Does Artificial Intelligence Elevate or Undermine Strategic Distinctiveness? An Empirical Investigation of AI in Strategizing

Abstract

This paper examines the impact of artificial intelligence (AI) on strategizing through the knowledge-based view of the firm. We propose that internal AI knowledge elevates firms' strategic distinctiveness by surfacing diverse and latent knowledge (H1). We further argue that this effect is amplified when executives possess deep domain knowledge, enabling precise application and context-specific interpretation of AI outputs (H2). This combined influence of AI knowledge and domain expertise is expected to be stronger in complex task environments, where situated expertise is essential to fully leverage AI’s analytical capabilities (H3). Using longitudinal data from S&P 1500 firms, we find empirical support for our hypotheses. Our research contributes to theory and practice by offering insights into whether and how firms can leverage AI to their strategic advantage.