IDEAS home Printed from https://ideas.repec.org/a/eee/jbrese/v174y2024ics0148296324000043.html
   My bibliography  Save this article

Artificial intelligence and adaptive response to market changes: A strategy to enhance firm performance and innovation

Author

Listed:
  • Sullivan, Yulia
  • Fosso Wamba, Samuel

Abstract

This research examines how AI-powered capabilities can bring value to organizations by enhancing their Adaptive Response to Market Changes (ARMC). Utilizing insights from organizational agility and the dynamic capability framework, we define ARMC as an organization’s ability to promptly identify and adjust to market changes, with customer responsiveness and operational adjustment as foundational competencies. We outline three AI-powered capabilities (AI-enabled automation, AI-enabled analytics, and AI-enabled relational capabilities) as ARMC’s predictors. We posit that the strengths of these relationships depend on environmental hostility and dynamism. Additionally, we propose positive associations between ARMC and three organizational outcomes: firm performance, process innovation, and product innovation. Our research employs a two-stage design, surveying IT and business executives from firms that have adopted AI. The results demonstrate significant interaction effects of environmental hostility and dynamism on the relationships between AI-powered capabilities and ARMC. Furthermore, we find that ARMC positively influences firm performance and innovation.

Suggested Citation

  • Sullivan, Yulia & Fosso Wamba, Samuel, 2024. "Artificial intelligence and adaptive response to market changes: A strategy to enhance firm performance and innovation," Journal of Business Research, Elsevier, vol. 174(C).
    • Handle: RePEc:eee:jbrese:v:174:y:2024:i:c:s0148296324000043
    DOI: 10.1016/j.jbusres.2024.114500
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0148296324000043
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jbusres.2024.114500?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Fariborz Damanpour & Shanthi Gopalakrishnan, 2001. "The Dynamics of the Adoption of Product and Process Innovations in Organizations," Journal of Management Studies, Wiley Blackwell, vol. 38(1), pages 45-65, January.
    2. Lin, Canchu & Kunnathur, Anand, 2019. "Strategic orientations, developmental culture, and big data capability," Journal of Business Research, Elsevier, vol. 105(C), pages 49-60.
    3. Duan, Yanqing & Edwards, John S. & Dwivedi, Yogesh K, 2019. "Artificial intelligence for decision making in the era of Big Data – evolution, challenges and research agenda," International Journal of Information Management, Elsevier, vol. 48(C), pages 63-71.
    4. One-Ki (Daniel) Lee & Vallabh Sambamurthy & Kai H. Lim & Kwok Kee Wei, 2015. "How Does IT Ambidexterity Impact Organizational Agility?," Information Systems Research, INFORMS, vol. 26(2), pages 398-417, June.
    5. Paul A. Pavlou & Omar A. El Sawy, 2006. "From IT Leveraging Competence to Competitive Advantage in Turbulent Environments: The Case of New Product Development," Information Systems Research, INFORMS, vol. 17(3), pages 198-227, September.
    6. Yang Chen & Yi Wang & Saggi Nevo & Jiafei Jin & Luning Wang & Wing S Chow, 2014. "IT capability and organizational performance: the roles of business process agility and environmental factors," European Journal of Information Systems, Taylor & Francis Journals, vol. 23(3), pages 326-342, May.
    7. Jussupow, Ekaterina & Spohrer, Kai & Heinzl, Armin & Gawlitza, Joshua, 2021. "Augmenting Medical Diagnosis Decisions? An Investigation into Physicians’ Decision-Making Process with Artificial Intelligence," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 137446, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
    8. Sriraman Bhoovaraghavan & Ashok Vasudevan & Rajan Chandran, 1996. "Resolving the Process vs. Product Innovation Dilemma: A Consumer Choice Theoretic Approach," Management Science, INFORMS, vol. 42(2), pages 232-246, February.
    9. Magnus Holmqvist & Kalevi Pessi, 2006. "Agility through scenario development and continuous implementation: a global aftermarket logistics case," European Journal of Information Systems, Taylor & Francis Journals, vol. 15(2), pages 146-158, April.
