Management Review Quarterly (2021) 71:91–134

https://doi.org/10.1007/s11301-020-00181-x

Understanding the interplay of artificial intelligence

and strategic management: four decades of research
in review

Christoph Keding1

Received: 23 August 2019 / Accepted: 1 February 2020 / Published online: 24 February 2020
© Springer Nature Switzerland AG 2020

Abstract
As artificial intelligence (AI) is enabling the automation of many facets of manage-
ment and is increasingly used in a wide range of strategic tasks, it is necessary to
better understand its relevance for strategic management. However, research on the
interplay of AI and strategic management is unbalanced and lacks a coherent struc-
ture due to its multidisciplinarity. This article contributes to the emerging academic
discussion by systematically reviewing and categorizing the substantial amount of
research that has been conducted since the first article in the field was published
in 1979. Furthermore, it introduces a comprehensive framework that integrates and
synthesizes existing concepts. The framework displays the structure of the research
field by classifying 58 relevant articles into two research scopes: condition-oriented
research, which explores antecedents for leveraging the use of AI in strategic man-
agement, and outcome-oriented research, which studies the consequences of AI in
strategic management at both the individual and the organizational level. Given the
exponential potential of AI to reshape the field in its current form and the need for a
realistic assessment of its impact, this review proposes promising research avenues
for studying the quantifiable effects of the interplay of AI and strategic management
based on the developed framework.

Keywords Artificial intelligence · Strategic management · Literature review ·

Algorithmic management

JEL Classification L2 · M15

* Christoph Keding
[email protected]
1
ESCP Business School, Heubnerweg 8‑10, 14059 Berlin, Germany

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1 Introduction

AI, which can be defined as “a system’s capability to correctly interpret external

data, to learn from such data, and to use those learnings to achieve specific goals
and tasks through flexible adaption” (Kaplan and Haenlein 2019), has been in
the focus of academia since the 1950s. In the years since, AI has experienced
fragmented and unbalanced development in various research fields. Due to recent
technological advances, which are facilitated by the availability of big data (BD)
(George et al. 2014), the self-learning capacities of algorithms (Faraj et al. 2018)
and the increasing power of computers (Ferràs-Hernández 2018), AI-based sys-
tems are becoming more effective (Brynjolfsson and McAfee 2016), less expen-
sive (Agrawal et al. 2017) and increasingly used to solve business problems
(Davenport and Ronanki 2018; Gunasekaran et al. 2017; Lee 2018; Phan et al.
2017). The application of AI is supposed to derive solutions to problems that
would typically require the intervention of human intelligence (Kurzweil 1999;
Mitchell 2019) or leadership (Wesche and Sonderegger 2019), and has accord-
ingly induced a discussion about the future validity of traditional organizational
assumptions (Jordan 2017) and the augmentation (Huang et al. 2019; Wilson
and Daugherty 2018) or substitution of human managers by intelligent machines
(Acemoglu and Restrepo 2018; Autor 2015; Brynjolfsson and Mitchell 2017).
From a strategic management perspective, the decisional situations that need
human judgment and analysis regularly relate to issues where problems are far
from being well-structured (Bettis 2017; Martínez-López and Casillas 2013;
Reeves and Ueda 2016). This review adopts the definition of Nag et al. (2007) and
understands strategic management as a field that “deals with the major intended
and emergent initiatives taken by general managers on behalf of owners, involv-
ing utilization of resources, to enhance the performance of firms in their external
environments.”
Research in the field has identified the knowledge base as the most significant
factor for the success of strategic decision-making (Hickson et al. 2003) and has
shown that algorithms outperform managers in various decision-making situa-
tions (Dawes 1979; Kahneman et al. 2016; Yeomans et al. 2019). According to
Raghunathan (1999), decision-quality increases when decision-makers have more
detailed knowledge of the connections between problem variables, thus shedding
light on AI as a new knowledge source to reduce complexity by anticipatively
addressing changes in the organizational environment (Barro and Davenport
2019; Jarrahi 2018) and calling for new models for managerial decision-making
(Colson 2019; Lee 2018) and organizational culture (Fountaine et al. 2019; Rans-
botham et al. 2018).
The use of intelligent systems is starting to increase in unstructured environ-
ments (Di Ciccio et al. 2015) for non-routine decisions (D’Acunto et al. 2019;
Huang and Rust 2018; Schildt 2017; Tokic 2018) that are consequential for stra-
tegic outcomes (Ayoub and Payne 2016; Berman and Dalzell-Payne 2018; Kiron
and Schrage 2019; Reeves and Ueda 2016; von Krogh 2018) and essential for
the development of competitive advantages (Davenport 2016; Grover et al. 2018;

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Lado and Zhang 1998). Intelligent decision systems that are supported by the
entire organization outperform humans in accomplishing quantitative targets
(Kolbjørnsrud et al. 2017) against measurable criteria (Parry et al. 2016) and help
to reduce the degree of uncertainty in strategic decision-making in two ways in
the period under review. While early studies indicate that AI could be used as
a decision support system accumulating expert knowledge (Ashmore 1989) and
guiding organizational action (e.g., Luconi et al. 1986; Merten 1991) with limita-
tions at the strategic level (Edwards and Yanqing 2000), current research streams
clarify that the real value of AI is to perform data analysis autonomously across
various sorts of data, to access tacit knowledge and to create new knowledge
by itself (Bani-Hani et al. 2018; Grover et al. 2018; Kaplan and Haenlein 2019;
Uden and He 2017).
However, research related to the interplay of AI and strategic management lacks
a coherent structure and consistent use of terminology (Duan et al. 2019) due to its
multidisciplinarity. Despite the alleged maturity of the research field and the grow-
ing stream of literature on the business potential of AI, very little is known about
what encompasses the concept within strategic management. In line with other
researchers that consider systematic literature reviews particularly appropriate for
emerging topics (Fosso Wamba et al. 2015; Snyder 2019), and the growing inter-
est of both academia and practice (Davenport and Ronanki 2018), I argue that an
integrative review is needed, to synthesize knowledge from earlier debates with the
current scholarly discussion, in order to actuate recent excitement and to structure
future research activities around the evolutionary phenomenon of AI in strategic
management. Hence, this research is led by the following research question: What
role does AI play in strategic management and how can existing concepts in the
management literature be synthesized?
Therefore, the contribution of this systematic review is twofold. First, I provide a
comprehensive presentation of the current state of scientific knowledge on the rel-
evance of AI in the field of strategic management, by following the guidelines devel-
oped by Tranfield et al. (2003). Second, this review classifies the articles into a the-
matic “knowledge map” (Frank and Hatak 2014) to better understand the structure
of existing literature. In particular, I distinguish between articles that focus on the
antecedents of an organizational adoption of AI-based systems and those that inves-
tigate the consequences of AI on the individual as well as the organizational level of
a firm. This thematic framework then subsequently serves as a basis for identifying
promising research avenues in the emerging field of the interplay of AI and strategic
management.

2 Research in artificial intelligence: a descriptive analysis

Since McCarthy coined the term “artificial intelligence” for the first time in 1955
at the Dartmouth conference, AI has been an ongoing important research topic in
the intersection of computer science and psychology. However, initial successes
such as the natural language-processing computer program ELIZA (Weizenbaum
1966) soon led to misjudgments as well as overoptimism regarding the performance

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capability and possible applications of AI. This resulted in recurring periods without
significant research results, also known as AI winters (Russell and Norvig 2009).
However, with advances in machine learning (ML), and by beating human players
in multiple games (Jaderberg et al. 2019; Silver et al. 2016), AI is no longer seen as
an “academic toy” (Holloway 1983) and has been described as having reached the
tipping point for practical usefulness in other domains such as image recognition
(Russakovsky et al. 2015).
In the context of strategic management, two main literature streams capture the
concept of AI and provide different scopes. While early publications (1979–2005)
understood AI as the underlying technology of rule-based expert systems to support
and improve strategic decision-making in a top-down approach (e.g., Carlsson and
Walden 1997), more recent articles about AI in strategic management (2015–2019)
find their technological foundation in ML algorithms that recognize patterns in data-
sets with the help of statistical inferences and possess the potential capability to act
autonomously in the area of cognitive tasks and process automation (Davenport and
Ronanki 2018).
In line with the general trend within AI research, scientific publications on the
subject of AI in strategic management are not consistent and unbalanced in the
reviewed period. Despite the fact that a third of all considered studies have analyzed
the role of AI before the era of big data, some actual controversies in the field, such
as the substitution of humans by intelligent machines, falsely give the appearance
of never having been discussed before and seem to be unaware of what happened
before (Duan et al. 2019).
Given the time horizons between the publications, it is remarkable that the short-
est and latest period in the years 2016–2019 has led not only to the most useful
publications, but also to the highest quality of publications for this review. The
recent advent of machine learning technology in strategic management has begun to
move the discussion from information systems (IS) to the management literature and
ensured that first sets of empirical work have emerged that show ambiguous effects
on management practices with respect to algorithmic biases (D’Acunto et al. 2019;
Lambrecht and Tucker 2019), algorithm aversion (Dietvorst et al. 2018; Prahl and
Van Swol 2017) and algorithm appreciation (Logg et al. 2019). To illustrate the rele-
vance of the subject in strategic management, the following figure (Fig. 1) illustrates
the relevant articles for this review, sorted by publication date, place of publication
and their quality according to the VHB-Jourqual 3.1

1
The Jourqual 3 is a magazine ranking on the basis of the judgments of VHB members. It is published
by the German Academic Association for Business Research (VHB) and can be accessed online at http://
www.vhbon​line.org (retrieved on November 15th, 2018).

