The use of artificial intelligence is changing the way entrepreneurs make decisions, take risks and adapt to changing circumstances, according to new research led by academics from the University of East London School of Management in collaboration with the University of Benin and Nigeria’s LAPO Institute. The researchers concluded that AI’s role is not just speeding up work, but actually changing the way entrepreneurs think.
The study was carried out by Dr. Jamiu Odugbesan from the University of East London and co-authors Dr. Andrew Tafameland from the University of Benin in Nigeria and Dr. Dennis Aklawa from the LAPO Institute in Nigeria. The three researchers worked together to investigate the impact that regular exposure to AI and digital tools has on entrepreneurs working in high-pressure business environments.
Rather than viewing AI as a tool to automate tasks, as many have seen, the researchers determined that the continued use of intelligent digital tools can help executives think more strategically. Entrepreneurs who are aware of and actively leverage AI demonstrate higher levels of mental agility and a greater ability to adjust their thinking as circumstances change.
“The changes we are seeing are not the result of AI replacing human thinking, but rather the result of AI changing the way entrepreneurs think,” said lead researcher Dr Jamiu Odugbesan from the University of East London. “Entrepreneurs are using AI as a partner in their planning process. They are using AI to drive greater revision of assumptions, consider more options, and adapt to changing circumstances more easily than before. AI is expanding the opportunities available to entrepreneurs in their decision-making.”
A real-life experiment in a high-stress market
The researchers conducted an experiment with 376 entrepreneurs based in Lagos, Nigeria, employed by Computer Village. Computer Village is one of the largest technology market areas in West Africa. In terms of a functioning business environment, this region has the highest concentration of traders and small and medium-sized enterprises.
Computer Village was a suitable location to test the hypotheses of this research project. Entrepreneurs there are experiencing widespread and unexpected disruption. These include power outages, exchange rate and stock market speculation, and changes in government regulations by policymakers. What allows entrepreneurs to weather these disruptions is their ability to think quickly and adapt to circumstances.
The researchers noticed an important trend within the computer village as a setting. Entrepreneurs with higher levels of understanding of AI showed higher levels of adaptability when faced with unexpected challenges than entrepreneurs with lower levels of understanding of AI. Entrepreneurs with extensive knowledge of AI were also able to revise their strategies faster and were less likely to be bogged down by challenges if their initial strategies failed.
The entrepreneurs in this study were not just passively using AI products and services in their day-to-day business operations. Rather, they actively used AI and other digital tools to aid the process of strategic reasoning. Leveraging AI and other digital tools in this way can facilitate a broader approach to business strategy development and a more strategic outlook.
AI as a collaborator in strategic business thinking
Research results show that the availability of technological resources alone does not produce the same benefits for entrepreneurs. The greatest benefits emerge when entrepreneurs consider AI as a partner in their strategic thinking process, rather than passively leveraging AI tools to simply deliver efficiencies.
People who regularly used AI systems were more willing to try new options and think outside the box. This freed them from only reacting to what they currently perceive and allowed them to start looking at creating strategies that use AI to proactively predict the future.
Dr. Odugbesan said, “When operating in an uncertain environment, success usually depends less on having developed the ideal plan and more on being prepared to redesign that plan when it is disrupted.”
The findings are consistent with previous research showing that AI impacts the way people reason, plan, and respond to risk. These impacts are in addition to the impact AI has on productivity.
Implications for training, policy and support
A narrow view of AI training and policy concerns only the technical training aspects. The findings show that including a broader perspective on how AI positively changes the mindset of entrepreneurs may bring further benefits.
Entrepreneurs using AI systems should be encouraged to think beyond using AI systems as automation solutions. They need to start developing decision-making capabilities using new approaches to problem recognition and business building.
Policy makers will realize the impact of supporting digital education in developing countries. Supporting entrepreneurs with access to AI provides them with the best opportunity to succeed in creating innovative solutions, while increasing business resilience and the potential for sustainable growth.
Educators and investors can therefore leverage AI to help entrepreneurs gain new levels of confidence and adaptability in their decision-making and how they respond to market disruption scenarios. These qualities are critical to an entrepreneur’s ability to sustain a business.
