| Abstract | Artificial Intelligence (AI) has transitioned from a supporting digital tool into a primary driver of
business transformation. Its ability to analyze large data sets, automate tasks, and generate creative outputs
makes it a catalyst for innovation across industries. This paper examines how AI influences business
innovation in four dimensions: products and services, processes, business models, and organizational
ecosystems. A conceptual framework is introduced that links AI capabilities with innovation outcomes
through firm-level resources and governance. The study also highlights adoption barriers, including data
limitations, talent shortages, and governance challenges, while suggesting strategies for managers and
policymakers to maximize benefits while addressing risks.
Keywords: Artificial Intelligence, Business Innovation, Digital Transformation.
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