The Impact of Artificial Intelligence On Organizational Behavior
The Impact of Artificial Intelligence On Organizational Behavior
The Impact of Artificial Intelligence On Organizational Behavior
Submitted by
Bishal Khadka
Third Semester
Submitted to
Faculty of Management
Dharan, Sunsari
July 2024
Student Declaration
I declare that the Term report titled 'The Impact of Artificial Intelligence on
Organizational Behavior,' submitted to the Faculty of Management at Mahendra Multiple
Campus, Tribhuvan University, is solely my own work. This report fulfills the requirements of the
Term course within the Bachelor of Business Administration (BBA) program.
I acknowledge all assistance received during my research and in preparing this report.
Additionally, I confirm that all sources of information and literature cited in this report are duly
acknowledged in the references. This report has not been previously submitted to any other
university or institution for any academic qualification.
...………….…….……..
Bishal Khadka
July, 2024
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Certificate from Supervisor
We have examined the Term report titled 'The Impact of Artificial Intelligence on
Organizational Behavior,' presented by Bishal Khadka from Mahendra Multiple Campus,
Dharan, as part of the requirements for the Bachelor of Business Administration (BBA) degree.
Following a viva voce examination of the candidate, we affirm that the report meets the criteria
for acceptance.
…………………….
Mr..………………...
External Supervisor
……………………
Supervisor
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Acknowledgements
Bishal Khadka
July, 2024
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Abstract
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Table of Contents
Acknowledgements .................................................................................................................... iv
Abstract ....................................................................................................................................... v
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Chapter III: Summary and Conclusion ..................................................................................... 13
References ................................................................................................................................. 16
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Chapter I: Introduction
The adoption of AI tools in organizational settings has profound implications for job
satisfaction, personality, and attitudes of employees. AI can enhance job satisfaction by automating
tasks, thereby allowing employees to engage in more complex and fulfilling activities. For
instance, AI-powered tools can take over repetitive data entry tasks, enabling employees to focus
on strategic planning and creative problem-solving, which are more engaging and rewarding
(Brynjolfsson & McAfee, 2014). However, AI also poses risks, such as job displacement and the
potential loss of human judgment and decision-making skills, which are critical in roles requiring
emotional intelligence. The balance between leveraging AI for efficiency and maintaining
meaningful human roles is a significant concern for organizational leaders.
The evolving landscape necessitates policies and strategies to manage the transition
effectively. These include investing in education and training programs to prepare the workforce
for new roles created by technological advances, establishing regulations to govern the responsible
use of AI, and developing ethical guidelines to align AI systems with human values and goals. For
example, companies can implement continuous learning initiatives to help employees acquire new
skills relevant to AI-enhanced roles, ensuring they remain competitive and adaptable in the job
market.
members by providing real-time data and insights, which can help in making informed decisions
quickly (Zhou, 2020). However, the reliance on AI can also lead to challenges, such as over-
dependence on technology and reduced interpersonal interactions, potentially affecting team
cohesion and trust.
The rapid integration of Artificial Intelligence (AI) into organizational operations presents
both opportunities and challenges. While AI can significantly enhance efficiency, productivity, and
decision-making processes, its impact on organizational behavior remains under-explored (Khan,
2021).
Specifically, there are concerns about how AI affects employee job satisfaction,
interpersonal dynamics, and the overall organizational culture (Rao, 2021). Additionally, the
ethical implications of AI deployment, such as bias in decision-making algorithms and the
potential for job displacement, necessitate a thorough investigation.
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To address these issues, this study aims to explore the following research questions:
The primary objective of this Term paper, titled " The Impact of Artificial Intelligence on
Organizational Behavior" is:
This study draws upon a diverse range of sources to explore "The Impact of Artificial
Intelligence on Organizational Behavior." Primarily, it synthesizes existing literature from
academic journals, books, and articles focusing on artificial intelligence, organizational behavior,
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The analysis of information in this study involves synthesizing and critiquing diverse
sources to develop a comprehensive understanding of AI's impact on organizational behavior.
