Making the most of AI and machine learning in organizations and strategy research: Supervised machine learning, causal inference, and matching models

Abstract

AbstractResearch SummaryWe spotlight the use of machine learning in two‐stage matching models to deal with sample selection bias. Recent advances in machine learning have unlocked new empirical possibilities for inductive theorizing. In contrast, the opportunities to use machine learning in regression studies involving large‐scale data with many covariates and a causal claim are still less well understood. Our core contribution is to guide researchers in the use of machine learning approaches to choosing matching variables for enhanced causal inference in propensity score matching models. We use an analysis of real‐world technology invention data of public–private relationships to demonstrate the method and find that machine learning can provide an alternative approach to ad hoc matching. However, as with any method, it is also important to understand its limitations.Managerial SummaryThis article explores the use of machine learning to enhance decision‐making, particularly in addressing sample selection bias in large‐scale datasets. The rapid development of AI and machine learning offers new, powerful tools especially for digital ecosystems where complex data and causal relationships are complex to analyze. We offer managers and stakeholders insight into the effective integration of machine learning for selecting critical variables in propensity score matching models. Through a detailed examination of real‐world data on technology inventions within public–private relationships, we demonstrate the effectiveness of machine learning as a robust alternative to traditional matching methods.