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Understanding the interplay of artificial intelligence and… 95

25

20 A+
A+
A A
15 A+
B A
B
B
10
C

A+
5 A C
A C
A B
B B
B C C C
0
up to 1985 1986 - 1995 1996 - 2005 2006 - 2015 2016 - 2017 2018 - 08/2019

Fig. 1  Publication date and VHB ranking of literature in the research field

As the literature in the research field is fragmented at the intersection of informa-

tion systems, management, and organizational studies, the number of distinct jour-
nals included in this review adds up to 35. Most articles (16) in the final sample
were published in journals classified as B, followed by 8 A- journal publications.
Likewise, C-categorized journal articles amount to 8, while the number of A + (3)
publications remains relatively small. If the sub-categories are considered as the unit
of analysis, it is noticeable that there is a disparity in the distribution of concepts and
that all categories consist of mainly conceptual work. Table 1 provides a classifica-
tion of the studies linked to their respective subcategories. As this systematic review
followed a concept-centric approach, some studies appear in multiple categories.

Table 1  Categorization and number of articles per subcategory

Theme Conceptual Empirical

Data-driven Constantiou and Kallinikos (2015), Davenport and Kirby (2015), Lambrecht and Tucker (2018), Davenport
workflows Davenport and Mahidhar (2018), Grover et al. (2018), Kahneman et and Harris (2005), Janssen et al. (2017),
al. (2016), Lau et al. (2012), Mazzei and Noble (2017), Orsini Kowalczyk and Buxmann (2014),
(1986), Wright and Schultz (2018), Watson (2017) Merendino et al. (2018), Olszak (2016),
Vidgen et al. (2017)
Antecedents

Managerial Berman and Dalzell-Payne (2018), Constantiou and Kallinikos Ghasemaghaei et al. (2018), Kolbjørnsrud
willingness (2015), Davenport and Mahidhar (2018), Lichtenthaler (2018), et al. (2017), Prahl and van Swol (2017),
Davenport and Kirby (2015), Davenport and Kirby (2016), Dietvorst et al. (2018), Logg et al. (2019),
Diakopoulos (2016), Epstein (2015), Geisler (1986), Lichtenthaler Schneider and Leyer (2019)
(2019), Parry et al. (2016), Phillips-Wren et al. (2009), Watson
(2017), Wilson and Daugherty (2018), Wright and Schultz (2018)

Organizational Berman and Dalzell-Payne (2018), Bonczek et al. (1979), Davenport Davenport and Harris (2005),
determinants and Mahidhar (2018), Geisler (1986), Lau et al. (2012), Lawrence Kolbjørnsrud et al. (2017)
(1991), Merten (1991), Pinson and Moraltis (1997), Watson (2017)

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96 C. Keding

Table 1  (continued)
Theme Conceptual Empirical

Managerial Agrawal et al. (2017), Berman and Dalzell-Payne (2018), Bettis Brynjolfsson and Mitchell (2017),
cognition (2017), Bonczek et al. (1979), Chi and Turban (1995), Davenport and Ghasemaghaei et al. (2018), Kowalczyk
Kirby (2016), Diakopoulos (2016), Garfinkel et al. (2017), Hoffman and Buxmann (2014), Lambrecht and
(2016), Intezari and Gressel (2017), Jarrahi (2018), Kahneman et al. Tucker (2018), Merendino et al. (2018)
(2016), Lawrence (1991), Orwig et al. (1997), Parry et al. (2016),
Pomerol (1997), Wilson and Daugherty (2018), Wright and Schultz
(2018)

Value of Agrawal et al. (2017), Davenport (2016), Davenport and Kirby Kolbjørnsrud et al. (2017), Wilson et al.
complementary (2015), Davenport and Kirby (2016), Ferràs-Hernández (2018), (2017)
skills Garfinkel et al. (2017), Geisler (1986), Jarrahi (2018), Lichtenthaler
(2018), Plastino and Purdy (2018), Watson (2017), Wilson and
Daugherty (2018)
Consequences

Human-machine Agrawal et al. (2017), Bettis (2017), Bonczek et al. (1979), Bader and Kaiser (2019), Brynjolfsson and
collaboration Davenport and Kirby (2015), Ferràs-Hernández (2018), Geisler Mitchell (2017)
(1986), Holloway (1983), Huang and Rust (2018), Jarrahi (2018),
Lichtenthaler (2018), Lichtenthaler (2019), Parry et al. (2016),
Wilson and Daugherty (2018)

Design of decision- Davenport (2013), Garfinkel et al. (2017), Hirsch (2018), Hoffman Davenport and Harris (2005),
making governance (2016), Holloway (1983), Parry et al. (2016), Shrestha et al. (2019), Kolbjørnsrud et al. (2017), Schneider and
Watson (2017), Wright and Schultz (2018) Leyer (2019)

Agility and Berman and Dalzell-Payne (2018), Constantiou and Kallinikos Davenport and Harris (2005), Vidgen et al.
participation in (2015), Davenport (2016), Grover et al. (2018), Holloway (1983), (2017)
strategy Intezari and Gressel (2017), Mazzei and Noble (2017), Metcalf et al.
(2019), Orsini (1986), Orwig et al. (1997), Pinson and Moraltis
development
(1997)

Predictive logic in Agrawal et al. (2017), Berman and Dalzell-Payne (2018),

business models Constantiou and Kallinikos (2015), Dnport (2016), Davenport and
Mahidhar (2018), Watson (2017)

3 Research methodology

Drawing on the methodological framework of Tranfield et al. (2003) and the edito-
rial of Fisch and Block (2018), this systematic literature review (SLR) is based on a
multilevel process to systematically identify and synthesize the fragmented knowl-
edge on the role of AI in strategic management. As suggested by Tranfield et al.
(2003), this SLR can be subdivided into three phases, namely (1) planning, (2) con-
ducting, and (3) reporting, to enable transparency and replicability.
After several pilot searches and exploratory readings, the most relevant key-
words were identified in an iterative review approach and used to determine a
systematic search strategy within an advanced database search utilizing Business
Source Complete (EBSCO) and Scopus. I decided to apply two levels of broad
keywords and used the search terms “artificial intelligence”, “AI” or “machine
learning” in combination with the Boolean operator “AND” and the terms “stra-
tegic management” or “strategic planning” for matches in the titles, subjects,
keywords and abstracts of academic papers, which yielded 658 articles. In line
with similar reviews in the field (e.g., Akyuz and Gursoy 2019; Dias and Fer-
reira 2019), I used the term “strategic management” to define the search con-
text. However, to account also for the changing of semantics in strategic manage-
ment (Furrer et al. 2008; Ronda-Pupo and Guerras-Martin 2012) in the period
under review, the synonymous use of the terms (Bowman et al. 2002; David and

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David 2017) and the relevance of the term in IS literature (Barki et al. 1993), I
also included “strategic planning” as a second search term, to enlarge the search
context and integrate relevant concepts from the IS discipline. In accordance
with other systematic reviews dealing with AI in adjacent research fields (Reis
et al. 2019; Sousa et al. 2019), I followed an approach suggested by Brocke et al.
(2015) and deliberately excluded more specific search terms and used “artificial
intelligence”, “AI” and “machine learning” as aggregated umbrellas, to keep the
review focused on the general influence of AI on strategic management and to
ensure a coherent synthesis of the articles.
I then excluded papers that were neither published in peer-reviewed academic
journals nor written in English, to prevent inferior quality in the papers incorporated
in this review. To cover the full range of literature for the research field, and to pre-
sent its unbalanced development, I chose a far-reaching time frame from 1979, when
the relationship between computer-based artificial support and strategic decision-
making was first mentioned (Bonczek et al. 1979), until the finalization of the search
for literature in August 2019.
In line with Tranfield et al. (2003), the suitability of the remaining 343 articles
for the review was then assessed as part of a two-step content-screening process. If
the title and abstract did not disclose the subject of the paper, the complete paper
was analyzed to determine eligibility for this SLR. Reviews as well as studies
without a managerial focus, in which the search terms were stated in the abstract
or keywords but the authors did not discuss them in the full text, were excluded.
In line with previous SLRs (e.g., Ahn et al. 2018; Breitenmoser and Bader 2016;
Gutmann 2019), and following an approach suggested by Levy and Ellis (2006), I
considered the survey-based VHB-Jourqual 3 ranking fit as an additional quality
threshold for the article selection process. Only articles from peer-reviewed journals
possessing the minimum VHB-Jourqual 3 rating of “scientifically recognized” (C)
were included in this SLR. Instead of assessing a journal’s quality in relation to the
quantity of citations, I deemed the internationally recognized (e.g., Li et al. 2019),
expert-based VHB Jourqual-3 ranking particularly appropriate as a quality thresh-
old (Eisend 2011) to relate the journals to their respective business research sub-
disciplines and also to mirror and integrate subdivisions of academic discussions
(Schrader and Hennig-Thurau 2009).
In the final step, the number of relevant papers was further narrowed, based on
an in-depth examination of the remaining 91 articles. By doing so, the further exclu-
sion of 33 articles was driven by content, which (1) did not focus on strategic busi-
ness activities (e.g., Levina et al. 2009), (2) only addressed the technological foun-
dations of a particular AI (e.g., Lu et al. 2012) or (3) were only short editorials (e.g.,
Phan et al. 2017). Given the dynamics of the research field, I constantly tracked the
relevant references of the articles that fulfilled our selection criteria in line with the
guidelines for snowballing in systematic literature studies (Wohlin 2014) to add
further concepts of relevance during the writing process. The systematic process,
which is visualized in Fig. 2, resulted in a final literature base comprising a total of
58 articles (see Table 4), whose content was then consolidated and synthesized in a
concept-centric approach as suggested by Webster and Watson (2002).

