes (Berg et al, 2018 ), and more rarely to improve their internal process e.g., to prioritise projects (Zamani et al, 2021 ). Even in these cases in which BA might be underutilised, BA introduce an important opportunity for start-ups and SMEs more generally (Sheng et al, 2020 ; van Rijmenam et al, 2019 ).…”

“…Instagram is a well-known example that used BA to alter their business model, whereby during the early-stages, its founders used BA to analyse app data and spot users’ preferences regarding posting photographs (Steer, 2021 ). However, research-wise, although there is evidence that smaller firms use BA (e.g., Behl et al, 2019 ; Berg et al, 2018 ; Sayyed-Alikhani et al, 2021 ), there is a paucity of research on how exactly SMEs use this technology for business model transformations.…”