Through a thorough literature review, it identifies key theories, trends, and frameworks shaping
discussions on AI's influence on job satisfaction, employee motivation, and ethical considerations.
Empirical studies and case analyses are pivotal in examining real-world implications, highlighting
both positive outcomes and challenges associated with AI adoption in Nepal and beyond.
Comparative analysis across different sectors and organizational contexts enriches the study by
uncovering common themes and variations in AI's effects. Ethical analysis critically evaluates
issues such as fairness, bias, privacy, and transparency, offering insights into their implications for
organizational trust and culture. Ultimately, the study aims to distill these findings into practical
recommendations for organizations, policymakers, and stakeholders, facilitating informed
decision-making in navigating the complexities of AI integration while ensuring ethical and
human-centric organizational practices.
language processing, and robotics, which are increasingly being integrated into business processes
and decision-making systems (Davenport & Ronanki, 2018).
Job satisfaction, defined as the pleasurable emotional state resulting from the appraisal of
one's job experiences (Locke, 1976), can be significantly influenced by AI implementation. The
Job Characteristics Model (JCM) by Hackman and Oldham (1976) provides a framework for
understanding how AI might affect job satisfaction through changes in skill variety, task identity,
and task significance.
Organizational behavior, which studies how individuals and groups act within
organizations (Robbins & Judge, 2019), is evolving with the integration of AI. The socio-technical
systems theory (Trist & Bamforth, 1951) is particularly relevant in understanding how AI, as a
technological component, interacts with the social aspects of organizations.
The ethical implications of AI in organizations are often analyzed through the lens of
utilitarianism and deontological ethics (Bostrom & Yudkowsky, 2014). Issues such as algorithmic
bias, privacy concerns, and the potential for job displacement require careful ethical consideration
(Floridi & Cowls, 2019).
Schein's (2010) model of organizational culture, which includes artifacts, espoused values,
and basic underlying assumptions, can be used to understand how AI integration might reshape
organizational culture. The introduction of AI may lead to changes in all three levels of culture,
potentially creating a more data-driven and technologically oriented organizational ethos.
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These conceptual frameworks provide a foundation for analyzing the multifaceted impact
of AI on organizational behavior, job satisfaction, ethics, trust, and culture. They offer valuable
lenses through which to examine the complex interplay between technological advancements and
human factors in organizational settings.
Several empirical studies have investigated the impact of Artificial Intelligence (AI) on
various aspects of organizational behavior.
Glikson and Woolley (2020) investigated the factors influencing trust in AI systems within
organizations. Their study found that employees' trust in AI was positively correlated with
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perceived transparency of the AI system and the level of human oversight. They also noted that
trust in AI varied across different organizational levels, with senior management generally showing
higher levels of trust. Shneiderman (2020) examined the impact of human-AI collaboration on
organizational trust. The study found that organizations implementing collaborative AI systems,
where humans and AI work together, reported higher levels of employee trust and job satisfaction
compared to those with fully automated AI systems.
These empirical studies provide valuable insights into the multifaceted impact of AI on
organizational behavior. They highlight both the potential benefits of AI in enhancing job
satisfaction and performance, as well as the challenges in maintaining ethical standards, trust, and
a balanced organizational culture. The findings underscore the need for thoughtful implementation
of AI technologies in organizational settings.
• The findings and conclusions drawn from this study may not be universally applicable
across all organizational contexts, especially considering the diverse nature of
industries and organizational cultures.
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• The study's scope may limit the depth of analysis for long-term impacts of AI
integration, as the effects could evolve over time and require longitudinal studies for
comprehensive understanding.
• Potential biases in the selection of literature sources and empirical studies could
influence the interpretations and conclusions drawn regarding AI's impact on
organizational behavior.
• The study primarily focuses on job satisfaction, motivation, and ethical implications.
