Digital innovation and the effects of artificial intelligence on firms’ research and development – Automation or augmentation, exploration or exploitation?

Abstract

Digitalization has altered many assumptions underpinning research on innovation management. At the early innings of exploring how digital innovation management stands out, there is a need for further studies in this area. Previous research on how firms use artificial intelligence has distinguished between automation and augmentation of human activities. In this paper, we explore how firms implement artificial intelligence within research and development. Utilizing an international news database spanning 956 articles from 122 newspapers published in 2020, we find that artificial intelligence is primarily adopted to augment human activities (55%) within research and development, rather than to automate matters (11%). We observe differences across sectors where automation is more common in government, information and communication technology (ICT), and technology and software. Our systematic coding shows that artificial intelligence is primarily adopted for exploration research and development (64%), rather than exploitation (5%). Based on these findings, we conclude that research and development from artificial intelligence primarily focuses on novel markets and areas of operations, rather than enhancing existing product markets and activities. Moreover, it augments human labor rather than replaces it; hence, job losses related to artificial intelligence do not seem to be taking place within research and development.