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98 C. Keding

Fig. 2  Systematic approach to article selection

4 The role of artificial intelligence in strategic management

literature: a thematic framework

This literature review identifies and maps knowledge by integrating and synthesiz-
ing concepts (Fisch and Block 2018) at the intersection of AI and strategic manage-
ment. In line with Ginsberg and Venkatraman (1985), a concept-centric scheme has
been designed for categorizing and systemically displaying the relevance of over-
arching themes and subcategories within the research field. An in-depth analysis
of the body of the literature unveiled two categories of factors for understanding
the interplay of AI and strategic management. Therefore, I developed a frame-
work (Fig. 3) that not only displays the structure of the research field, but also clas-
sifies the relevant articles into two different research scopes: condition-oriented,
i.e., research that explores antecedents for leveraging the use of AI in strategic man-
agement, and outcome-oriented, i.e., research that studies the consequences of AI
in strategic management on both the individual and the organizational level.

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Fig. 3  Thematic framework of AI in strategic management based on the literature

99

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4.1 Antecedents

4.1.1 Data‑driven workflows

4.1.1.1 Effective data value chain Research in this category shows that sufficient
data, experience and a routinized process to extract knowledge are preconditions for
creating strategic value from AI. Accessing tacit knowledge with the help of cogni-
tive technologies can be seen as an evolutionary process that builds on adaptive busi-
ness intelligence (BI) as its precedent technology.
Recent literature shows that the importance of large amounts of datasets for stra-
tegic decision-making has found prevalence in many organizations (Merendino
et al. 2018) and that the conversion of unstructured data into machine-readable data
has developed into a crucial talent for organizational success (Olszak 2016). BD is
thereby often associated with the use of predictive analytics, which consists of a vari-
ety of intelligent techniques to detect and predict relationships in data sets. However,
leveraging BD to become a “strategic asset” (Grover et al. 2018) is not only a techni-
cal issue, but also requires organizations to align their analytics capability with their
business strategy and match all related organizational (Vidgen et al. 2017) and human
resources (Davenport and Harris 2005) within the scope of a mutual cognitive archi-
tecture. Data gathering, processing and utilization are not performed within a single
department within the firm but usually require collaboration with partners from dif-
ferent disciplines (Janssen et al. 2017; Kowalczyk and Buxmann 2014).
Watson (2017) adds a temporal dimension to this discussion and posits that each
generation of decision support inevitably builds on previous ones. This exemplifies
the relevance of BD analytics in light of the growing importance of AI and shows
that the current position of a company in BI influences not only its competitive posi-
tion (Lau et al. 2012), but also its way forward. According to this proposition, the
case study by Janssen et al. (2017) reveals that deriving benefits from BD is an evo-
lutionary process in which the incremental understanding of the opportunities and
the successive routinization of processes and constant updating (Constantiou and
Kallinikos 2015) ultimately determine the success of the particular AI application.

4.1.1.2 Quality of data While generally the amount of data is an important factor for
the performance of an AI system, the specific features of ill-structured problems in
strategic management attach particular importance to the quality of data that under-
lies the algorithms and increasingly determines the success of actions within the
scope of strategic management (Mazzei and Noble 2017).
Research shows that machine learning is empowered by data. More specifically,
the precision of a derived analysis is positively correlated with the amount of data
the AI system is fed (Davenport and Harris 2005; Davenport and Kirby 2015). In
contrast, some scholars argue that more information, more variables and more data
do not automatically lead to better results and strategic decisions (Orsini 1986;
Wright and Schultz 2018). Applying data analytics techniques to generate new
insights and knowledge for strategic management puts strong requirements on the
data as well as the organizational workforce. Davenport and Mahidhar (2018)’s arti-
cle extends this debate by stressing the value of information as a corporate asset, and

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discusses the risks of turning over content ownership to third parties even if “would-
be users” are able to add significant value to what they receive.
As algorithms generally work with historical data, algorithmic decision-making
can either amplify existing biases (Lambrecht and Tucker 2019) or mitigate human
idiosyncrasies (Kahneman et al. 2016). Data governance practices should thus assist
organizations in collecting and managing the availability, variety and quality of data
with the help of refining loops, to enable real-time interpretation and applications
for strategic management (Davenport and Kirby 2015).

4.1.2 Managerial willingness

4.1.2.1 Support and dismantling of information silos Leveraging the use of AI sys-
tems in strategic management places requirements on both the appropriate organiza-
tional infrastructure and the working methods of management teams. Research indi-
cates that the organizational culture and the process of how AI is applied are decisive
for organizational success. Instead of working in vertical customer-oriented business
unit silos, the literature strengthens the role of AI as a horizontal facilitator by lever-
aging processes or improving or creating products.
Most of the studies in this research stream have identified organizational learning
processes as being crucial for strategic renewal endeavors whilst emphasizing that
suitable design of organizational structures facilitates the adaptation of technologi-
cal advancement (e.g., Constantiou and Kallinikos 2015).
However, many companies lack adaption speed to avoid digital disruption in the
future (Berman and Dalzell-Payne 2018; Lichtenthaler 2018) or oversteer the tech-
nological utilization of AI (Davenport and Mahidhar 2018). A study by Kolbjørn-
srud et al. (2017) reveals that workforce support for the introduction of AI systems
positively correlates with the rank and the level of management and is subjected
to national and cultural differences. The authors show further that the willingness
to trust AI systems is attached to a manager’s understanding, a proven track record
(Prahl and Van Swol 2017) and the technology’s ability to provide reasoning for its
advice. In line with this notion, Wilson and Daugherty (2018) suggest that the adop-
tion of principles within the fields of employee commitment and experimentation
can increase the speed, cost savings and revenues of AI initiatives. Other identified
factors that foster the distribution and the success of AI in strategic management
include the role of sharing knowledge, the vision of management (Davenport and
Kirby 2016), the skills of current employees (Davenport and Mahidhar 2018; Wat-
son 2017) and the organizational data analytics competency (Ghasemaghaei et al.
2018).

4.1.2.2 Trust and acceptance The themes of trust and algorithm acceptance have
been the subject of several studies in the field, particularly in terms of how hierarchi-
cal layers are assigned with different levels of acceptability. While ethical considera-
tions, public perception and the inexplicability of algorithmic decision-making are
generally described as decelerating the deployment of AI in strategic management

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and burdening community relationships, executive support and leadership styles are
seen as counterbalances.
The literature argues that the negative perception of AI (Epstein 2015;
Lichtenthaler 2019), the lack of transparency (Davenport and Kirby 2016; Diako-
poulos 2016) and the ethical issues of automation in business (Wright and Schultz
2018) diminish managerial trust in AI. For employees, trust issues can possibly be
further increased, as autonomous AI systems could be used to justify immoral deci-
sion outcomes without a human-held veto, by maximizing certain parameters at all
costs while ignoring firm-specific ethical standards (Parry et al. 2016). Enriching
this discussion, Schneider and Leyer (2019), for example, examine factors influenc-
ing a manager’s willingness to delegate strategic tasks to an AI, while Logg et al.
(2019) challenge the prevalent assumption that humans prefer human to algorithmic
judgment (Dietvorst et al. 2018; Prahl and Van Swol 2017). Their experiments show
that laypeople trust algorithmic advice more than human advice in specific decision
circumstances. Other studies show geographical and cultural differences regard-
ing the willingness for and resistance to AI adoption, which necessitates adjusted
approaches for a timely organizational distribution (Davenport and Kirby 2015) and
clarifies the need for early ownership throughout the learning process, to promote
familiarization with the intelligent systems (Kolbjørnsrud et al. 2017).
In addition, the literature stream also discusses measures to mitigate these chal-
lenges. Phillips-Wren et al. (2009), for example, note that the acceptance level
could be elevated by personalizing the design. In a similar vein, Parry et al. (2016)
propose a similar effect when increasing the degree of autonomy of such systems.
Other identified factors are the level of support of executives (Geisler 1986) and the
process transparency seen in how the intelligent agents reason and make decisions
(Kolbjørnsrud et al. 2017).

