Big Data Analytics as a Game Changer for Business Model Innovation in Small and Medium-Sized Enterprises in South Africa

Introduction

The possibility to exploit big data to pursue several innovative corporate strategies is increasingly disrupting business logics in many industries (Ciampi et al., 2020). Digital transformation is a period whereby small and big enterprises, worldwide are refocusing their business strategies by embracing the advanced emerging digital technologies to support and drive their business operations that yield substantial value and increased revenues. Increasing number of SMEs strive to obtain longer-lasting competitive advantages by utilising the newest digital technologies for innovating their business models rather than merely adapting their products, services and processes (Spieth et al., 2019). However, SMEs integrating and adopting emerging digital technologies in their business operations or digitalizing their business models innovation are considered as a threat by other competitive enterprises due to their open desire to be digitally inclined and their constant demonstration to optimally utilize these innovative technologies. Many scholars highlight the importance of examining the impact of digitalisation on business model innovation in small and big enterprises, and these enterprises can leverage big data to make their value creation processes evolve by enhancing business relations with customers and other stakeholders, to develop innovative value propositions where data plays either a supportive or a central role and by adding new sources of revenue or planning cost-cutting interventions (Woerner & Wixom, 2015; Sorescu, 2017; Lokshina et al., 2018; Bouwman et al., 2018). The adoption of big data to support decision-making processes has prompted many SMEs to undertake considerable efforts to develop business models and improve business practices.

However, SMEs were struggling to operate their businesses fully and make profit during COVID-19 crisis due to lock downs and restrictive measures, and social distancing policies that severely affected and disrupted their business operations that were put in place by the government in different parts of the world. SMEs were limited in digital marketing, e-commerce and online offerings due to their weak or poor technological infrastructure that also sabotages these enterprises’ quest to embrace technological transformation. As a result, the majority of SMES faced severe losses in revenues and had to close operation due to a number of consumers attempting and making online purchases while employees were also laid off due to COVID-19 pandemic. Online sales helped to contain reductions in revenue for a number of small and big enterprises although the adoption of digital technologies is more difficult for SMEs. The results of a survey of over 5 800 small businesses in the United States by Bartik et al. (2020) shows that 43% of responding businesses were temporarily closed due to COVID-19 crisis, while on average, businesses reduced their employees by 40%.

Bartik et al (2020) further reported that three-quarters of respondents indicate that they have two months or less in cash in reserve. Similarly, the survey among SMEs in 132 countries by the International Trade Centre (ITC) (2020) reported that two-thirds of micro and small firms report that the crisis strongly affected their business operations and one-fifth indicate the risk of shutting down permanently within three months. The survey by McKinsey (2020) also indicates that between 25% and 36% of small businesses closed down permanently from the disruption in the first four months of the pandemic. The survey by the Canadian small businesses further revealed that the forty-four (44%) of SMEs were faced with a variety of technology and tech support challenges, such as in the areas of digital marketing, e-commerce and their other online offerings The Census Bureau in the United States, set up a specific weekly small business survey to measure the impact of COVID-19 on small business that indicated that almost 90% of small businesses experienced a strong (51%) or moderate (38%) negative impact from the pandemic; 45% of businesses experienced disruptions in supply chains; 25% of businesses has less than 1 to 2 months cash reserves (Buffington et al., 2020). SMEs and other businesses in South Africa are also faced with load shedding challenge that affects the full usage of technology by destabilizing internet connectivity which is heavily relied on when operating technologically. This challenge thus has a negative impact on e-commerce, digital marketing and it causes damage to electronics and loss of profit.