A Process Model of Managerial Phronesis in the Age of Generative AI

Managerial phronesis involves first-hand experience that helps managers make moral and context-specific judgments at work in pursuit of the common good. Yet, as managers increasingly rely on generative artificial intelligence (GenAI) at work, many of these first-hand experiences are replaced by synthetic outputs. While past research has investigated how human–AI interactions alter managerial agency, we do not know why, how, and under which conditions GenAI affects the development of managerial phronesis. Answering these questions is important because phronesis underpins much of knowledge use in organizations. Consequently, we develop a baseline model that advances our understanding of how phronesis emerges in the absence of GenAI, introducing conceptual innovations that explain how new experiences are generated. We then extend this model by explaining why and how GenAI shapes the development of phronesis. Specifically, we theorize how GenAI can shift the development of phronesis toward what we term epistemic de-skilling, when conditions of perceived time pressure prompt cognitive offloading of tasks, and toward epistemic up-skilling, when conditions of accountability activate managerial reflexivity. We discuss the theoretical and practical implications of our model, and articulate an agenda for future research.