Other aspects of organizational behavior influenced by AI, such as leadership dynamics
or organizational learning, may warrant further exploration.
While these limitations are important to acknowledge, they provide opportunities for future
research to delve deeper into understanding how AI integration can be effectively managed to
maximize benefits while mitigating risks in diverse organizational settings.
Chapter II: Analysis and Discussion
2.1 Analysis
The integration of Artificial Intelligence (AI) into organizational processes has had a
profound and multifaceted impact on organizational behavior. This analysis focuses on two key
areas: the influence of AI on job satisfaction and employee motivation, and the ethical implications
of AI in organizational decision-making.
The effect of AI on job satisfaction and employee motivation has been mixed. On one hand,
AI's ability to automate routine and repetitive tasks has led to significant job redesign in many
organizations, potentially increasing job satisfaction by enhancing skill variety and task
significance. Employees in some sectors, particularly those requiring high levels of technical
expertise, have reported increased job satisfaction due to new upskilling opportunities presented
by AI adoption. Furthermore, AI has shown potential to significantly enhance employee
performance and productivity by improving decision-making processes and reducing manual
errors, which can lead to increased job satisfaction as employees feel more effective and valuable
in their roles.
However, the impact of AI on job satisfaction varies across industries and individual
circumstances. In some sectors, AI implementation has resulted in decreased satisfaction due to
perceived job insecurity and reduced opportunities for teamwork. The introduction of AI
technologies can be a source of stress and anxiety for some employees, particularly those who feel
unprepared for the technological shift. This underscores the importance of appropriate training and
development programs to accompany AI implementation, which can enhance employee
motivation by providing new learning opportunities and career growth prospects.
hiring and performance evaluation. The potential for algorithmic bias can lead to discrimination
and unfair treatment, undermining employee trust and organizational integrity.
Privacy and data protection are also major ethical concerns, as AI often involves processing
large amounts of personal data. Organizations must prioritize data protection and transparency in
their AI systems to maintain employee trust and comply with ethical standards. The balance
between AI automation and human judgment is crucial for ethical decision-making and
maintaining employee trust, with studies showing that trust in AI systems is positively correlated
with the level of human oversight.
The "black box" nature of some AI algorithms can lead to a lack of transparency in
decision-making processes, which can erode trust and accountability within the organization.
Implementing explainable AI systems and maintaining clear communication about AI's role in
decision-making are essential for building trust and ensuring ethical use.
The analysis reveals that AI's impact on organizational behavior is nuanced and context-
dependent. While it offers significant potential for enhancing job satisfaction, motivation, and
productivity, its implementation must be carefully managed to address ethical concerns and
maintain a positive organizational culture. The successful integration of AI in organizational
settings requires a balanced approach that leverages the benefits of technology while prioritizing
human values, ethical considerations, and employee well-being.
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In the agricultural sector, AI is playing a pivotal role in precision farming. The Nepalese
government, along with various NGOs, is promoting the use of AI-driven tools for soil health
monitoring and weather prediction. These tools provide farmers with actionable insights, reducing
uncertainty and helping them make informed decisions to optimize crop yields. As a result, farmers
experience higher job satisfaction and productivity, as their work becomes more effective and
rewarding.
The financial sector in Nepal is also undergoing significant changes due to AI integration.
Banks are using AI for fraud detection, risk management, and customer service through chatbots.
By automating repetitive tasks, AI allows bank employees to concentrate on more strategic and
value-added activities, enhancing their job satisfaction and motivation. Moreover, AI-driven
solutions improve operational efficiency and customer service quality, benefiting both employees
and customers.
However, the adoption of AI in Nepal brings about important ethical implications that must
be addressed to maintain organizational trust. In hiring processes, for example, it is crucial to
ensure that AI algorithms are free from bias to maintain fairness and equity. Regular audits and
transparent AI practices are necessary to uphold ethical standards and foster trust within
organizations. Privacy concerns are also most important, especially in sectors like finance and
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healthcare, where sensitive data is handled. Organizations must implement robust data protection
measures to gain and maintain the trust of employees and customers.
