Strategic Implications of Algorithmic Tools in Operational Decision-Making

Abstract

In this conceptual paper, we seek to explore how the use of algorithmic tools in operational decision-making shapes strategy formation. We detail how such tools are starting to perform some of the roles of strategic links between top management strategic vision and organizational action and how this affects the roles and dynamics of traditional strategic actors. We present a model detailing the influence of algorithms and middle managers on the top-down processes of strategy implementation and adaptation and the bottom-up process of innovation as strategic links. We also put forward a set of propositions on how algorithmic tools are likely to change how organizations create, implement, and adapt strategy. We contribute to the literature on strategy formation and to the literature on algorithms at work by explicating the important strategic implications of operational algorithmic tools that prior work has mainly left implicit.