Discourse about the disruptive potential of artificial intelligence for individuals, professions, and markets is proliferating. The fundamental changes underway at the societal level are also expected to profoundly impact and alter organizations, yet we are only just beginning to understand how artificial intelligence impacts the nature of the organization itself. Based on the premise that widespread organizational adoption of artificial intelligence fundamentally transforms the organization, we present the findings of an in-depth case study of a multinational industrial firm embarking on fundamental organizational change driven by the vision offered by artificial intelligence to become a more rationally intelligent ‘cognitive enterprise’ that seeks superior competitiveness through expanded rationality and the augmented ability to think logically, make sound decisions, and solve problems effectively. Drawing on the perspective of Benson’s (1977) dialectical view of organizations, we develop a model of AI-enabled organizational transformation explaining AI’s role in disrupting in an industrial firm, leading to its transformation and organizational reconstruction in the process of becoming a cognitive enterprise. We offer our model as a contribution to the burgeoning literature on AI in management as well as an invitation to management scholars to re-examine the behavioral theory of the firm.
