IDEAS home Printed from https://ideas.repec.org/a/eee/tefoso/v171y2021ics0040162521004029.html
   My bibliography  Save this article

Managerial overreliance on AI-augmented decision-making processes: How the use of AI-based advisory systems shapes choice behavior in R&D investment decisions

Author

Listed:
  • Keding, Christoph
  • Meissner, Philip

Abstract

AI-augmented decision-making processes promise to transform strategic decisions around innovation management. However, despite a growing body of research on algorithmic management, very little is known about the behavioral effects of the AI-augmented decision-making process. This article utilizes a psychological perspective to research the interaction of artificial intelligence and human judgment, suggesting that AI-based advice affects human decision-making behavior and skews perceptions of decision outcomes. We present a vignette-based decision experiment involving 150 senior executives to examine the perception of AI-augmented decision-making at the individual level. In contrast to earlier research on algorithm aversion, we find that employing AI-based advisory systems positively affects choice behavior and amplifies decision quality perception. We further show how this overreliance on an AI-augmented decision-making process can be explained through both a higher degree of trust in the advisor and the attribution of a more structured process. This paper contributes to the emerging discussion as to the role of AI in management and the novel phenomenon of algorithm appreciation by investigating the interplay of human and artificial intelligence in strategic decision-making to show that AI-based advice is perceived as more trustworthy than human advice in an R&D investment context.