    10. Gary C. Moore & Izak Benbasat, 1991. "Development of an Instrument to Measure the Perceptions of Adopting an Information Technology Innovation," Information Systems Research, INFORMS, vol. 2(3), pages 192-222, September.
    11. Armstrong, J. Scott & Overton, Terry S., 1977. "Estimating Nonresponse Bias in Mail Surveys," MPRA Paper 81694, University Library of Munich, Germany.
    12. Hüseyin Tanriverdi & N. Venkatraman, 2005. "Knowledge relatedness and the performance of multibusiness firms," Strategic Management Journal, Wiley Blackwell, vol. 26(2), pages 97-119, February.
    13. Kalevi Kyläheiko & Päivi Maijanen, 2020. "Industry 4.0. Transformation Challenge in Light of Dynamic Capabilities," Springer Books, in: Mikael Collan & Karl-Erik Michelsen (ed.), Technical, Economic and Societal Effects of Manufacturing 4.0, edition 1, pages 169-189, Springer.
    14. Huang, Ming-Hui & Rust, Roland T., 2022. "A Framework for Collaborative Artificial Intelligence in Marketing," Journal of Retailing, Elsevier, vol. 98(2), pages 209-223.
    15. Neil A. Morgan & Douglas W. Vorhies & Charlotte H. Mason, 2009. "Market orientation, marketing capabilities, and firm performance," Strategic Management Journal, Wiley Blackwell, vol. 30(8), pages 909-920, August.
    16. Tom Fangyun Tan & Serguei Netessine & Lorin Hitt, 2017. "Is Tom Cruise Threatened? An Empirical Study of the Impact of Product Variety on Demand Concentration," Information Systems Research, INFORMS, vol. 28(3), pages 643-660, September.
    17. Kathleen M. Eisenhardt & Jeffrey A. Martin, 2000. "Dynamic capabilities: what are they?," Strategic Management Journal, Wiley Blackwell, vol. 21(10‐11), pages 1105-1121, October.
    18. Kevin Zheng Zhou & Fang Wu, 2010. "Technological capability, strategic flexibility, and product innovation," Strategic Management Journal, Wiley Blackwell, vol. 31(5), pages 547-561, May.
    19. Capatina, Alexandru & Kachour, Maher & Lichy, Jessica & Micu, Adrian & Micu, Angela-Eliza & Codignola, Federica, 2020. "Matching the future capabilities of an artificial intelligence-based software for social media marketing with potential users’ expectations," Technological Forecasting and Social Change, Elsevier, vol. 151(C).
    20. Chatterjee, Lagnajita & Feng, Cong & Nakata, Cheryl & Sivakumar, K., 2023. "The environmental turbulence concept in marketing: A look back and a look ahead," Journal of Business Research, Elsevier, vol. 161(C).
    21. Albrecht, Tobias & Rausch, Theresa Maria & Derra, Nicholas Daniel, 2021. "Call me maybe: Methods and practical implementation of artificial intelligence in call center arrivals’ forecasting," Journal of Business Research, Elsevier, vol. 123(C), pages 267-278.
    22. Thomas H. Davenport, 2018. "From analytics to artificial intelligence," Journal of Business Analytics, Taylor & Francis Journals, vol. 1(2), pages 73-80, July.
    23. Manis, K.T. & Madhavaram, Sreedhar, 2023. "AI-Enabled marketing capabilities and the hierarchy of capabilities: Conceptualization, proposition development, and research avenues," Journal of Business Research, Elsevier, vol. 157(C).
    24. Makarius, Erin E. & Mukherjee, Debmalya & Fox, Joseph D. & Fox, Alexa K., 2020. "Rising with the machines: A sociotechnical framework for bringing artificial intelligence into the organization," Journal of Business Research, Elsevier, vol. 120(C), pages 262-273.
    25. Constance E. Helfat & Margaret A. Peteraf, 2015. "Managerial cognitive capabilities and the microfoundations of dynamic capabilities," Strategic Management Journal, Wiley Blackwell, vol. 36(6), pages 831-850, June.
    26. Ming-Hui Huang & Roland T. Rust, 2021. "A strategic framework for artificial intelligence in marketing," Journal of the Academy of Marketing Science, Springer, vol. 49(1), pages 30-50, January.
    27. Fernández-Rovira, Cristina & Álvarez Valdés, Jesús & Molleví, Gemma & Nicolas-Sans, Ruben, 2021. "The digital transformation of business. Towards the datafication of the relationship with customers," Technological Forecasting and Social Change, Elsevier, vol. 162(C).
    28. Douglas A Battleson & Barry C West & Jongwoo Kim & Balasubramaniam Ramesh & Pamela S Robinson, 2016. "Achieving dynamic capabilities with cloud computing: an empirical investigation," European Journal of Information Systems, Taylor & Francis Journals, vol. 25(3), pages 209-230, May.
