IDEAS home Printed from https://ideas.repec.org/a/bla/stratm/v44y2023i6p1425-1452.html
   My bibliography  Save this article

Artificial intelligence and the changing sources of competitive advantage

Author

Listed:
  • Sebastian Krakowski
  • Johannes Luger
  • Sebastian Raisch

Abstract

Research Summary We apply a resource‐based view to investigate how the adoption of Artificial Intelligence (AI) affects competitive capabilities and performance. Following prior work on using chess as a controlled setting for studying competitive interactions, we compare the same players’ capabilities and performance across conventional, centaur, and engine chess tournaments. Our analysis shows that AI adoption triggers interrelated substitution and complementation dynamics, which make humans’ traditional competitive capabilities obsolete, while creating new sources of persistent heterogeneity when humans interact with chess engines. These novel human‐machine capabilities are unrelated, or even negatively related, to traditional capabilities. We contribute an integrated view of substitution and complementation, which identifies AI as the driver of these dynamics and explains how they jointly shift the sources of competitive advantage. Managerial Summary AI‐based technologies increasingly substitute and complement humans in managerial tasks such as decision making. We investigate how such change affects the sources of competitive advantage. AI‐based engines’ adoption in chess allows us to investigate competitive capabilities and performance in human, AI, and hybrid settings. We find that neither humans nor AI in isolation explain performance differences in the AI and hybrid settings. Instead, a new decision‐making resource emerges at the human‐AI intersection, which drives performance but is unrelated or even negatively related to humans’ original capability. Our results document how AI adoption changes the sources of competitive advantage and, in turn, requires managers to develop new capabilities to stay relevant in an AI‐based competitive landscape.