Suggested Citation

  • Keding, Christoph & Meissner, Philip, 2021. "Managerial overreliance on AI-augmented decision-making processes: How the use of AI-based advisory systems shapes choice behavior in R&D investment decisions," Technological Forecasting and Social Change, Elsevier, vol. 171(C).
    • Handle: RePEc:eee:tefoso:v:171:y:2021:i:c:s0040162521004029
    DOI: 10.1016/j.techfore.2021.120970
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0040162521004029
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.techfore.2021.120970?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
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. John Horton & David Rand & Richard Zeckhauser, 2011. "The online laboratory: conducting experiments in a real labor market," Experimental Economics, Springer;Economic Science Association, vol. 14(3), pages 399-425, September.
    2. Tsai, Claire I. & Klayman, Joshua & Hastie, Reid, 2008. "Effects of amount of information on judgment accuracy and confidence," Organizational Behavior and Human Decision Processes, Elsevier, vol. 107(2), pages 97-105, November.
    3. Benedikt Berger & Martin Adam & Alexander Rühr & Alexander Benlian, 2021. "Watch Me Improve—Algorithm Aversion and Demonstrating the Ability to Learn," Business & Information Systems Engineering: The International Journal of WIRTSCHAFTSINFORMATIK, Springer;Gesellschaft für Informatik e.V. (GI), vol. 63(1), pages 55-68, February.
    4. Jarrahi, Mohammad Hossein, 2018. "Artificial intelligence and the future of work: Human-AI symbiosis in organizational decision making," Business Horizons, Elsevier, vol. 61(4), pages 577-586.
    5. Agrawal, Ajay & Gans, Joshua S. & Goldfarb, Avi, 2019. "Exploring the impact of artificial Intelligence: Prediction versus judgment," Information Economics and Policy, Elsevier, vol. 47(C), pages 1-6.
    6. Michela Arnaboldi, 2018. "The Missing Variable in Big Data for Social Sciences: The Decision-Maker," Sustainability, MDPI, vol. 10(10), pages 1-18, September.
    7. Gino, Francesca & Shang, Jen & Croson, Rachel, 2009. "The impact of information from similar or different advisors on judgment," Organizational Behavior and Human Decision Processes, Elsevier, vol. 108(2), pages 287-302, March.
    8. Haefner, Naomi & Wincent, Joakim & Parida, Vinit & Gassmann, Oliver, 2021. "Artificial intelligence and innovation management: A review, framework, and research agenda✰," Technological Forecasting and Social Change, Elsevier, vol. 162(C).
    9. Sarath Tomy & Eric Pardede, 2018. "From Uncertainties to Successful Start Ups: A Data Analytic Approach to Predict Success in Technological Entrepreneurship," Sustainability, MDPI, vol. 10(3), pages 1-24, February.
    10. D. Harrison McKnight & Vivek Choudhury & Charles Kacmar, 2002. "Developing and Validating Trust Measures for e-Commerce: An Integrative Typology," Information Systems Research, INFORMS, vol. 13(3), pages 334-359, September.
    11. Shrestha, Yash Raj & Krishna, Vaibhav & von Krogh, Georg, 2021. "Augmenting organizational decision-making with deep learning algorithms: Principles, promises, and challenges," Journal of Business Research, Elsevier, vol. 123(C), pages 588-603.
    12. Michael J. Leiblein & Jeffrey J. Reuer & Todd Zenger, 2018. "What Makes a Decision Strategic?," Strategy Science, INFORMS, vol. 3(4), pages 558-573, December.
    13. Frederiks, Arjan J. & Englis, Basil G. & Ehrenhard, Michel L. & Groen, Aard J., 2019. "Entrepreneurial cognition and the quality of new venture ideas: An experimental approach to comparing future-oriented cognitive processes," Journal of Business Venturing, Elsevier, vol. 34(2), pages 327-347.
    14. Kottemann, Jeffrey E. & Davis, Fred D. & Remus, William E., 1994. "Computer-Assisted Decision Making: Performance, Beliefs, and the Illusion of Control," Organizational Behavior and Human Decision Processes, Elsevier, vol. 57(1), pages 26-37, January.
    15. Sniezek, Janet A. & Buckley, Timothy, 1995. "Cueing and Cognitive Conflict in Judge-Advisor Decision Making," Organizational Behavior and Human Decision Processes, Elsevier, vol. 62(2), pages 159-174, May.
    16. Constantiou, Ioanna D & Kallinikos, Jannis, 2015. "New games, new rules: big data and the changing context of strategy," LSE Research Online Documents on Economics 63017, London School of Economics and Political Science, LSE Library.
