Strategic Decision-Making with Artificial Intelligence Implications for Decision Speed and Quality

Abstract

Artificial Intelligence (AI) has infiltrated board rooms and holds promise to fundamentally alter strategic decision-making. Drawing a multiple bodies of related literature, we first offer a framework to classify the procedural modes decision makers adopt when they make strategic decisions and use this framework to derive our propositions. In this framework, decision makers facing use simplification strategies – by decomposition and by use of heuristics or choosing simpler problems – to make strategic decision. Using this framework, we propose that the use of AI in strategic decision-making has heterogeneous effects on the decision-making speed and decision quality. Specifically, in scenarios where delegation is the main mode of decision making, the use of AI to augment human decision makers leads to faster and better-quality decisions, whereas the replacement of heuristics and problem simplification strategies leads to slower and perceived lower quality decisions. Finally, we discuss the implications for future empirical research.