Suggested Citation

  • Sebastian Krakowski & Johannes Luger & Sebastian Raisch, 2023. "Artificial intelligence and the changing sources of competitive advantage," Strategic Management Journal, Wiley Blackwell, vol. 44(6), pages 1425-1452, June.
    • Handle: RePEc:bla:stratm:v:44:y:2023:i:6:p:1425-1452
    DOI: 10.1002/smj.3387
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/smj.3387
    Download Restriction: no
    File URL: https://libkey.io/10.1002/smj.3387?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Sebastián Cea & Guillermo Durán & Mario Guajardo & Denis Sauré & Joaquín Siebert & Gonzalo Zamorano, 2020. "An analytics approach to the FIFA ranking procedure and the World Cup final draw," Annals of Operations Research, Springer, vol. 286(1), pages 119-146, March.
    2. Bruce Kogut & Udo Zander, 1992. "Knowledge of the Firm, Combinative Capabilities, and the Replication of Technology," Organization Science, INFORMS, vol. 3(3), pages 383-397, August.
    3. Gautam Ahuja & Russell W. Coff & Peggy M. Lee, 2005. "Managerial foresight and attempted rent appropriation: insider trading on knowledge of imminent breakthroughs," Strategic Management Journal, Wiley Blackwell, vol. 26(9), pages 791-808, September.
    4. Nicholas S. Argyres & Todd R. Zenger, 2012. "Capabilities, Transaction Costs, and Firm Boundaries," Organization Science, INFORMS, vol. 23(6), pages 1643-1657, December.
    5. Philippe Chassy & Fernand Gobet, 2011. "Measuring Chess Experts' Single-Use Sequence Knowledge: An Archival Study of Departure from ‘Theoretical’ Openings," PLOS ONE, Public Library of Science, vol. 6(11), pages 1-9, November.
    6. Mahoney, Joseph T., 1995. "The management of resources and the resource of management," Journal of Business Research, Elsevier, vol. 33(2), pages 91-101, June.
    7. Jay B. Barney, 1986. "Strategic Factor Markets: Expectations, Luck, and Business Strategy," Management Science, INFORMS, vol. 32(10), pages 1231-1241, October.
    8. Heather Berry & Aseem Kaul & Narae Lee, 2021. "Follow the smoke: The pollution haven effect on global sourcing," Strategic Management Journal, Wiley Blackwell, vol. 42(13), pages 2420-2450, December.
    9. Prithwiraj Choudhury & Evan Starr & Rajshree Agarwal, 2020. "Machine learning and human capital complementarities: Experimental evidence on bias mitigation," Strategic Management Journal, Wiley Blackwell, vol. 41(8), pages 1381-1411, August.
    10. Felipe A. Csaszar & Daniella Laureiro-Martínez, 2018. "Individual and Organizational Antecedents of Strategic Foresight: A Representational Approach," Strategy Science, INFORMS, vol. 3(3), pages 513-532, September.
    11. Haroldo V Ribeiro & Renio S Mendes & Ervin K Lenzi & Marcelo del Castillo-Mussot & Luís A N Amaral, 2013. "Move-by-Move Dynamics of the Advantage in Chess Matches Reveals Population-Level Learning of the Game," PLOS ONE, Public Library of Science, vol. 8(1), pages 1-7, January.
    12. Jaideep Anand & Louis Mulotte & Charlotte R. Ren, 2016. "Does experience imply learning?," Strategic Management Journal, Wiley Blackwell, vol. 37(7), pages 1395-1412, July.
    13. Thomas C. Powell, 2003. "Varieties of competitive parity," Strategic Management Journal, Wiley Blackwell, vol. 24(1), pages 61-86, January.
    14. Milgrom, Paul & Roberts, John, 1990. "Rationalizability, Learning, and Equilibrium in Games with Strategic Complementarities," Econometrica, Econometric Society, vol. 58(6), pages 1255-1277, November.
    15. Cynthia A. Montgomery & Birger Wernerfelt, 1988. "Diversification, Ricardian Rents, and Tobin's q," RAND Journal of Economics, The RAND Corporation, vol. 19(4), pages 623-632, Winter.
    16. Zoubin Ghahramani, 2015. "Probabilistic machine learning and artificial intelligence," Nature, Nature, vol. 521(7553), pages 452-459, May.
    17. J. Scott Long & Jeremy Freese, 2006. "Regression Models for Categorical Dependent Variables using Stata, 2nd Edition," Stata Press books, StataCorp LP, edition 2, number long2, March.
    18. Rory Wolfe & William Gould, 1998. "An approximate likelihood-ratio test for ordinal response models," Stata Technical Bulletin, StataCorp LP, vol. 7(42).
    19. Constance E. Helfat & Margaret A. Peteraf, 2015. "Managerial cognitive capabilities and the microfoundations of dynamic capabilities," Strategic Management Journal, Wiley Blackwell, vol. 36(6), pages 831-850, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Vomberg, Arnd & Schauerte, Nico & Krakowski, Sebastian & Ingram Bogusz, Claire & Gijsenberg, Maarten J. & Bleier, Alexander, 2023. "The cold-start problem in nascent AI strategy: Kickstarting data network effects," Journal of Business Research, Elsevier, vol. 168(C).
    2. Deepa, R. & Sekar, Srinivasan & Malik, Ashish & Kumar, Jitender & Attri, Rekha, 2024. "Impact of AI-focussed technologies on social and technical competencies for HR managers – A systematic review and research agenda," Technological Forecasting and Social Change, Elsevier, vol. 202(C).
    3. Constance E. Helfat & Aseem Kaul & David J. Ketchen & Jay B. Barney & Olivier Chatain & Harbir Singh, 2023. "Renewing the resource‐based view: New contexts, new concepts, and new methods," Strategic Management Journal, Wiley Blackwell, vol. 44(6), pages 1357-1390, June.