    17. James W. Dean & Mark P. Sharfman, 1993. "Procedural Rationality In The Strategic Decision‐Making Process," Journal of Management Studies, Wiley Blackwell, vol. 30(4), pages 587-610, July.
    18. Harvey, Nigel & Harries, Clare & Fischer, Ilan, 2000. "Using Advice and Assessing Its Quality," Organizational Behavior and Human Decision Processes, Elsevier, vol. 81(2), pages 252-273, March.
    19. R. Orwig & H. Chen & D. Vogel & J. F. Nunamaker, 1997. "A Multi-Agent View of Strategic Planning Using Group Support Systems and Artificial Intelligence," Group Decision and Negotiation, Springer, vol. 6(1), pages 37-59, January.
    20. Anja Lambrecht & Catherine Tucker, 2019. "Algorithmic Bias? An Empirical Study of Apparent Gender-Based Discrimination in the Display of STEM Career Ads," Management Science, INFORMS, vol. 65(7), pages 2966-2981, July.
    21. Meissner, Philip & Wulf, Torsten, 2017. "The effect of cognitive diversity on the illusion of control bias in strategic decisions: An experimental investigation," European Management Journal, Elsevier, vol. 35(4), pages 430-439.
    22. Harvey, Nigel & Fischer, Ilan, 1997. "Taking Advice: Accepting Help, Improving Judgment, and Sharing Responsibility," Organizational Behavior and Human Decision Processes, Elsevier, vol. 70(2), pages 117-133, May.
    23. Kakatkar, Chinmay & Bilgram, Volker & Füller, Johann, 2020. "Innovation analytics: Leveraging artificial intelligence in the innovation process," Business Horizons, Elsevier, vol. 63(2), pages 171-181.
    24. Olson, Bradley J. & Bao, Yongjian & Parayitam, Satyanarayana, 2007. "Strategic decision making within Chinese firms: The effects of cognitive diversity and trust on decision outcomes," Journal of World Business, Elsevier, vol. 42(1), pages 35-46, March.
    25. Anna Trunk & Hendrik Birkel & Evi Hartmann, 2020. "On the current state of combining human and artificial intelligence for strategic organizational decision making," Business Research, Springer;German Academic Association for Business Research, vol. 13(3), pages 875-919, November.
    26. Heath, Chip & Gonzalez, Rich, 1995. "Interaction with Others Increases Decision Confidence but Not Decision Quality: Evidence against Information Collection Views of Interactive Decision Making," Organizational Behavior and Human Decision Processes, Elsevier, vol. 61(3), pages 305-326, March.
    27. Logg, Jennifer M. & Minson, Julia A. & Moore, Don A., 2019. "Algorithm appreciation: People prefer algorithmic to human judgment," Organizational Behavior and Human Decision Processes, Elsevier, vol. 151(C), pages 90-103.
    28. Sniezek, Janet A. & Van Swol, Lyn M., 2001. "Trust, Confidence, and Expertise in a Judge-Advisor System," Organizational Behavior and Human Decision Processes, Elsevier, vol. 84(2), pages 288-307, March.
    29. Ashish Arora & Michelle Gittelman & Sarah Kaplan & John Lynch & Will Mitchell & Nicolaj Siggelkow & Aaron K. Chatterji & Michael Findley & Nathan M. Jensen & Stephan Meier & Daniel Nielson, 2016. "Field experiments in strategy research," Strategic Management Journal, Wiley Blackwell, vol. 37(1), pages 116-132, January.
    30. Jon Kleinberg & Himabindu Lakkaraju & Jure Leskovec & Jens Ludwig & Sendhil Mullainathan, 2018. "Human Decisions and Machine Predictions," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 133(1), pages 237-293.
    31. 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.
    32. Goodwin, Paul & Sinan Gönül, M. & Önkal, Dilek, 2013. "Antecedents and effects of trust in forecasting advice," International Journal of Forecasting, Elsevier, vol. 29(2), pages 354-366.
    33. Pomerol, Jean-Charles, 1997. "Artificial intelligence and human decision making," European Journal of Operational Research, Elsevier, vol. 99(1), pages 3-25, May.
    34. Holger Patzelt & Dean A. Shepherd, 2008. "The Decision to Persist with Underperforming Alliances: The Role of Trust and Control," Journal of Management Studies, Wiley Blackwell, vol. 45(7), pages 1217-1243, November.
    35. See, Kelly E. & Morrison, Elizabeth W. & Rothman, Naomi B. & Soll, Jack B., 2011. "The detrimental effects of power on confidence, advice taking, and accuracy," Organizational Behavior and Human Decision Processes, Elsevier, vol. 116(2), pages 272-285.
    36. Merendino, Alessandro & Dibb, Sally & Meadows, Maureen & Quinn, Lee & Wilson, David & Simkin, Lyndon & Canhoto, Ana, 2018. "Big data, big decisions: The impact of big data on board level decision-making," Journal of Business Research, Elsevier, vol. 93(C), pages 67-78.
