CRM and AI in Time of Crisis

46 Pages Posted: 3 Dec 2021

See all articles by Michelle Y. Lu

Michelle Y. Lu

McGill University

Navid Mojir

Harvard Business School

Date Written: November 29, 2021

Abstract

A crisis can affect the incentives of various players within a firm’s multi-layered sales and marketing organization (e.g., headquarters and branches of a bank). Such shifts can result in sales decisions against the firm’s best interests. Motivated by the backlash to the Paycheck Protection Program and the subsequent adoption of artificial intelligence (AI) in the banking industry during the COVID-19 pandemic, we develop a model of decision authority allocation between headquarters and branches, then examine the impact of AI on decision authority and intra-organizational conflicts. Our model reveals how an increased concentration of decision authority at headquarters during a crisis can push the bank to focus on its largest clients and explains why such a strategy might not be beneficial. Furthermore, using AI does not always help the firm. When it replaces the branch’s due diligence efforts (e.g., Fintech firms), AI can mitigate intra-organizational conflict and enhance resource allocation. Yet when AI supplements the branch’s due diligence efforts (e.g., traditional banks), the branch might decrease its efforts and thus lower the bank’s information about the branch’s clients. AI can thus create new conflicts of interest and result in decision authority becoming concentrated at headquarters. This effect of AI is exacerbated during a crisis. Our findings have important implications for both practitioners and policy-makers that apply beyond the COVID-19 crisis.

Keywords: Artificial Intelligence (AI), B2B marketing, decision authority, crisis marketing, intra-organizational conflict, customer relationship management, Covid-19 pandemic

JEL Classification: M31, M21, D21

Suggested Citation

Lu, Michelle Y. and Mojir, Navid, CRM and AI in Time of Crisis (November 29, 2021). Harvard Business School Marketing Unit Working Paper Forthcoming, Available at SSRN: https://ssrn.com/abstract=3973662 or http://dx.doi.org/10.2139/ssrn.3973662

Michelle Y. Lu

McGill University ( email )

1001 Sherbrooke St. W
Montreal, Quebec H3A 1G5
Canada

Navid Mojir (Contact Author)

Harvard Business School ( email )

Boston, MA 02163
United States

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