INNOVATION, ENTREPRENEURSHIP, AND COMPETITIVE ADVANTAGE IN THE AI ECONOMY
DOI:
https://doi.org/10.70301/SBS.MONO.2026.1.2Keywords:
Artificial Intelligence; Innovation Economics; Competitive Advantage; Digital Ecosystems; AI Strategy; Entrepreneurial DynamicsAbstract
Artificial intelligence (AI) is reshaping the way firms create value, innovate, and compete, and transforming the future sources of firm-level competitive advantage. Recent research indicates that AI represents a general-purpose technology that will transform productivity, entrepreneurial opportunity, and competition (Crafts, 2021; Cockburn et al., 2018). This chapter shows how AI is changing the underlying drivers of innovation and competitive advantage in the 21(st) Century economy. Its objective is to explain how AI-enabled capabilities, specifically data accumulation, algorithmic learning, and digital ecosystems, transform strategic resources and then firm behavior. It develops a theory-driven analysis, building on rich literature in invention and strategy, and incorporating elements of Schumpeterian creative destruction, Resource-Based View, and dynamic capabilities theory, platform and ecosystem theory, and transaction cost economics, and establishes a conceptual framework called the Algorithmic Competitive Advantage Architecture. Drawing on the literature in these areas and empirical insights from AI-intensive firms, it seeks to answer how the interaction among data assets, machine learning models, digital infrastructure, and platform ecosystems can lead to sustained competitive advantage in the AI economy. It establishes AI as a source of structural economic transformation, reshaping the mechanisms that drive value creation, entrepreneurial opportunity, and competition. It further discusses the implications for scholars, executives, and policymakers interested in exploring the dramatic ways that AI-enabled capabilities will change the future architecture of technology and of economic organization.
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