Managing AI-powered service innovation capability: A conceptual framework for dynamic markets

Introduction

AI-powered service innovation is playing a crucial role in the success of firms in the Fourth Industrial Revolution. However, existing research studies on this topic lack a conceptual framework for managing AI-powered service innovation in dynamic markets. This article aims to synthesize the current body of knowledge, propose a framework, and develop an agenda for advancing our understanding of AI-powered service innovation capability.

AI-powered service innovation

AI-powered service innovation involves the use of AI technologies, such as ChatGPT, Bard, and Sydney, to improve service offerings. These innovations have the potential to revolutionize various industries, including banking, healthcare, and entertainment. However, despite significant investments in AI, many firms are not seeing the expected returns. This is due to a limited understanding of AI-powered service innovation capabilities.

Theoretical framework

In this study, we adopt the dynamic capability view (DCV) as a theoretical lens to understand AI-powered service innovation capability. The DCV emphasizes the integration, building, and reconfiguration of internal and external competencies to develop innovations that can adapt to changing business environments. We propose a conceptual framework that incorporates AI-market capability, AI-infrastructure capability, and AI-management capability as essential determinants of AI-powered service innovation capability.

Research questions

This study aims to answer the following research questions:

1. What are the core capabilities for AI-powered service innovation?
2. How can firms develop and manage AI-powered service innovation capability?
3. What is the role of AI-powered service innovation capability in achieving organizational agility and competitive advantage?

Methodology

To answer these research questions, we conducted a systematic literature review (SLR) and thematic analysis. The SLR involved the identification and screening of relevant articles from academic databases. After the screening process, 33 articles were selected for analysis. The findings from these articles were used to develop a conceptual framework for AI-powered service innovation capability.

Findings

The findings of this study suggest that AI-market capability, AI-infrastructure capability, and AI-management capability are crucial determinants of AI-powered service innovation capability. These capabilities involve customer orientation, industry orientation, cross-functional integration, data management, business models, ecosystem development, AI-orientation, organizational learning, and AI ethics. Developing these capabilities can help firms achieve organizational agility and gain a competitive advantage in dynamic markets.

Implications and future research

The findings of this study have several implications for practice and future research. From a practical perspective, firms should focus on developing AI-powered service innovation capabilities to improve their agility and competitiveness. This involves investing in AI infrastructure, developing AI-orientation within the organization, promoting organizational learning, and addressing ethical considerations related to AI.

From a research perspective, this study contributes to the literature by providing a conceptual framework for AI-powered service innovation capability. Future research could further explore the relationships between different capabilities and their impacts on organizational agility and competitive advantage. Additionally, more studies are needed to understand the specific mechanisms through which AI-powered service innovation capabilities can be developed and managed effectively.

Conclusion

In conclusion, this study proposes a framework for managing AI-powered service innovation capability in dynamic markets. The findings suggest that developing AI-market capability, AI-infrastructure capability, and AI-management capability is crucial for achieving organizational agility and competitive advantage. By investing in these capabilities, firms can harness the power of AI to drive innovation and success in the Fourth Industrial Revolution.

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