The Role of Artificial Intelligence in Business Strategy and Decision-Making: Exploring Innovation, Organizational Performance, and the Future of Digital Transformation

Abstract

Artificial Intelligence (AI) is a strategic capability that's changing business strategy, decision making processes in organisations and digital transformation in industries. AI is proving to be a useful asset for organisations to use in their strategic planning, operations, innovation management and customer interaction for improved efficiency, competitiveness and longer term organisational performance. While the use of AI is rapidly increasing, most of the research has focused on the technological implementation and the quantitative results (Dwivedi et al., 2023; Vial, 2019), comparatively less attention has been paid to how AI affects strategic decision making, organisational innovation, and business transformation from a qualitative and interpretive perspective. In this regard, the present study looks into the role of AI in business strategies and decision-making, from innovation and organizational performance to the future of digital transformation. This type of study is a Qualitative research with research design is a document analysis, qualitative content analysis and thematic analysis that follows research paradigm interpretivist. The patterns, themes, context, and ways involving AI and business transformation came from a study of peer-reviewed scholarly articles, business reports, policy documents, and published organizational case studies. AI is now more than a tool for operations, it has emerged as a strategic asset that helps the organisation make evidence-based decisions, boosts the innovation potential, streamlines operational processes, establishes a competitive advantage, and powers digital transformation. But it also reveals key ethical concerns about governance, organizational preparedness, adaptation of staff, data privacy, transparency, and ethical implementation of AI. Overall, the study makes significant contributions to the theoretical field, combining elements of strategic management, digital transformation and AI governance theory in one study, all within a qualitative context, and offers important practical insights for business leaders and policy makers trying to make good use of AI. The significance of AI and sustainable digital transformation of organizations is a strategic concern that is explored in an interdisciplinary way in this study, which is unique in this regard. Finally, the study proposes that the strategic role of AI will be sustainable in the long run as long as it is led by ethics, backed by organizational learning, and human-centered decision-making.