The impact of artificial intelligence on management practice

The emerging information technologies, including artificial intelligence (AI) algorithms (e.g., machine learning) and big data (i.e., collecting large volumes of unstructured data translated through analysis to information suitable for managerial decision-making), have the potential to substantively change the established management practices globally. The AI systems trained on big data reduce the managerial bounded rationality problem, moving from satisficing to optimizing mode in managerial decision making. We discuss the micro-foundational impact of these technologies on the process of managerial decision-making, stressing their ability to enable automated and augmented rationality. Then, we explore the impact of AI in four distinct domains of decision problems: determination, design, deliberation, and discovery. Finally, the developed micro-foundational framework is used to analyze the strategic impact of AI on organizational business models and sources of competitive advantage.