    37. David H. Autor, 2015. "Why Are There Still So Many Jobs? The History and Future of Workplace Automation," Journal of Economic Perspectives, American Economic Association, vol. 29(3), pages 3-30, Summer.
    38. Wood, Matthew S. & Williams, David W. & Drover, Will, 2017. "Past as prologue: Entrepreneurial inaction decisions and subsequent action judgments," Journal of Business Venturing, Elsevier, vol. 32(1), pages 107-127.
    39. Gerard P. Hodgkinson & Nicola J. Bown & A. John Maule & Keith W. Glaister & Alan D. Pearman, 1999. "Breaking the frame: an analysis of strategic cognition and decision making under uncertainty," Strategic Management Journal, Wiley Blackwell, vol. 20(10), pages 977-985, October.
    40. David L. Mclain & Ramon J. Aldag, 2009. "Complexity And Familiarity With Computer Assistance When Making Ill-Structured Business Decisions," International Journal of Information Technology & Decision Making (IJITDM), World Scientific Publishing Co. Pte. Ltd., vol. 8(03), pages 407-426.
    41. Zacharakis, Andrew L. & Shepherd, Dean A., 2001. "The nature of information and overconfidence on venture capitalists' decision making," Journal of Business Venturing, Elsevier, vol. 16(4), pages 311-332, July.
    42. Gediminas Adomavicius & Jesse C. Bockstedt & Shawn P. Curley & Jingjing Zhang, 2013. "Do Recommender Systems Manipulate Consumer Preferences? A Study of Anchoring Effects," Information Systems Research, INFORMS, vol. 24(4), pages 956-975, December.
    43. Berkeley J. Dietvorst & Joseph P. Simmons & Cade Massey, 2018. "Overcoming Algorithm Aversion: People Will Use Imperfect Algorithms If They Can (Even Slightly) Modify Them," Management Science, INFORMS, vol. 64(3), pages 1155-1170, March.
    44. Sabrina Schneider & Michael Leyer, 2019. "Me or information technology? Adoption of artificial intelligence in the delegation of personal strategic decisions," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 40(3), pages 223-231, April.
    45. Makarius, Erin E. & Mukherjee, Debmalya & Fox, Joseph D. & Fox, Alexa K., 2020. "Rising with the machines: A sociotechnical framework for bringing artificial intelligence into the organization," Journal of Business Research, Elsevier, vol. 120(C), pages 262-273.
    46. Nic Fleming, 2018. "How artificial intelligence is changing drug discovery," Nature, Nature, vol. 557(7707), pages 55-57, May.
    47. Yaniv, Ilan, 2004. "Receiving other people's advice: Influence and benefit," Organizational Behavior and Human Decision Processes, Elsevier, vol. 93(1), pages 1-13, January.
    48. Bonaccio, Silvia & Dalal, Reeshad S., 2006. "Advice taking and decision-making: An integrative literature review, and implications for the organizational sciences," Organizational Behavior and Human Decision Processes, Elsevier, vol. 101(2), pages 127-151, November.
    49. Townsend, David M. & Hunt, Richard A., 2019. "Entrepreneurial action, creativity, & judgment in the age of artificial intelligence," Journal of Business Venturing Insights, Elsevier, vol. 11(C), pages 1-1.
    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. Plantec, Quentin & Deval, Marie-Alix & Hooge, Sophie & Weil, Benoit, 2023. "Big data as an exploration trigger or problem-solving patch: Design and integration of AI-embedded systems in the automotive industry," Technovation, Elsevier, vol. 124(C).
    2. Yogesh K. Dwivedi & A. Sharma & Nripendra P. Rana & M. Giannakis & P. Goel & Vincent Dutot, 2023. "Evolution of Artificial Intelligence Research in Technological Forecasting and Social Change: Research Topics, Trends, and Future Directions," Post-Print hal-04292607, HAL.
    3. Naeini, Ali Bonyadi & Zamani, Mehdi & Daim, Tugrul U. & Sharma, Mahak & Yalcin, Haydar, 2022. "Conceptual structure and perspectives on “innovation management”: A bibliometric review," Technological Forecasting and Social Change, Elsevier, vol. 185(C).
    4. Baabdullah, Abdullah M., 2024. "Generative conversational AI agent for managerial practices: The role of IQ dimensions, novelty seeking and ethical concerns," Technological Forecasting and Social Change, Elsevier, vol. 198(C).
    5. Johnson, Prince Chacko & Laurell, Christofer & Ots, Mart & Sandström, Christian, 2022. "Digital innovation and the effects of artificial intelligence on firms’ research and development – Automation or augmentation, exploration or exploitation?," Technological Forecasting and Social Change, Elsevier, vol. 179(C).

