Algorithmic fairness in business analytics: Directions for research and practice

Abstract

The extensive adoption of business analytics (BA) has brought financial gains and increased efficiencies. However, these advances have simultaneously drawn attention to rising legal and ethical challenges when BA inform decisions with fairness implications. As a response to these concerns, the emerging study of algorithmic fairness deals with algorithmic outputs that may result in disparate outcomes or other forms of injustices for subgroups of the population, especially those who have been historically marginalized. Fairness is relevant on the basis of legal compliance, social responsibility, and utility; if not adequately and systematically addressed, unfair BA systems may lead to societal harms and may also threaten an organization's own survival, its competitiveness, and overall performance. This paper offers a forward‐looking, BA‐focused review of algorithmic fairness. We first review the state‐of‐the‐art research on sources and measures of bias, as well as bias mitigation algorithms. We then provide a detailed discussion of the utility–fairness relationship, emphasizing that the frequent assumption of a trade‐off between these two constructs is often mistaken or short‐sighted. Finally, we chart a path forward by identifying opportunities for business scholars to address impactful, open challenges that are key to the effective and responsible deployment of BA.