Shedding Light on the Black Box: Integrating Prediction Models and Explainability Using Explainable Machine Learning

Abstract

In contemporary organizational research, when dealing with large heterogeneous datasets and complex relationships, statistical modeling focused on developing substantive explanations typically results in low predictive accuracy. In contrast, machine learning (ML) exhibits remarkable strength for prediction, but suffers from an unexplainable analytical process and output—thus ML is often known as a “black box” approach. The recent development of explainable machine learning (XML) integrates high predictive accuracy with explainability, which combines the advantages inherent in both statistical modeling and ML paradigms. This paper compares XML with statistical modeling and the traditional ML approaches, focusing on an advanced application of XML known as evolving fuzzy system (EFS), which enhances model transparency by clarifying the unique contribution of each modeled predictor. In an illustrative study, we demonstrate two EFS-based XML models and conduct comparative analyses among XML, ML, and statistical models with a commonly-used database in organizational research. Our study offers a thorough description of analysis procedures for implementing XML in organizational research, along with best-practice recommendations for each step as well as Python code to aid future research using XML. Finally, we discuss the benefits of XML for organizational research and its potential development.