In this paper, we discuss the impact of artificial intelligence (AI) on innovation dynamics and argue that AI has affected innovation dynamics in at least two distinct ways. First, innovation using AI has unique dynamics that are characterised by data playing a central role and the increasing importance of external collaboration; however, data security and privacy issues also present new risks to external collaboration. When innovating in AI, collaboration with customers and competitors is critical, yet there are considerable risks associated with data sharing. Second, unique organisational challenges emerge during the diffusion of AI innovations, because adopting AI in an organisation not only results in the need for additional employee competencies but also challenges organisational power structures. We also discuss the merits of AI as a general purpose technology and argue that conclusions about AI in relation to innovation dynamics are likely to change when generative AI is widely adopted.
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