Companies that build 'smart' products perform better if the head office leaves the AI development entirely to individual business units.
April 1, 2026
Original Paper
Centralizing or Localizing AI in Diversified Firms? The Contingent Role of Smart Products and Ecosystem-Facing Value Creation
SSRN · 6504726
The Takeaway
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.
From the abstract
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,