4.1.3 Organizational determinants

4.1.3.1 Distinct AI strategy Implementing AI-based systems touches many elements

of strategic management, as understood by Nag et al. (2007), and addresses a vari-
ety of issues, including content creation, technology components, people and change
management (Davenport and Mahidhar 2018). Given the broad area of possible
applications, managers must start tackling a manageable specific business problem
with AI, before they generally deploy the technology within strategic management.
Research shows that the customized adoption of AI by organizations is on the
rise, albeit adoption involves high upfront costs and rather long-term and unquantifi-
able benefits (Berman and Dalzell-Payne 2018). Davenport and Mahidhar (2018)
see a clear AI strategy as the first step towards a distinct competitive advantage.
Using cognitive technologies does not necessarily mean building a completely new
strategy, but “[…] devis[ing] well-informed actions that align with existing busi-
ness goals” (Davenport and Mahidhar 2018), which are driven by the specifics of
the corporate strategy. Supporting the line of argumentation of other authors that
emphasize integration with the help of trial-and-error approaches (e.g., Kolbjørn-
srud et al. 2017), Davenport and Mahidhar (2018) consider a series of pilots with
proofs of concept necessary for deploying the technology. To mitigate the workforce

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Understanding the interplay of artificial intelligence and… 103

consequences of using AI in management, a study by Davenport and Harris (2005)

underlines the importance of regular organizational communication and further
training opportunities for employees at risk of losing their jobs.
As the use of AI technologies in management requires capabilities that can be
either internalized externally or developed internally, Watson (2017) distinguishes
the adoption of an organizational AI architecture in ten phases and notes that smaller
and medium-sized organizations in particular will access AI as an analytics-as-ser-
vice tool through cloud solutions.

4.1.3.2 Method of implementation While intelligent decision support systems

(IDSS) in the form of expert systems have been the subject of academic discussions
for almost 40 years, the scope of such systems has been confined to supporting mana-
gerial decision-making statically. However, more recent use cases in the literature
refer to AI as a technological umbrella for a huge set of techniques and methods
related to machine learning or fuzzy logic.
Despite the partial usefulness of early AI applications within IDSS for planning
(Geisler 1986), knowledge management (Merten 1991) and organizational decision-
making (Bonczek et al. 1979) most of the early expert systems fell into disuse due to
managerial resistance (Davenport and Harris 2005) and the non-monotonous nature
of reasoning in strategic management (Lawrence 1991). In the following years,
scholars further evolved the systems into distributed planning systems supporting
the top management in creating scenarios with the help of intelligent agents (Pinson
and Moraltis 1997) attempting to replicate the cognitive process of human strate-
gists. Before the era of BD, the main challenge in supporting strategic decision-mak-
ing was understanding an executive as an individual user with domain-specific work
and aligning the intelligence activities into the right context. Evolving this approach
has led to the paradigm of cognitive support systems (Watson 2017) and resulted in
a diversification of applications and more specific use cases for strategy formulation
(e.g., Lau et al. 2012).

4.2 Consequences

4.2.1 Individual‑level

4.2.1.1 Managerial cognition Strategic decision-makers with limited capacity for

converting information are challenged by an increasing degree of volatility, uncer-
tainty and complexity and have more data to analyze than ever before (Merendino
et al. 2018). The literature indicates that the usage of AI in decision-making can offer
aid to deal with this data overload and might enable managers to overcome cognitive
limitations by mimicking rationality (Jarrahi 2018).
Numerous researchers have discussed and highlighted the potential of AI to aug-
ment managerial decision-making (Berman and Dalzell-Payne 2018; Bonczek et al.
1979; Davenport and Kirby 2016; Parry et al. 2016; Wilson and Daugherty 2018)
and have shown its positive influence (Bettis 2017; Ghasemaghaei et al. 2018; Kow-
alczyk and Buxmann 2014) on the individual performance level of managers by

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104 C. Keding

increasing the amount of decision-relevant data (Chi and Turban 1995; Hoffman
2016; Intezari and Gressel 2017) as decision-inputs. This assumption has recently
been challenged by Brynjolfsson and Mitchell (2017), who demonstrate that the
competence of AI is highly context-specific and more fragile than the nature of
human decision-making. In addition, the authors point out various tasks for which
the algorithmic decision-making approach is completely ineffective.
The article by Pomerol (1997) underlines the interplay of human reasoning and
AI and perceives the main strengths of AI in reducing the uncertainty in decision-
making while criticizing the subjectivity of and the disregard for multi-attribute
preferences at the same time. Another study states the high inter-subject reliability
of using algorithmic decision-making, which can ultimately lead to consistent deci-
sion-making over time and increases the level of fairness (Kahneman et al. 2016).
Other studies challenge the applicability of AI for strategic decisions that are novel
and uncertain (Jarrahi 2018) or show that certain AI systems can also increase deci-
sional complexity (Lawrence 1991) while enhancing the buy-in and legitimacy for
decision outcomes (Orwig et al. 1997; Parry et al. 2016).
However, due to the fact that AI systems understand neither the inputs they pro-
cess or the outputs they produce, research shows that pure data-driven rationality
does not necessarily lead to the right decisions, as such decision agents might aim
at maximizing specific parameters at all costs while ignoring morals, the firm’s spe-
cific values and ethical standards (Agrawal et al. 2017; Wright and Schultz 2018).
Learning with real-life data, algorithms retrospectively identify patterns to predict
the future, which means that distrustful patterns of past decisions within the realms
of sexism, racism and economic disadvantage may also be reflected and reinforced
by algorithmic decision-making (Diakopoulos 2016; Merendino et al. 2018; Parry
et al. 2016). Although studies have implied that machine judgment trained with his-
torical data appears to be more accurate and less prone to biases than human judg-
ment (Kahneman et al. 2016), other scholars have highlighted a number of negative
examples of algorithmic bias from judicial decision-making (Garfinkel et al. 2017)
and human resource management (Lambrecht and Tucker 2019).

4.2.1.2 Value of complementary skills The inclusion of AI modifies the strategic

decision-making process and produces personal challenges for managers, in that it
replaces tasks that are merely objective and therefore enables humans to focus on
other activities such as judgment and more intuitive and empathetic areas within the
realm of algorithmic management.
The segmentation of a strategic decision into its essential elements makes clear
where the use of machine learning in strategic decision-making is of its most sig-
nificant benefit: prediction (Agrawal et al. 2017). Although this is an integral part
of every decision process under uncertainty, a prediction itself is not a decision.
Agrawal et al. (2017) found that complementary skills to prediction are the most
valuable in the future strategic co-creation of prediction-focused AI systems and
judgment-focused managers. Strategic managers are required to develop what Wil-
son and Daugherty (2018) call “fusion skills” to collaborate effectively with intel-
ligent machines (Jarrahi 2018; Lichtenthaler 2018; Watson 2017), and they need to

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Understanding the interplay of artificial intelligence and… 105

take responsibility in the development and monitoring of the operations, depending

on the degree of autonomy of such systems (Garfinkel et al. 2017).
Numerous studies argue that AI replaces managerial tasks that are predominantly
objective and codifiable. As a consequence, the managerial role will evolve to focus
on other activities requiring implicit knowledge, flexibility, judgment and creativ-
ity (e.g., Geisler 1986; Kolbjørnsrud et al. 2017). Moreover, Davenport (2016)
not only points out that the cognitive capabilities of intelligent machines will need
to be united with managerial intelligence in what he calls an “integrated strategy
approach”, but he also develops five paths towards employability for knowledge
workers in the era of intelligent machines (Davenport and Kirby 2015). In the same
vein, Wilson et al. (2017) find and categorize three emerging human job roles, i.e.
trainers, explainers and sustainers, that will need to be created to navigate the grow-
ing utilization of AI in management practices.
Further conceptual research in the field suggests that machines do not perform
well at conceptually piecing together a big picture (Geisler 1986), while good
human strategists excel on the narrative level of sense-making through a personal
consideration of contexts and facts (Davenport 2016; Davenport and Kirby 2016).
In line with this idea, other scholars argue that the introduction of AI will lead to
an augmentation of management productivity and thus enable managers to focus on
“high-value work” (Plastino and Purdy 2018), which will result in a premium on
soft skills such as intuition (Ferràs-Hernández 2018) and human judgment (Agrawal
et al. 2017).

