Business intelligence systems use in performance measurement capabilities: Implications for enhanced competitive advantage

• Three latent concepts for BI quality are developed and empirically validated: BI infrastructure integration; BI functionality; and BI self-service.
• The BI quality concepts have significant impacts on both diagnostic and interactive dimensions of performance measurement capabilities.
• The BI quality concepts are associated with competitive advantage via both diagnostic and interactive dimensions of performance measurement capabilities.

The purpose of this study is to better understand how the quality of a Business Intelligence (BI) system improves the diagnostic and interactive dimensions of management control systems (MCS), thereby enhancing performance measurement capabilities, which in turn are positively associated with competitive advantage. Integrating theory from performance measurement, organizational learning and the knowledge-based view of the firm, a theoretical model is developed that considers three concepts of BI quality (infrastructure integration, functionality, and self-service) and the roles they play in enhancing diagnostic and interactive performance measurement capabilities. Data collected via survey from 324 CEOs and CFOs provides support for the theorized effects of BI quality on performance measurement capabilities. These capabilities in turn are positively associated with competitive advantage.