    29. Paschen, Ulrich & Pitt, Christine & Kietzmann, Jan, 2020. "Artificial intelligence: Building blocks and an innovation typology," Business Horizons, Elsevier, vol. 63(2), pages 147-155.
    30. John Hulland & Hans Baumgartner & Keith Marion Smith, 2018. "Marketing survey research best practices: evidence and recommendations from a review of JAMS articles," Journal of the Academy of Marketing Science, Springer, vol. 46(1), pages 92-108, January.
    31. Anol Bhattacherjee & Neset Hikmet, 2007. "Physicians' resistance toward healthcare information technology: a theoretical model and empirical test," European Journal of Information Systems, Taylor & Francis Journals, vol. 16(6), pages 725-737, December.
    32. David J. Teece, 2007. "Explicating dynamic capabilities: the nature and microfoundations of (sustainable) enterprise performance," Strategic Management Journal, Wiley Blackwell, vol. 28(13), pages 1319-1350, December.
    33. Naresh K. Malhotra & Sung S. Kim & Ashutosh Patil, 2006. "Common Method Variance in IS Research: A Comparison of Alternative Approaches and a Reanalysis of Past Research," Management Science, INFORMS, vol. 52(12), pages 1865-1883, December.
    34. Zahra, Shaker A. & Garvis, Dennis M., 2000. "International corporate entrepreneurship and firm performance: The moderating effect of international environmental hostility," Journal of Business Venturing, Elsevier, vol. 15(5-6), pages 469-492.
    35. Tussyadiah, Iis, 2020. "A review of research into automation in tourism: Launching the Annals of Tourism Research Curated Collection on Artificial Intelligence and Robotics in Tourism," Annals of Tourism Research, Elsevier, vol. 81(C).
    36. David J. Teece & Gary Pisano & Amy Shuen, 1997. "Dynamic capabilities and strategic management," Strategic Management Journal, Wiley Blackwell, vol. 18(7), pages 509-533, August.
    37. Ekaterina Jussupow & Kai Spohrer & Armin Heinzl & Joshua Gawlitza, 2021. "Augmenting Medical Diagnosis Decisions? An Investigation into Physicians’ Decision-Making Process with Artificial Intelligence," Information Systems Research, INFORMS, vol. 32(3), pages 713-735, September.
    38. Xueming Luo & Siliang Tong & Zheng Fang & Zhe Qu, 2019. "Frontiers: Machines vs. Humans: The Impact of Artificial Intelligence Chatbot Disclosure on Customer Purchases," Marketing Science, INFORMS, vol. 38(6), pages 937-947, November.
    39. Shivam Gupta & Sachin Modgil & Samadrita Bhattacharyya & Indranil Bose, 2022. "Artificial intelligence for decision support systems in the field of operations research: review and future scope of research," Annals of Operations Research, Springer, vol. 308(1), pages 215-274, January.
    40. Thomas Davenport & Abhijit Guha & Dhruv Grewal & Timna Bressgott, 2020. "How artificial intelligence will change the future of marketing," Journal of the Academy of Marketing Science, Springer, vol. 48(1), pages 24-42, January.
    41. L. J. Bourgeois, III & Kathleen M. Eisenhardt, 1988. "Strategic Decision Processes in High Velocity Environments: Four Cases in the Microcomputer Industry," Management Science, INFORMS, vol. 34(7), pages 816-835, July.
    42. Anindita Chakravarty & Rajdeep Grewal & V. Sambamurthy, 2013. "Information Technology Competencies, Organizational Agility, and Firm Performance: Enabling and Facilitating Roles," Information Systems Research, INFORMS, vol. 24(4), pages 976-997, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Dominik M. Wielgos & Christian Homburg & Christina Kuehnl, 2021. "Digital business capability: its impact on firm and customer performance," Journal of the Academy of Marketing Science, Springer, vol. 49(4), pages 762-789, July.
    2. Akter, Shahriar & Hossain, Md Afnan & Sajib, Shahriar & Sultana, Saida & Rahman, Mahfuzur & Vrontis, Demetris & McCarthy, Grace, 2023. "A framework for AI-powered service innovation capability: Review and agenda for future research," Technovation, Elsevier, vol. 125(C).
    3. Waleczek, Peter & von den Driesch, Till & Flatten, Tessa C. & Brettel, Malte, 2019. "On the dynamic bundles behind operations management and research and development," European Management Journal, Elsevier, vol. 37(2), pages 175-187.
    4. Terence J. V. Saldanha & Dongwon Lee & Sunil Mithas, 2020. "Aligning Information Technology and Business: The Differential Effects of Alignment During Investment Planning, Delivery, and Change," Information Systems Research, INFORMS, vol. 31(4), pages 1260-1281, December.
