Key Definitions

Artificial Intelligence systems can be broadly defined as systems designed to perform actions that, if performed by humans, would be considered intelligent (Hammond, 2024). AI includes “a broad collection of computer-assisted systems for task performance, leveraging machine learning, automated knowledge repositories, image recognition, natural language processing, and large language models” (Von Krogh, 2018). 

• AI for automation - that creates business value through substitution of human capabilities to improve efficiency and create cost advantages.
• AI for augmentation - that creates business value by complementation of human cognitive capabilities to improve decision making and drive innovation.

AI Orientation is defined as a firm’s overall strategic direction and goals associated with introducing and applying AI technology (Li et al, 2021). Firms need a strategic orientation on AI to navigate the complexities of AI deployment. When companies develop AI as a strategic orientation for them, it becomes a valuable capability for them difficult to imitate, hence providing sustained competitive advantage. 

A human’s holistic proficiency concerning AI that enables critical usage and evaluation of AI as well as effective communication and collaboration with AI is referred to as AI Literacy or AI Fluency. The collective AI Literacy of the Top Management Team (TMT) is referred to as TMT AI Literacy / Fluency. 

AI capability is the ability of a firm to select, orchestrate, and leverage its AI-specific resources. Scalability is the measure of a system’s ability to increase or decrease in performance and cost in response to changes in application and system processing demands. The core of sustainable AI-based value generation is a scalable AI system

Value capture is defined as the mechanisms that ensure an economic return from value creation and that profits are shared throughout the value creation network. It is important to understand how AI creates value and the firm needs to ensure that complementary products, technologies, and services are available within the value-creation network.

AI governance is a system of rules, practices, processes, and technological tools employed to ensure an organization’s use of AI technologies aligns with its strategies, objectives, and values, fulfills legal requirements, and meets the principles of ethical AI followed by the organization.

Learning orientation is an organizational characteristic that affects a firm’s propensity to value generative and double-loop learning. Firms that have enhanced learning orientations are more willing to question long-held assumptions about their fundamental operating philosophies