4.2.2 Organizational level

4.2.2.1 Human–machine collaboration The degree to which tasks in strategic man-

agement can and will be substituted by AI has been the subject of various articles in
the research field. Although some authors see the usage of AI in strategy overstated in
the foresighted future, the majority of scholars anticipate the most beneficial impact
for strategic management when AI augments managers (e.g., Agrawal et al. 2017;
Wilson and Daugherty 2018) and focuses on strategy execution (Ferràs-Hernández
2018).
The concept of an artificial manager, meaning a machine replacing a human
manager, is not an entirely new phenomenon but has not been able to live up
scholarly expectations (Geisler 1986; Holloway 1983). Studies have exam-
ined the integration of human and algorithmic intelligence into work practices
(Lichtenthaler 2018), the role of the interface of AI and human managers for user
involvement (Bader and Kaiser 2019) and cognitive reasons for implementation
barriers (Lichtenthaler 2019). Interdisciplinary research has shown that there are
differences in the nature and the capabilities of humans and machines (e.g., Bettis
2017; Bonczek et al. 1979), which are the reasons why most scholars consider the
relationship between machines and humans complementary (e.g., Jarrahi 2018;
Parry et al. 2016) and contemplate that managerial tasks that cannot be auto-
mated will be supplemented by AI in the future (e.g., Davenport and Kirby 2015).
Enriching this discussion, Brynjolfsson and Mitchell (2017) have developed a
concept to assess the workforce implications for organizations, while Huang and

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106 C. Keding

Rust (2018) map recommendations for managerial delegation within the field of
analytical, intuitive and empathetic tasks.

4.2.2.2 Design of decision‑making governance The advent of AI will further

amplify the edge of analytics-based decision-making in strategic management.
To establish smart decision-making processes and a more efficient and fact-based
decision-making culture, research posits a rethinking of established leadership
regularities.
The question surrounding the administration of an AI system in strategic man-
agement is a recurring theme in the research field (Holloway 1983; Parry et al.
2016) and becomes even more relevant with regard to the accountability (Gar-
finkel et al. 2017) and ethics (Wright and Schultz 2018) of autonomous deci-
sion systems. The framework produced by Shrestha et al. (2019) introduces three
distinct categories in which collaborative decision structures can be classified:
full delegation from manager to AI, sequential decision-making, and aggregated
human-AI decision-making.
However, even if full automation of a decision-making process is possible,
fiduciary, legal or ethical issues may still require the active role of a responsible
human manager (Davenport and Harris 2005). While the delegation of decision-
making authority to intelligent systems (Schneider and Leyer 2019) is associated
with the dismantling of inefficient information structures, this at the same time
poses new leadership challenges to managers in the realm of understanding the
underlying principles and assumptions (Davenport 2013). Although there is no
available AI technology that is completely able to incorporate the emotional,
human and political contexts needed to automate strategic decisions, future AI-
systems might enable a parting from top-down planning and imply a push to de-
individualizing decision-making (Parry et al. 2016). This would require a rethink-
ing of established leadership regularities and accountabilities (Garfinkel et al.
2017) without a human-held veto. In this context, studies were performed that
indicate changes towards a more information-based leadership style in the era of
algorithmic management. These studies further refer to the importance of defin-
ing tracking parameters, the tracking of potential abuse (Hirsch 2018) and the
compliance of intelligent systems (e.g., Garfinkel et al. 2017; Kolbjørnsrud et al.
2017) with the help of accessing decision-support-related information through
intelligent visualization systems (Hoffman 2016) or chatbots (Watson 2017).

4.2.2.3 Agility and participation in strategy development Research at the inter-

section of AI and strategic management considers traditional strategy approaches
increasingly inadequate for business environments that are changed by emerging
technologies. However, scholars are attributing to AI the potential to increase the
variety of organizational knowledge integrated into the strategy development pro-
cess.
To solve planning problems in strategic management, cooperation among sev-
eral agents is needed (Pinson and Moraltis 1997). Early studies argue that each of
the strategy formulation elements is subjected to repeated feedback and that no

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Understanding the interplay of artificial intelligence and… 107

other planning system can be seen beyond the abilities of an AI concept which
surpasses humans regarding knowledge and memory performance (Davenport
2016; Holloway 1983). As highlighted by Orwig et al. (1997), intelligent group
support systems can decrease political friction in strategic decisions by providing
a method to integrate many stakeholders (Orsini 1986) and objectives (Berman
and Dalzell-Payne 2018) in the strategy process, thus leading to greater organi-
zational buy-ins to decision outcomes by combining explicit and tactic knowl-
edge (Metcalf et al. 2019). While Grover et al. (2018) describe the strategic value
proposition of intelligent analytics, Berman and Dalzell-Payne (2018) call for
an agile and IT-centric conceptualization of strategy in the context of AI. The
authors attribute to various AI technologies the potential to detect and examine
proactively driving forces of change with the help of sophisticated scenario-mod-
eling (Constantiou and Kallinikos 2015).
While other researchers posit that AI systems can lead to faster (Davenport and
Harris 2005) and more successful strategic decision-making (Intezari and Gressel
2017) when the role of the manager is limited to reviewing and confirming decisions
(Davenport and Harris 2005), a small number of researchers considers special and
inimitable organizational abilities more relevant than the pure ownership of mar-
ketable algorithms and data (Grover et al. 2018; Vidgen et al. 2017) and questions
the long-term benefits and distinctive character of algorithms to create unique com-
parative advantages when the data and tools are available to all players in the market
(Mazzei and Noble 2017).

4.2.2.4 Predictive logic in business models AI can display incremental shifts in

demand and simplify the conversion of strategic opportunities into business model
elements. Scholars in the field predict a change in the majority of value propositions
due to the further dissemination of personalized products and services facilitated by
the use of intelligent machines.
Agrawal et al. (2017) have recently developed the concept of an AI canvas and
shown that data-driven services, as well as efficient operational processes based
on complex prediction models, are the main pillars for digitized business models.
To keep up with the pace of changes in the competition, companies will addition-
ally need the capability to adapt their business models quickly. This can be done
by deploying cognitive technologies that show incremental shifts in demand (Dav-
enport 2016), or by utilizing natural language interfaces to reduce friction within
the customer journey (Watson 2017). By continually scrutinizing whether existing
business model elements still reflect current customer needs and place the focus on
technological possibilities, managers are called first to explore and then utilize the
knowledge to shape business models that will remain viable in the foreseeable future
(Berman and Dalzell-Payne 2018).
With the arrival of the next generation of decision support services, the primary
logic of business model design will shift to an understanding of how customers
make decisions (Constantiou and Kallinikos 2015) and how this decision-making
process can be used to generate revenue with personalized products and services
(Davenport and Mahidhar 2018).

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108 C. Keding

5 Discussion

Research on the role of AI in strategic management is not an entirely new phe-

nomenon. Already in the 1980s, many promises were made about its manage-
rial usefulness (e.g., Geisler 1986; Holloway 1983), but early forms in the shape
of expert systems failed to achieve their value propositions on a strategic level
(e.g., Edwards and Yanqing 2000), which led to a decline in publications and
a temporary loss of the research field’s significance. However, academic inter-
ested has increased again, as more recent articles (e.g., Jarrahi 2018; Wilson and
Daugherty 2018) now find their technological foundation in sophisticated algo-
rithms that are more powerful than ever before and are extending their reach into
what would normally be seen as exclusively human domains in strategic manage-
ment. Although AI is still at an early state of deployment in strategic management
(Fountaine et al. 2019), recent publications have shifted the focus to the busi-
ness potential of AI and consider the synergy of BD and AI being on the cusp of
practical usefulness (e.g., Berman and Dalzell-Payne 2018; Ghasemaghaei et al.
2018). In contrast to earlier publications in the field, current studies assign AI a
high degree of utility and more autonomy in the area of “thinking work” (Phan
et al. 2017) within cognitive tasks and process automation (Davenport and Ron-
anki 2018).
This SLR contributes to the emerging discussion in strategic management
literature by structuring and synthesizing concepts covering four decades of
research and by deriving promising research opportunities in the area where AI
and strategic management intersect. An in-depth analysis of the fragmented body
of the literature yielded a range of themes (see: Fig. 3), which provides the first
comprehensive assessment of the interplay of AI and strategic management and
hence contributes to understanding the transition of the research field at the fron-
tier of algorithmic management.
At the level of antecedents, research integrates technological suitability along-
side a number of organizational-wide antecedents such as data-driven workflows,
managerial willingness and other organizational determinants as one of many
conditions in the context of AI adoption in strategic management. The literature
shows that AI is not perceived as a plug-and-play technology with fast returns
and that effective leverage of the technology’s potential requires a clear and dis-
tinct deployment strategy involving multiple stakeholders. In the current state of
many organizations, managers at the work-practice level are constrained by prev-
alent organizational models and insufficient interdisciplinary collaboration when
approaching the utilization of BD and AI-based systems within different cogni-
tive technologies. As the use of AI places requirements on the organizational
infrastructure as well as managerial working methods, research indicates that the
process by which it is implemented is decisive in its degree of trustworthiness
and managerial acceptance.
At the level of consequences, AI-based systems are described as either sup-
porting the human manager or replacing him in the realm of routine tasks that
are objective and codifiable and enable managers to focus on more meaningful