The potential for job displacement due to AI automation is another significant concern.
While AI can automate routine tasks, it also creates opportunities for new roles that require
different skill sets. To mitigate the risk of job displacement, Nepalese organizations are investing
in reskilling and upskilling programs. These initiatives help employees transition to new roles
created by AI advancements, ensuring they remain competitive and adaptable in the job market.
3.1 Summary
The problem statement addresses the dual nature of AI's impact on organizations,
presenting both opportunities for enhanced efficiency and productivity, and challenges related to
job satisfaction and ethical concerns. It raises critical research questions, such as how AI influences
employee job satisfaction and motivation, and the ethical implications of AI in organizational
decision-making. These questions aim to uncover the comprehensive effects of AI on
organizational behavior and culture.
The objectives of the study are to investigate how AI technologies affect employee job
satisfaction and motivation, and to analyze the ethical implications of AI in decision-making
processes, particularly regarding organizational trust and culture. The significance of the study lies
in providing insights into the multifaceted impact of AI on organizational behavior, offering
strategies to maximize its benefits while mitigating potential risks.
The methods section outlines the sources of information and approaches used for analysis,
including literature reviews and empirical studies. Overall, the report underscores the importance
of a balanced approach to AI integration in organizations, promoting innovation and efficiency
while safeguarding ethical standards and maintaining human-centric work environments.
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3.2 Conclusion
One of the primary concerns discussed in the report is the ethical implications of AI. As AI
systems take on more significant roles in decision-making processes, issues such as algorithmic
bias, data privacy, and the potential for job displacement become increasingly critical. Algorithmic
bias can lead to unfair or discriminatory outcomes, undermining trust in AI systems and the
organizations that deploy them. Data privacy concerns are supreme as AI systems often require
vast amounts of personal data to function effectively. The report stresses the need for robust data
governance frameworks to protect individual privacy and ensure data is used ethically and
responsibly.
Job displacement is another significant challenge posed by the rise of AI. While AI can
create new job opportunities and industries, it can also render certain roles obsolete, leading to job
losses and economic disruption. The report suggests that organizations must proactively address
this issue by investing in retraining and upskilling programs for their workforce. By equipping
employees with the skills needed to thrive in an AI-augmented workplace, organizations can
mitigate the adverse effects of job displacement and foster a culture of continuous learning and
adaptation.
The report also discusses the importance of maintaining a positive organizational culture
in the age of AI. AI can impact organizational trust and culture in various ways. For instance, if
employees feel that AI systems are being used to monitor and control them excessively, it can lead
to a decrease in morale and trust in the organization. On the other hand, if AI is used transparently
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and ethically, it can enhance trust and collaboration within the organization. The report emphasizes
the need for clear communication and transparency regarding the use of AI, as well as the
establishment of ethical guidelines to govern its deployment.
Moreover, the report highlights the need for a balanced approach to AI integration, one that
leverages the benefits of AI while prioritizing human values and ethical considerations. This
includes developing and implementing ethical AI frameworks that address issues of fairness,
accountability, and transparency. Organizations should also engage with a diverse range of
stakeholders, including employees, customers, and regulators, to ensure that their AI strategies
align with broader societal values and expectations.
The report calls for a holistic and integrated approach to managing AI in organizations. By
addressing the ethical, social, and economic challenges associated with AI, organizations can
harness its full potential to drive innovation and growth. This requires a commitment to ethical AI
practices, investment in employee development, and a focus on maintaining a positive
organizational culture. By doing so, organizations can navigate the complexities of AI integration
and create a work environment that is both technologically advanced and human-centric. This
balanced approach will ultimately lead to more sustainable and inclusive growth, benefiting both
organizations and society at large.
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