Abstract
Artificial intelligence is a recent technological paradigm that mimics human thinking and evaluating ability. It has the potential to transfer human intelligence to informatics systems in business management and transform various business aspects such as information acquisition, product creation, and service utilization. It may also help businesses mitigate threats and capitalize on opportunities. However, some organizations have rushed into its adoption despite their limited operational skills and its high costs. In this context, dynamic capabilities are crucial for a company's growth, and artificial intelligence can transform the process. This chapter reviewed and analyzed data in the literature to reveal the performance enhancement and productivity improvement led by artificial intelligence in a way that utilizes capabilities, competencies, and resources of firms.
TopMain Focus Of The Chapter
Artificial Intelligence, Dynamic Capabilities, and Business Optimization
The digital age we live in, which changes both the behaviors, perspectives and perceptions of people, has many profound and important influences (Asbaş & Erdem Tuzlukaya, 2021). With the effects of this era, the ways and methods in which economic and socioeconomic relations are established, maintained and executed have also been digitized at a high rate (Afonasova et al., 2019; Karpunina et al., 2019; Mehta et al., 2020). As one of the dimensions of this digitalization and with the contributions of Industry 4.0, which has become the dominant paradigm in the industry, the adoption of artificial intelligence has begun and continues to be experienced in companies.
The primary objective of artificial intelligence adoption in companies is to improve performance by increasing production efficiency and flexibility over time (Chen, Esperança & Wang, 2022). In today's dynamic business environment, firms must focus on sustaining their competitive edge against rivals by implementing strategic approaches (Ho, Gan, Jin & Le, 2022). Artificial intelligence can be leveraged through business strategies and capabilities to mitigate potential threats and capitalize on available opportunities, ensuring greater opportunities and reduced threats for companies (Lee et al., 2018).
The rapid evolution of technology has compelled organizations to adapt and reconfigure themselves to remain relevant in the dynamic business environment (Venkatram & Geetha, 2017). To sustain themselves and stay competitive, businesses need to develop dynamic capabilities that enable them to think broadly and adapt to change (Akhtar, Khan, Tarba & Jayawickrama, 2017). In the context of artificial intelligence, dynamic capabilities are becoming increasingly important as firms seek to integrate and optimize artificial intelligence technology to improve business performance.
Key Terms in this Chapter
Sensing: The ability of an organization to identify available opportunities and to notice potential threats.
Artificial Intelligence: Technological approaches and paradigm which imitate thinking behaviors of human beings. Artificial intelligence-integrated systems are able to think, sense, reason and act like humans demonstrating the capability of solving problems similar to human beings.
Reconfiguration: The ability of a firm optimizing its available assets appropriately and effectively.
Firm Performance: End results achieved by an organization either in financial or non-financial form. In the current research, firm performance is measured in terms of various aspects including customer satisfaction, employee turnover, increased productivity, market share, and innovation/new products.
Seizing: The aspect of a firm understanding adopting business patterns such as utilizing of a new technology by an organization which desires to adapt to the environment.
Optimization: Process of improving efficiency, reducing costs, and maximizing profits under the certain conditions and constraints by using various strategies and techniques. It is generally centered through improvement of communication among employees and management, proper documentation, improving employees’ skills through training and hiring quality manpower in various positions.
Dynamic Capabilities: Basic routine processes that progress transformation among companies through evolution with time making them survive well in a competitive environment.