    5. Xu, Hangjun & Guo, Huiling & Zhang, Jing & Dang, Anh, 2018. "Facilitating dynamic marketing capabilities development for domestic and foreign firms in an emerging economy," Journal of Business Research, Elsevier, vol. 86(C), pages 141-152.
    6. Adomako, Samuel & Amankwah-Amoah, Joseph & Donbesuur, Francis & Ahsan, Mujtaba & Danso, Albert & Uddin, Moshfique, 2022. "Strategic agility of SMEs in emerging economies: Antecedents, consequences and boundary conditions," International Business Review, Elsevier, vol. 31(6).
    7. Phong Nguyen, Nguyen & Adomako, Samuel & Ahsan, Mujtaba, 2023. "The base-of- the-pyramid orientation and export performance of Vietnamese small and medium enterprises," Journal of Business Research, Elsevier, vol. 154(C).
    8. Haarhaus, Tim & Liening, Andreas, 2020. "Building dynamic capabilities to cope with environmental uncertainty: The role of strategic foresight," Technological Forecasting and Social Change, Elsevier, vol. 155(C).
    9. Côrte-Real, Nadine & Oliveira, Tiago & Ruivo, Pedro, 2017. "Assessing business value of Big Data Analytics in European firms," Journal of Business Research, Elsevier, vol. 70(C), pages 379-390.
    10. Lange, Francie & Tomini, Nino & Brinkmann, Florian & Kanbach, Dominik K. & Kraus, Sascha, 2023. "Demystifying massive and rapid business scaling – An explorative study on driving factors in digital start-ups," Technological Forecasting and Social Change, Elsevier, vol. 196(C).
    11. Liu, Yi & Liao, Yonghai & Li, Yuan, 2018. "Capability configuration, ambidexterity and performance: Evidence from service outsourcing sector," International Journal of Production Economics, Elsevier, vol. 200(C), pages 343-352.
    12. Manis, K.T. & Madhavaram, Sreedhar, 2023. "AI-Enabled marketing capabilities and the hierarchy of capabilities: Conceptualization, proposition development, and research avenues," Journal of Business Research, Elsevier, vol. 157(C).
    13. One-Ki (Daniel) Lee & Vallabh Sambamurthy & Kai H. Lim & Kwok Kee Wei, 2015. "How Does IT Ambidexterity Impact Organizational Agility?," Information Systems Research, INFORMS, vol. 26(2), pages 398-417, June.
    14. Ritu Singh & Parikshit Charan & Manojit Chattopadhyay, 2019. "Dynamic capabilities and responsiveness: moderating effect of organization structures and environmental dynamism," DECISION: Official Journal of the Indian Institute of Management Calcutta, Springer;Indian Institute of Management Calcutta, vol. 46(4), pages 301-319, December.
    15. Han, Jeong Hugh & Wang, Yingli & Naim, Mohamed, 2017. "Reconceptualization of information technology flexibility for supply chain management: An empirical study," International Journal of Production Economics, Elsevier, vol. 187(C), pages 196-215.
    16. Jean, Ruey-Jer “Bryan” & Sinkovics, Rudolf R. & Kim, Daekwan & Lew, Yong Kyu, 2015. "Drivers and performance implications of international key account management capability," International Business Review, Elsevier, vol. 24(4), pages 543-555.
    17. Yolande E. Chan & James S. Denford & Junjun Jane Wang, 2019. "The Co-Evolution of IT, Knowledge, and Agility in Micro and Small Enterprises," Journal of Information & Knowledge Management (JIKM), World Scientific Publishing Co. Pte. Ltd., vol. 18(03), pages 1-34, September.
    18. Khan, Huda & Khan, Zaheer, 2021. "The efficacy of marketing skills and market responsiveness in marketing performance of emerging market exporting firms in advanced markets: The moderating role of competitive intensity," International Business Review, Elsevier, vol. 30(6).
    19. Gelhard, Carsten & von Delft, Stephan, 2016. "The role of organizational capabilities in achieving superior sustainability performance," Journal of Business Research, Elsevier, vol. 69(10), pages 4632-4642.
    20. Zhang, Yucheng & Hou, Zhongwei & Yang, Feifei & Yang, Miles M. & Wang, Zhiling, 2021. "Discovering the evolution of resource-based theory: Science mapping based on bibliometric analysis," Journal of Business Research, Elsevier, vol. 137(C), pages 500-516.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jbrese:v:174:y:2024:i:c:s0148296324000043. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/jbusres .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.