    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. Christoph Keding, 2021. "Understanding the interplay of artificial intelligence and strategic management: four decades of research in review," Management Review Quarterly, Springer, vol. 71(1), pages 91-134, February.
    2. Kausel, Edgar E. & Culbertson, Satoris S. & Leiva, Pedro I. & Slaughter, Jerel E. & Jackson, Alexander T., 2015. "Too arrogant for their own good? Why and when narcissists dismiss advice," Organizational Behavior and Human Decision Processes, Elsevier, vol. 131(C), pages 33-50.
    3. Önkal, Dilek & Sinan Gönül, M. & Goodwin, Paul & Thomson, Mary & Öz, Esra, 2017. "Evaluating expert advice in forecasting: Users’ reactions to presumed vs. experienced credibility," International Journal of Forecasting, Elsevier, vol. 33(1), pages 280-297.
    4. See, Kelly E. & Morrison, Elizabeth W. & Rothman, Naomi B. & Soll, Jack B., 2011. "The detrimental effects of power on confidence, advice taking, and accuracy," Organizational Behavior and Human Decision Processes, Elsevier, vol. 116(2), pages 272-285.
    5. Bonaccio, Silvia & Dalal, Reeshad S., 2006. "Advice taking and decision-making: An integrative literature review, and implications for the organizational sciences," Organizational Behavior and Human Decision Processes, Elsevier, vol. 101(2), pages 127-151, November.
    6. Jodlbauer, Barbara & Jonas, Eva, 2011. "Forecasting clients' reactions: How does the perception of strategic behavior influence the acceptance of advice?," International Journal of Forecasting, Elsevier, vol. 27(1), pages 121-133, January.
    7. Van Swol, Lyn M., 2011. "Forecasting another’s enjoyment versus giving the right answer: Trust, shared values, task effects, and confidence in improving the acceptance of advice," International Journal of Forecasting, Elsevier, vol. 27(1), pages 103-120.
    8. Van Swol, Lyn M., 2011. "Forecasting another's enjoyment versus giving the right answer: Trust, shared values, task effects, and confidence in improving the acceptance of advice," International Journal of Forecasting, Elsevier, vol. 27(1), pages 103-120, January.
    9. Philipp Ecken & Richard Pibernik, 2016. "Hit or Miss: What Leads Experts to Take Advice for Long-Term Judgments?," Management Science, INFORMS, vol. 62(7), pages 2002-2021, July.
    10. Jodlbauer, Barbara & Jonas, Eva, 2011. "Forecasting clients’ reactions: How does the perception of strategic behavior influence the acceptance of advice?," International Journal of Forecasting, Elsevier, vol. 27(1), pages 121-133.
    11. Gino, Francesca, 2008. "Do we listen to advice just because we paid for it? The impact of advice cost on its use," Organizational Behavior and Human Decision Processes, Elsevier, vol. 107(2), pages 234-245, November.
    12. Alison Wood Brooks & Francesca Gino & Maurice E. Schweitzer, 2015. "Smart People Ask for (My) Advice: Seeking Advice Boosts Perceptions of Competence," Management Science, INFORMS, vol. 61(6), pages 1421-1435, June.
    13. Robert M. Gillenkirch & Julia Ortner & Sebastian Robert & Louis Velthuis, 2023. "Designing incentives and performance measurement for advisors: How to make decision-makers listen to advice," Working Papers 2304, Gutenberg School of Management and Economics, Johannes Gutenberg-Universität Mainz.
    14. Ekaterina Jussupow & Kai Spohrer & Armin Heinzl & Joshua Gawlitza, 2021. "Augmenting Medical Diagnosis Decisions? An Investigation into Physicians’ Decision-Making Process with Artificial Intelligence," Information Systems Research, INFORMS, vol. 32(3), pages 713-735, September.
    15. Kevin Bauer & Andrej Gill, 2024. "Mirror, Mirror on the Wall: Algorithmic Assessments, Transparency, and Self-Fulfilling Prophecies," Information Systems Research, INFORMS, vol. 35(1), pages 226-248, March.
    16. Palmeira, Mauricio, 2020. "Advice in the presence of external cues: The impact of conflicting judgments on perceptions of expertise," Organizational Behavior and Human Decision Processes, Elsevier, vol. 156(C), pages 82-96.
    17. Albert E. Mannes, 2009. "Are We Wise About the Wisdom of Crowds? The Use of Group Judgments in Belief Revision," Management Science, INFORMS, vol. 55(8), pages 1267-1279, August.
    18. Leiby, Justin, 2018. "The role of consultants and management prestige in management control system adoption," Accounting, Organizations and Society, Elsevier, vol. 66(C), pages 1-13.
    19. Christiane B. Haubitz & Cedric A. Lehmann & Andreas Fügener & Ulrich W. Thonemann, 2021. "The Risk of Algorithm Transparency: How Algorithm Complexity Drives the Effects on Use of Advice," ECONtribute Discussion Papers Series 078, University of Bonn and University of Cologne, Germany.
    20. Mesbah, Neda & Tauchert, Christoph & Buxmann, Peter, 2021. "Whose Advice Counts More – Man or Machine? An Experimental Investigation of AI-based Advice Utilization," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 124796, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).

    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:eee:tefoso:v:171:y:2021:i:c:s0040162521004029. 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: Catherine Liu (email available below). General contact details of provider: http://www.sciencedirect.com/science/journal/00401625 .

    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.