Business Model Innovation through AI Adaptation: The Role of Strategic Human Resources Management

Abstract While artificial intelligence (AI) requires business model innovation, it simultaneously poses persistent operational, regulatory and strategic challenges, highlighting the importance of researching AI adaptation to appropriate organizational value. AI adaptation is not monolithic, and its nature and consequent value appropriation processes may vary due to external factors and an organization's strategic approach to innovation and resource management. Accordingly, a taxonomy of AI adaptation and its link with value appropriation can yield a theoretical understanding and practical implications of why and how organizations vary in leveraging strategic human resource management to shape business innovation led by AI adaptation. In this paper, we address this issue by applying adaptive structuration theory and conducting interviews with top management personnel from 51 companies based in India. Based on our findings, we develop a novel taxonomy of AI adaptation (exploitive, exploratory, emancipatory and expedient), structured within a 2 × 2 matrix and a robust model of value appropriation within a dynamic business environment.