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Understanding the interplay of artificial intelligence and… 109

tasks. Literature shows that organizations that are capable of effectively address-
ing the challenges associated with the utilization of AI, including biased data
sources, hidden imprecisions and ethical issues, are potentially able to achieve
considerable strategic rewards. In this regard, studies indicate that the usage of
AI in decision-making can help deal with data overload and might enable manag-
ers to overcome cognitive limitations. However, scholars have moved away from
outdated concepts of AI-based systems replacing all managers (e.g., Holloway
1983), and now increasingly promote the concept of AI-enabled automation to
mostly augment tasks within this human machine-partnership in strategic man-
agement. The prevailing view within academia still considers human managers
best-suited for the role of central processor, due to their unique level of sense-
making and judgemental competence. Given the predicted need for the transition
of managerial working practices, distinct research streams in the field examine
the degree to which strategic work can—and will—be affected by AI and how
this human–machine collaboration will alter the decision-making governance and
logic of business models.
With respect to the research question, concept synthesis shows that the extent of
strategic value of AI-based systems on both the individual as well as the organiza-
tional level depends not solely on the power of the underlying algorithms, but it can
only be enabled through effectively orchestrated organizational capabilities and the
managerial willingness to utilize them. These conditions provided, AI promises to
change the nature of strategic management and possesses the potential to transform
how to generate competitive advantages—both by supporting managers with inno-
vative ways to leverage knowledge in the process of strategic decision-making and
by modifying the landscape of strategic capabilities through automation and the per-
sonalization of value propositions. However, the research field indicates that lever-
aging the technology’s power to enhance strategic management practices is a learn-
ing process for both the individual manager and the organization. The roles within
this learning process are described as gradually changing and prompting organiza-
tions to realign their structures, processes and cultural values continuously, in order
to remain competitive in the era of intelligent management.

6 Avenues for future research

This review also points towards promising future research opportunities in the field
to expand the scholarly discussion and contributes to theoretical advancement in the
interdisciplinary area where AI and strategic management intersect. Drawing on the
developed framework, I first outline the research opportunities within each identified
research stream (Table 2). Subsequently, I then assess relevant cross-cutting research
opportunities, to expand the scope of the identified research streams (Table 3), and
discuss the research implications of the lack of theorization about the phenomenon
of AI in strategic management in the current scholarly discussion.
A large body of the forward-looking research in the scattered field to date has
been focused on conceptual issues such as the replacement versus augmentation
debate without continuously substantiating claims with empirical evidence (e.g.,

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110 C. Keding

Table 2  Research opportunities within each research stream

Research stream Research opportunities

Antecedents
Data-driven workflows How should organizations structure their cognitive
architecture and data governance to support AI-
enabled systems in different departments? How do
legal and ethical factors affect the use of BD as an
input for AI-based systems? How can organizations
ensure sufficient data quality for supporting mana-
gerial actions of strategic importance?
Managerial willingness What are the psychological factors that drive manage-
rial decision delegation to AI in a strategic context?
Will managers allow autonomous AI systems
to make and execute strategic decisions on their
behalf? Will explainable AI-based systems affect
the level of trustworthiness?
Organizational determinants How do different AI implementation methods deter-
mine the concrete value added by intelligent tech-
nology? How can organizations assess the optimal
use and distribution of AI in strategic management?
Consequences
Managerial cognition How does one organize the cognitive collaboration
between human judgment and AI while minimiz-
ing the negative impact of the technology? How
should managers deal with moral dilemmas and
AI discrimination? How does the utilization of AI
interplay with human biases in strategic decision-
making processes? Will the utilization of AI-based
systems lead to managerial over-reliance?
Value of complementary skills What concrete leadership skills will remain important
in management teams in the age of AI-enabled auto-
mation? How do AI-supported activities change the
nature of strategic decision-making? What are the
implications of an AI implementation for organiza-
tional training and future management education?
Human–machine collaboration How can the human–machine partnership in strategic
management be transformed into competitive
advantages? How can one design the AI within
organizational decision-making in line with differ-
ent roles? What is the effect of AI on different levels
of management?
Design of decision-making governance How should organizations determine and assign the
levels of authority and accountability for algorithms
in strategic management? How can AI agency risks
be administered? How does this choice affect the
level of performance and motivation of human
managers?
Agility and participation in strategy development Will AI enable more equal relationships across dif-
ferent hierarchical levels? How will the utilization
of AI redefine the boundaries of an organization?
Which parts of the strategy development process
are likely to be outsourced to AI, and what are the
effects on organizational culture and performance?

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Understanding the interplay of artificial intelligence and… 111

Table 2  (continued)
Research stream Research opportunities
Predictive logic in business models What are concrete mechanisms through which organi-
zations reconfigure their business models in the era
of algorithmic management?

Davenport 2016; Jarrahi 2018; Parry et al. 2016). The accelerating deployment and
relevance of AI in strategic management practices, however, create a growing need
for more critical perspectives on the phenomenon in strategic management and a
demand for more quantitative and qualitative research on the level of automation
selection. A reasonable research approach could be experimental studies identifying
the concrete causalities through which the collaboration of AI and human managers
ultimately delivers the anticipated benefits, indicated by many conceptual studies. In
light of the intriguing assumptions that a human–machine symbiosis is imminent,
and that the quality of managerial actions will increase with the help of more inclu-
sive data and the complementary skills of AI-based systems, further research should
be undertaken to investigate how organizations can overcome the challenges of
managerial resistance as well as manage the balance between the traditional objec-
tives of human leadership and algorithmic optimization. Therefore, future research
will need to study how AI may redesign business processes and create new forms
of organizational design while also considering possible automation failures from
a strategic management perspective by addressing the questions outlined in the fol-
lowing Table 3.

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112 C. Keding

Table 3  Research opportunities Research stream Research opportunities

beyond identified research
streams Organizational design Which organizational design
ensures that AI and human
managers can work together
effectively? What are the effects
of an AI implementation on
organizational governance and
learning? How can organizations
assess AI safety and take action
to prevent data abuse? Is there
an underlying cultural dimension
to the logic of AI-based systems
and their subsequent outcomes?
What other organizational
resources and capabilities do
organizations need to invest for
realizing performance enhance-
ments through strategic AI
applications?
Critical perspectives on AI How will organizations deal with
discrimination and failure failures and errors of strategic AI
applications? Is the inexpli-
cability of algorithms in itself
compatible with the nature of
strategic decision-making pro-
cesses in organizations? Under
what conditions do organizations
require transparency of reasoning
within strategic AI applications?
What could be unintended con-
sequences of AI-based systems
that can produce downstream
effects on management practices
and markets?

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Understanding the interplay of artificial intelligence and… 113

From a theoretical perspective, AI is a domain with extensive opportunities for

generating novel theory perspectives at the intersection of information systems and
strategic management. Despite an initial set of empirical studies (e.g., Kolbjørn-
srud et al. 2017; Schneider and Leyer 2019), there is still very limited theoretically-
grounded research aiming at understanding the utility of the latest generation of AI
from a technology-application perspective. While some articles in the field view
the utilization of AI in strategic management through the theoretical lenses of the
knowledge-based view (e.g. Intezari and Gressel 2017; Merendino et al. 2018), the
agency theory (Pinson and Moraltis 1997) or theories in the sphere of the resource-
based view (e.g., Olszak 2016; Vidgen et al. 2017), the most cited recent articles
originate from practitioner-oriented journals such as Harvard Business Review or
MIT Sloan Management Review that provide executives with guidelines on how to
benefit and implement AI, without explicitly indicating the application of a theory
to the research (e.g., Davenport and Ronanki 2018). Although this is due to the fact
that in partially emerging fields early examinations generally seek to understand the
phenomenon before applying theory (Hambrick 2007), further research is required
to contemporarily theorize on new forms of management practices, to determine
further the essentiality of AI as a resource. To develop a full picture of AI in strate-
gic management, I encourage other researchers to shed light on the crucial relation-
ship between AI and theory and build more systematic evidence on the question of
whether the managerial use of AI requires modifying some assumptions of extant
management and organizational theories.

Acknowledgements I am particularly thankful to the editor and the two anonymous reviewers for their
constructive comments, which were very helpful for the revision of the manuscript. I would also like to
thank Philip Meissner (ESCP Business School) for his valuable feedback on earlier versions of this paper.

Appendix

See Table 4.

