Companies that build 'smart' products perform better if the head office leaves the AI development entirely to individual business units.
Standard corporate strategy suggests that high-tech initiatives should be centralized to share expertise. However, this study finds that for products intended to interact with external ecosystems, a central 'AI policy' is actually a handicap compared to decentralized, specialized development.
Centralizing or Localizing AI in Diversified Firms? The Contingent Role of Smart Products and Ecosystem-Facing Value Creation
SSRN · 6504726
Corporate diversification theory is being reshaped by data and AI, yet evidence on how multi-business firms should organize AI across their portfolios remains scarce. We address a corporate-strategy question that is increasingly central in the digital era: should AI be implemented as a corporate-wide policy or tailored at the business-unit level, and does the answer depend on the nature of the product offering? Drawing on the theory of the firm and recent arguments about digital diversification,