Artificial intelligence adoption and system‐wide change

Ajay Agrawal, Joshua Gans and Avi Goldfarb

Journal of Economics & Management Strategy, 2024, vol. 33, issue 2, 327-337

Abstract: Analyses of artificial intelligence (AI) adoption focus on its adoption at the individual task level. What has received significantly less attention is how AI adoption is shaped by the fact that organizations are composed of many interacting tasks. AI adoption may, therefore, require system‐wide change, which is both a constraint and an opportunity. We provide the first formal analysis where multiple tasks may be part of an interdependent system. We find that reliance on AI, a prediction tool, increases decision variation, which, in turn, raises challenges if decisions across the organization interact. Reducing inter‐dependencies between decisions softens that impact and can facilitate AI adoption. However, it does this at the expense of synergies. By contrast, when there are mechanisms for inter‐decision coordination, AI adoption is enhanced when there are more inter‐dependencies. Consequently, we show that there are important cases where AI adoption will be enhanced when it can be adopted beyond tasks but as part of a designed organizational system.

Date: 2024
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