13
 Table 4  Articles selected for review
114

Authors (Year) Title Journal VHB-Jourqual 3 Categorization Key findings

13
Agrawal et al. (2017) What to expect from artificial MIT Sloan Management C Conceptual New managerial challenges
intelligence Review ahead, due to focus on
judgmental tasks. Based on
the anatomy of a decision, a
differentiation is made between
automation and prediction
Bader and Kaiser (2019) Algorithmic decision-making? Organization B Empirical User interfaces possess an
The user interface and its ambiguous and meaning-
role for human involvement ful function for human
in decisions supported by involvement in joint decision
artificial intelligence processes. The user interface
is conceptualized a key role
between the poles of human
distance and attachment
Berman and Dalzell-Payne The interaction of strategy and Strategy & Leadership C Conceptual By proposing an innovative
(2018) technology in an era of busi- model for strategy develop-
ness re-invention ment, it is shown that digital
technology is a tool used for
tactical advantage and, it is
crucial for strategic renewal
Bettis (2017) Organizationally intractable Journal of Management A Conceptual Drawing on heuristics AI
decision problems and provides opportunities to deal
the intellectual virtues of effectively with ill-structured
heuristics and intractable decision envi-
ronments
Bonczek et al. (1979) Computer-based support of Decision Sciences B Conceptual Presentation of a framework for
organizational decision understanding the degree to
making which computer systems can
be used to facilitate strategic
planning processes beyond
C. Keding

information retrieval
 Table 4  (continued)
Authors (Year) Title Journal VHB-Jourqual 3 Categorization Key findings

Brynjolfsson and Mitchell What can machine learning Science A+ Empirical By assessing the suitability of
(2017) do? Workforce implications: ML for tasks, the increasing
profound change is coming, pace of automation is high-
but roles for humans remain lighted. ML will rarely auto-
mate whole jobs; in most cases,
it will lead to a re-engineering
the processes and reorganizing
tasks
Chi and Turban (1995) Distributed intelligent executive Decision Support Systems B Conceptual Development of a framework
information systems (DIEIS). It illustrates how mul-
tiple resources can be merged
for information processing in a
strategic environment and how
intelligent agents can cooper-
ate in complex information
Understanding the interplay of artificial intelligence and…

processing
Constantiou and Kallinikos New games, new rules: big data Journal of Information Technol- A Conceptual The usefulness of large data
(2015) and the changing context of ogy for strategizing depends on
strategy their ability to be constantly
updated, which shortens the
time span in which the infor-
mation is relevant for strategy
development and highlights
contextual factors
115

13
 Table 4  (continued)
116

Authors (Year) Title Journal VHB-Jourqual 3 Categorization Key findings

13
Davenport (2013) Keep up with your quants Harvard Business Review C Conceptual The selection and handling of
data analysts influence the
success of intelligent analytics
efforts. Managers need to
understand the underlying prin-
ciples of analytical decision-
making for organizational
success
Davenport (2016) Rise of the strategy machines MIT Sloan Management C Conceptual Description of state-of-the-art
Review machines that develop strate-
gies for organizations. Never-
theless, only humans are able
to make “big swing” strategic
decisions, as machines are not
very good at putting together
the big picture
Davenport and Harris (2005) Automated decision making MIT Sloan Management C Empirical Automatic decision-making
comes of age Review capabilities are not equiva-
lent to previous DSS and
are embedded in the normal
workflow with minimal human
intervention
C. Keding
 Table 4  (continued)
Authors (Year) Title Journal VHB-Jourqual 3 Categorization Key findings

Davenport and Kirby (2015) Beyond automation Harvard Business Review C Conceptual Division of automation into three
eras and the introduction of
five paths to employability.
Perception of automation as an
opportunity to augment human
abilities in creative problem-
solving. Many managerial
tasks, including empathy and
storytelling, cannot be codified
Davenport and Kirby (2016) Just how smart are smart MIT Sloan Management C Conceptual The growing number of cogni-
machines? Review tive technologies is mapped
in a framework that shows the
degree of autonomy and what
tasks they can perform
Understanding the interplay of artificial intelligence and…

Davenport and Mahidhar What’s your cognitive strategy? MIT Sloan Management C Conceptual Mapping of recommendations,
(2018) Review in order to develop and build
a cognitive strategy. Under-
standing the key levers in a
variety of topics such as the
use of content, technology
components, people, change
management and organizational
ambitions
117

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 Table 4  (continued)
118

Authors (Year) Title Journal VHB-Jourqual 3 Categorization Key findings

13
Diakopoulos (2016) Accountability in algorithmic Communications of the ACM B Conceptual Details on different types of algo-
decision making rithmic decision-making, such
as prioritization, classification,
allocation and filtering are pre-
sented. The need for regulation
and standards (human partici-
pation, data, and modelling) is
highlighted
Dietvorst et al. (2018) Overcoming algorithm aver- Management Science A+ Empirical Experimental studies show the
sion: people will use imper- option to mitigate algorithm
fect algorithms if they can aversion by giving users a
(even slightly) modify them small amount of control over
the prediction of an imperfect
algorithm
Epstein (2015) Wanted: collaborative intel- Artificial Intelligence B Conceptual Proposition of the development
ligence of collaborative intelligence as
an alternative to autonomous
systems that compete with
managers, to improve both pub-
lic perception and managerial
acceptance
Ferràs-Hernández (2018) The future of management in a Journal of Management Inquiry B Conceptual Comparison of the advantages of
world of electronic brains both managers and machines
along the value chain.
Although machines outperform
people in many cognitive tasks,
human managers are uniquely
capable of leading
C. Keding
 Table 4  (continued)
Authors (Year) Title Journal VHB-Jourqual 3 Categorization Key findings

Garfinkel et al. (2017) Toward algorithmic transpar- Communications of the ACM B Conceptual AI cannot allow decision-makers
ency and accountability to automatically overcome
cognitive distortions, because
these systems are not free of
distortions by themselves,
which creates new regulatory
challenges
Geisler (1986) Artificial management and the Business Horizons C Conceptual Management by expert systems
artificial manager can take over predefined
management tasks. Artificial
managers possess advantages
in the realm of technical and
procedural decisions
Ghasemaghaei et al. (2018) Data analytics competency for The Journal of Strategic Infor- A Empirical Development of a data analytics
Understanding the interplay of artificial intelligence and…

improving firm decision mak- mation Systems competency index from a

ing performance resource-oriented perspec-
tive. Most dimensions of data
analytics competency are
described to improve decision
quality, while the effect of
the bigness of data remains
ambivalent
Grover et al. (2018) Creating strategic business Journal of Management Infor- A Conceptual Development of a theoretical BD
value from big data analytics: mation Systems analytics framework to show
a research framework how distinctive BDA compo-
nents can become a strategic
advantage for the company
119

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 Table 4  (continued)
120

Authors (Year) Title Journal VHB-Jourqual 3 Categorization Key findings

13
Hirsch (2018) Tie me to the mast: artificial Journal of Business Strategy C Conceptual The usefulness of AI in
intelligence & reputation risk reputation risk management
management is assessed in two areas: ML
to analyze employee emails
to determine early signs of
malpractice and to test business
decisions for potential fraud
Hoffman (2016) Using artificial intelligence to MIT Sloan Management C Conceptual By focusing on the beneficial
set information free Review effects of AI in the way com-
panies gather, analyze and act
on knowledge, the study shows
how AI will affect manage-
ment practices in the areas
of knowledge distribution,
performance management and
talent mobility
Holloway (1983) Strategic management and Long Range Planning B Conceptual The potential for “thinking”
artificial intelligence robots has a big impact on
general management. By subdi-
viding strategic planning prob-
lems, companies could benefit
from massive knowledge stor-
age within such systems
C. Keding
 Table 4  (continued)
Authors (Year) Title Journal VHB-Jourqual 3 Categorization Key findings

Huang and Rust (2018) Artificial intelligence in service Journal of Service Research A Conceptual A framework to cope with
changes in the job structure
induced by AI. According to
four intelligences: mechani-
cal, analytical, intuitive and
empathetic. The article shows
how companies should decide
between humans and machines
to perform these tasks
Intezari and Gressel (2017) Information and reformation Journal of Knowledge Manage- C Conceptual Typologization of different data-
in KM systems: Big data and ment based decisions from a knowl-
strategic decision-making edge-based view. Characteriza-
tions of factors that help enable
intelligent systems to handle
BD and advanced analytics in
Understanding the interplay of artificial intelligence and…

strategic environments
Janssen et al. (2017) Factors influencing big data Journal of Business Research B Empirical The use of BD is an evolution-
decision-making quality ary procedure in which the
comprehension of the potential
of BD and the routinization of
practices play a pivotal role
Jarrahi (2018) Artificial intelligence and the Business Horizons C Conceptual AI can improve human cognition
future of work: Human-AI when confronted with manag-
symbiosis in organizational ing complexity. However,
decision making human managers still offer
more holistic and intuitive
approaches to deal with uncer-
tainty and ambiguity
121

13
 Table 4  (continued)
122

Authors (Year) Title Journal VHB-Jourqual 3 Categorization Key findings

13
Kahneman et al. (2016) Noise: how to overcome the Harvard Business Review C Conceptual The usage of AI in decision-mak-
high, hidden cost of inconsist- ing outperforms human manag-
ent decision making ers in terms of consistency
Kolbjørnsrud et al. (2017) Partnering with AI: how organi- Strategy & Leadership C Empirical When managers are involved in
zations can win over skeptical AI development, they acquire a
managers sense of ownership during the
learning process. In addition,
patterns for an effective intro-
duction of AI are identified and
described. The value of skills
complementary to AI will
increase
Kowalczyk and Buxmann Big Data and information Business & Information Sys- B Empirical Typologization of how large
(2014) processing in organizational tems Engineering data processing mechanisms
decision processes are used in various forms of
BI to enable decision-making
processes with an information-
processing theory perspective
Lambrecht and Tucker (2019) Algorithmic bias? An empirical Management Science A+ Empirical An algorithm that is supposed
study into apparent gender- to optimize cost efficiency in a
based discrimination in the neutral task delivers discrimi-
display of STEM career ads nating results. This empirical
result can be transferred to
other decision environments
and highlights the incoherence
of decision objectives
C. Keding
 Table 4  (continued)
Authors (Year) Title Journal VHB-Jourqual 3 Categorization Key findings