    4. Jiaqi Xu & Xiaofei Tang & En-Chung Chang & Haoyu Peng, 2024. "Working with AI: the impact of organizational intelligent service strategy on employees’ perception of career achievement," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-20, December.
    5. Greiner, Ben & Grünwald, Philipp & Lindner, Thomas & Lintner, Georg & Wiernsperger, Martin, 2024. "Incentives, Framing, and Reliance on Algorithmic Advice: An Experimental Study," Department for Strategy and Innovation Working Paper Series 01/2024, WU Vienna University of Economics and Business.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Nicholas S. Argyres & Teppo Felin & Nicolai Foss & Todd Zenger, 2012. "Organizational Economics of Capability and Heterogeneity," Organization Science, INFORMS, vol. 23(5), pages 1213-1226, October.
    2. Felipe A. Csaszar, 2018. "What Makes a Decision Strategic? Strategic Representations," Strategy Science, INFORMS, vol. 3(4), pages 606-619, December.
    3. Reha Karadag & Laura Poppo, 2023. "Strategic resource decay," Strategic Management Journal, Wiley Blackwell, vol. 44(6), pages 1534-1561, June.
    4. Sheen S. Levine & Mark Bernard & Rosemarie Nagel, 2018. "Strategic intelligence: The cognitive capability to anticipate competitor behaviour," Strategic Management Journal, Wiley Blackwell, vol. 39(2), pages 527-527, February.
    5. Nicolai J. Foss & Peter G. Klein & Lasse B. Lien & Thomas Zellweger & Todd Zenger, 2021. "Ownership competence," Strategic Management Journal, Wiley Blackwell, vol. 42(2), pages 302-328, February.
    6. Iman Seoudi & Matthias Huehn & Bo Carlsson, 2008. "Penrose Revisited: A Re-Appraisal of the Resource Perspective," Working Papers 14, The German University in Cairo, Faculty of Management Technology.
    7. Judith Cavazos-Arroyo & Rogelio Puente-Diaz, 2019. "The Influence of Marketing Capability in Mexican Social Enterprises," Sustainability, MDPI, vol. 11(17), pages 1-15, August.
    8. Nicolai J. Foss, 2002. "The Strategy and Transaction Cost Nexus Past Debates, Central Questions, and Future Research Possibilities," DRUID Working Papers 02-04, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    9. Kyle J. Mayer & Deepak Somaya & Ian O. Williamson, 2012. "Firm-Specific, Industry-Specific, and Occupational Human Capital and the Sourcing of Knowledge Work," Organization Science, INFORMS, vol. 23(5), pages 1311-1329, October.
    10. Baraldi, Enrico & Gressetvold, Espen & Harrison, Debbie, 2012. "Resource interaction in inter-organizational networks: Foundations, comparison, and a research agenda," Journal of Business Research, Elsevier, vol. 65(2), pages 266-276.
    11. Teppo Felin & Todd R. Zenger, 2016. "CROSSROADS—Strategy, Problems, and a Theory for the Firm," Organization Science, INFORMS, vol. 27(1), pages 222-231, February.
    12. Kim, Jongwook & Mahoney, Joseph T., 2006. "How Property Rights Economics Furthers the Resource-Based View: Resources, Transaction Costs and Entrepreneurial Discovery," Working Papers 06-0100, University of Illinois at Urbana-Champaign, College of Business.
    13. Aticus Peterson & Andy Wu, 2021. "Entrepreneurial learning and strategic foresight," Strategic Management Journal, Wiley Blackwell, vol. 42(13), pages 2357-2388, December.
    14. Rebecca Henderson & Iain Cockburn, 1994. "Measuring Competence? Exploring Firm Effects in Pharmaceutical Research," Strategic Management Journal, Wiley Blackwell, vol. 15(S1), pages 63-84, December.
    15. Klaus Uhlenbruck & Klaus E. Meyer & Michael A. Hitt, 2003. "Organizational Transformation in Transition Economies: Resource‐based and Organizational Learning Perspectives," Journal of Management Studies, Wiley Blackwell, vol. 40(2), pages 257-282, March.
    16. Rahul Kapoor & Daniel Wilde, 2023. "Peering into a crystal ball: Forecasting behavior and industry foresight," Strategic Management Journal, Wiley Blackwell, vol. 44(3), pages 704-736, March.
    17. John C. Eklund, 2022. "The knowledge‐incentive tradeoff: Understanding the relationship between research and development decentralization and innovation," Strategic Management Journal, Wiley Blackwell, vol. 43(12), pages 2478-2509, December.
    18. Raffaele Conti & Alfonso Gambardella & Elena Novelli, 2019. "Specializing in Generality: Firm Strategies When Intermediate Markets Work," Organization Science, INFORMS, vol. 30(1), pages 126-150, February.
    19. Lee, Lena & Wong, Poh Kam, 2009. "Firms’ Innovative Performance: The Mediating Role of Innovative Collaborations," MPRA Paper 16193, University Library of Munich, Germany.
    20. Maryam Ghorbankhani & Federica Rossi, 2023. "Intrinsic and strategic complementarity of research and knowledge transfer activities as determinants of knowledge transfer management: evidence from public research organisations," The Journal of Technology Transfer, Springer, vol. 48(4), pages 1386-1412, August.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:stratm:v:44:y:2023:i:6:p:1425-1452. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://onlinelibrary.wiley.com/journal/10.1111/0143-2095 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.