The Role of AI in Revolutionizing Strategy Formulation and Execution

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Generative artificial intelligence (AI) is a transformative technology with the potential to revolutionize industries by rapidly analyzing vast datasets and providing insights through generating text, images, videos, and other content based on the data it has been trained on (Jia, Luo, Fang, and Liao, 2024; Shrestha, Ben-Menahem, and Von Krogh, 2020). Management scholars suggest that, in contrast to other technologies, generative AI can fundamentally reshape how organizations approach strategy formulation and implementation, potentially leading to significant improvements in company performance (Wilson and Daugherty, 2024; Krakowski, Luger, and Raisch, 2023). Despite this promise, the mechanisms by which companies can effectively leverage generative AI in their strategy work remain unclear for two primary reasons (Kemp, 2024; Moser, Glaser, and Lindebaum, 2024).

First, most empirical studies on generative AI primarily focus on individual use of AI outside the strategic management context. For instance, research has examined doctors diagnosing cancer (Lebovitz, Lifshitz-Assaf, and Levina, 2022), healthcare patients utilizing virtual health advisors (Kyung and Kwon, 2022), and participants testing self-driving vehicles (Zhang, Tao, Qu, Zhang, Lin, and Zhang, 2019). In contact, strategy formulation and implementation are complex sociodynamic processes that involve “actions, interactions, and negotiations of multiple actors and the situated practices that they draw upon in accomplishing that activity” (Jarzabkowski, 2007: 8). The understanding of how micro-level phenomena—such as individual-level psychological reaction to AI—aggregate into meso-level processes, such as socio-dynamic processes during strategizing, and macro-level organizational outcomes, such as firm performance, is essential. (Bechky, 2020; Kouamé and Langley, 2018; Felin, Foss and Ployhart, 2015; Foss and Pedersen, 2016).

Second, as generative AI technologies—such as ChatGPT, Claude, and Microsoft CoPilot—have become widely accessible and offer similar functionalities across organizations, it remains unclear how companies can leverage these tools to gain a competitive edge and outperform their rivals (Kemp, 2024). This presents a critical challenge, as sustainable competitive advantage traditionally stems from resources that are rare and difficult to imitate (Barney, 1991). Given generative AI’s widespread availability, the key question is not whether organizations can access AI, but how they can uniquely integrate and optimize its use to drive strategic differentiation and long-term success.

This study aims to explore how and why management board members respond to generative AI and what the implications of these responses are on strategy work and firm performance. We conducted an inductive field study across seven management boards within three industrial companies specializing in technologies and services. Our data included 78 interviews with management board members—including middle managers, senior managers, and vice presidents—and AI specialists from IT functions. Furthermore, we observed 18 meetings focused on strategizing. We also analyzed surveys conducted by the case companies regarding the use of generative AI and employee satisfaction with AI tools such as Copilot and ChatGPT.

Vuori, N. (2025). The Role of AI in Revolutionizing Strategy Formulation and Execution.
Paper presented at the 45th Annual Conference of the Strategic Management Society (SMS), San Francisco, USA, October 11–14.

Full Paper

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