Lau et al. (2012) Web 2.0 environmental scan- MIS Quarterly A+ Conceptual Market-based view operationali-
ning and adaptive decision zation of a scorecard model and
support for business mergers development of a self-learning
and acquisitions system for M&A decision
support, based on a domain-
specific sentiment and business
relationship analysis
Lawrence (1991) Impacts of artificial intelligence Journal of Behavioral Decision B Conceptual The deployment of expert sys-
on organizational decision Making tems will produce less sophis-
making ticated and political decision-
making processes, whereas the
deployment of natural language
systems will lead to divergent
outcomes
Understanding the interplay of artificial intelligence and…

Lichtenthaler (2018) Substitute or Synthesis? The Research-Technology Manage- C Conceptual The relationship between humans
interplay between human and ment and AI is described in the form
artificial intelligence of a matrix that contains four
quadrants to describe the differ-
ent strengths in collaboration
Lichtenthaler (2019) Extremes of acceptance: Journal of Business Strategy C Conceptual Organizations experience bar-
employee attitudes toward riers in the implementation of
artificial intelligence AI, due to the negative attitudes
of their employees. A concept
of no-human interaction set-
tings is introduced to describe
employees’ preference for
working with real colleagues
123

13
 Table 4  (continued)
124

Authors (Year) Title Journal VHB-Jourqual 3 Categorization Key findings

13
Logg et al. (2019) Algorithm appreciation: People Organizational Behavior and A Empirical While calling for a theory of
prefer algorithmic to human Human Decision Processes machines, they show that
judgment laymen are more likely to take
advice when they originate
from an algorithm rather than
from a human. However, the
level of algorithm appreciation
decreases when a) users choose
between utilizing an algorithm
and their own decision and b)
when users are experienced in
that particular task
Mazzei and Noble (2017) Big data dreams: a framework Business Horizons C Conceptual Typologization of value creation
for corporate strategy layers with regard to the BD
phenomenon. The framework
shows how large amounts of
data improve dynamic capabili-
ties within companies and are
becoming essential elements of
disruptive strategies
Merendino et al. (2018) Big data, big decisions: the Journal of Business Research B Empirical Demonstration of the lim-
impact of big data on board ited cognitive abilities of
level decision-making decision-makers from a
knowledge-based perspective.
Subsequently, the potential
benefits of BD and cohesion
and control in leadership teams
are discussed
C. Keding
 Table 4  (continued)
Authors (Year) Title Journal VHB-Jourqual 3 Categorization Key findings

Merten (1991) Loop-based strategic decision Strategic Management Journal A Conceptual With the portfolio simulation
support systems model, the concept of continu-
ous feedback loops is used to
depict rule-based policy
decisions made by companies
that can increase quantita-
tive knowledge in interaction
processes
Metcalf et al. (2019) Keeping humans in the loop: California Management Review B Conceptual The concept of artificial swarm
pooling knowledge through intelligence is presented. ASI is
artificial swarm intelligence used by companies to increase
to improve business decision collaboration by exploiting the
making different perspectives within
groups and to enable the con-
vergence of decisions
Understanding the interplay of artificial intelligence and…

Olszak (2016) Toward better understanding Information Systems Manage- C Empirical From a resource-based
and use of business intel- ment perspective, BI is a catalyst
ligence in organizations for making more impactful
decisions, refining processes
and outcomes and overcoming
industrial barriers. Therefore,
BI systems require continuous
development and adaptation
Orsini (1986) Artificial intelligence: a way Long Range Planning B Conceptual Building on value theories the
through the strategic planning author identifies AI’s recom-
crisis? mendations as immediately
relevant for strategic planning
when they are implemented in
useful hardware and software
systems
125

13
 Table 4  (continued)
126

Authors (Year) Title Journal VHB-Jourqual 3 Categorization Key findings

13
Orwig et al. (1997) A multi-agent view of strategic Group Decision and Negotia- B Conceptual Intelligent agents in the problem-
planning using group support tion solving process can both a)
systems and artificial intel- improve the quality of strategic
ligence plans by enabling greater par-
ticipation of more members of
the organization and b) increase
complexity by enlarging the
amount of textual information
Parry et al. (2016) Rise of the machines: a critical Group & Organization Manage- B Conceptual AI provides opportunities to
consideration of automated ment deal effectively with complex
leadership decision making in decision environments. The
organizations delegation of decisions to
autonomous AI agents evokes
both sociocultural and manage-
rial challenges, depending on a
human veto right
Phillips-Wren et al. (2009) An integrative evaluation European Journal of Opera- A Conceptual Development of an integrative,
framework for intelligent tional Research multicriteria IDSS assessment
decision support systems framework, which relates the
decision value of an IDSS
to both the outcome and the
decision-making process
Pinson and Moraltis (1997) An intelligent distributed Group Decision and Negotia- B Conceptual Development of a framework
system for strategic decision tion (ARISTOTE) drawing on
making agency theory, which facilitates
coherence and simplifies coor-
dination among stakeholders
C. Keding
 Table 4  (continued)
Authors (Year) Title Journal VHB-Jourqual 3 Categorization Key findings

Plastino and Purdy (2018) Game changing value from Strategy & Leadership C Conceptual The unique characteristics of AI
Artificial Intelligence: eight possess the ability to change
strategies management practices on a
large scale and at a high speed
and challenge companies to
apply new approaches and
methods in different functional
areas
Pomerol (1997) Artificial intelligence and European Journal of Opera- A Conceptual Distinction between two aspects
human decision making tional Research of decision-making according
to decision theory: diagnosis
and prediction. Study shows
that AI has many relationships
with diagnosis (expert systems,
case-based thinking, etc.), but
Understanding the interplay of artificial intelligence and…

the field of predictive reasoning

remains under-researched in
the realm of AI
Prahl and van Swol (2017) Understanding algorithm aver- Journal of Forecasting B Empirical Drawing on response-advice the-
sion: when is advice from ory, the authors show that poor
automation discounted? advice experiences diminish
significantly the trust in auto-
mated advice. Decision-makers
describe themselves as much
more in common with human
advisors than with automated
counterparty, although there is
no interpersonal relationship
127

13
 Table 4  (continued)
128

Authors (Year) Title Journal VHB-Jourqual 3 Categorization Key findings

13
Schneider and Leyer (2019) Me or information technology? Managerial and Decision B Empirical The complexity of the decision
Adoption of artificial intel- Economics situation does not influence
ligence in the delegation of the delegation decision, but
personal strategic decisions humans with low situational
awareness are more inclined
to delegate decisions to AI in
accordance with decision sup-
port theory
Shrestha et al. (2019) Organizational decision-making California Management Review B Conceptual Drawing on organizational
structures in the age of Artifi- theory, the authors differenti-
cial Intelligence ate three categories for how
decision structures in organiza-
tions can be classified: full
delegation from manager to AI,
hybrid decision-making and
aggregated decision-making
between a manager and AI.
Recommendations for strategic
decision-making situations are
derived
Vidgen et al. (2017) Management challenges in European Journal of Opera- A Empirical Building on the resource-based
creating value from business tional Research view of the firm, the authors
analytics state that organizations need a
holistic data analysis strategy,
appropriate workforce skills
and cultural change when using
data for developing competitive
advantages
C. Keding
 Table 4  (continued)
Authors (Year) Title Journal VHB-Jourqual 3 Categorization Key findings

Watson (2017) Preparing for the cognitive MIS Quarterly Executive B Conceptual Managerial recommendations
generation of decision support for the implementation of
AI-based support systems in
management, which the author
considers as organizational
resources
Wilson and Daugherty (2018) Collaborative intelligence: Harvard Business Review C Conceptual While AI will radically change
humans and AI are joining managerial responsibilities and
forces the way work is done, the most
beneficial impact thereof will
be to augment human capabili-
ties instead of replacing them
Wilson et al. (2017) The jobs that artificial intel- MIT Sloan Management C Empirical Conceptualization of three new
ligence will create Review types of jobs that will be cre-
Understanding the interplay of artificial intelligence and…

ated by the utilization of AI in

management: trainers, explain-
ers and supporters
Wright and Schultz (2018) The rising tide of artificial Business Horizons C Conceptual Assessment of the cultural and
intelligence and business ethical impacts of business
automation: developing an automation on stakeholders,
ethical framework ranging from workers to states.
Holistic definition of business
automation and introduction
of a framework that integrates
stakeholder and social contract
theory
129

13
130 C. Keding

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