Ai-Enabled Value Creation in International Business: Crossing the Boundary of Bounded Rationality

Abstract

This paper explores the role of artificial intelligence (AI) in improving value creation within multinational enterprises (MNEs) by transcending the limitations of bounded rationality. Businesses and managers are increasingly using AI, particularly in decision-making processes, which are especially pertinent within MNEs due to the complexity that they face in operating across diverse institutional, cultural, and market environments. We argue that AI’s computational rationality—rooted in its ability to process vast amounts of data and provide optimized decisions—can complement traditional heuristic approaches that are constrained by humans’ bounded rationality. Through an exploratory analysis that draws on case studies, workshops, and expert interviews, we examine how AI rationality assists in adapting products and services to foreign contexts, thereby optimizing value creation. The findings suggest that, while AI offers substantial potential to improve decision-making outcomes, it also introduces new challenges due to the proprietary nature of its algorithms and the dynamic and diverse conditions of international markets. We contribute to the IB literature by presenting a nuanced understanding of how AI and bounded rationality intersect, ultimately proposing that AI-enabled decision-making can reduce the cognitive boundaries managers traditionally face, leading to more effective value-creation strategies within global contexts for MNEs.

Keywords: Artificial intelligence, Value Creation, bounded rationality, international contexts.