Font of innovation or algorithmic deforestation? The ecosystem impacts of artificial intelligence in entrepreneurship

Abstract

Artificial intelligence (AI) is increasingly embedded in the infrastructures, practices, and decision-making routines of founders, firms, and entrepreneurial ecosystems. For entrepreneurship, this appears to be a tremendous boon to value creation. By widening the aperture of individual entrepreneurs beyond the narrow limits of human cognition, assistive algorithms – and particularly the ground-breaking, readily accessible capabilities of Generative AI (Gen AI) – appear poised to deliver game-changing exploratory tools, enhanced predictive insights, operational efficiencies, and resource-preserving decision-support tools. Yet, the long-term, society-wide impacts are far less clear. One cause for concern is the variance-minimizing features of AI, a foundational design principle that reduces deviation and enhances the predictive stability of AI tools. In this, we identify a paradox wherein AI tools often enhance the individual creativity of entrepreneurs but, at scale, may erode collective entrepreneurial dynamism by filtering out non-algorithmic, highly serendipitous, mutation-generating, and variance-maximizing behaviors. Drawing upon the principles of rainforest logics, we theorize how AI's growing influence on entrepreneurial judgment, strategy, and ecosystem design may lead to a system-wide homogenization in decision-making and a decline in radical experimentation. With this, there is the danger of a corresponding increase in what we have dubbed algorithmic deforestation, involving systemic risks to the vitality and mutation-generating capacity of entrepreneurial ecosystems through the unintentional suppression of cognitive and behavioral diversity.