From Technological Enablement to Value Co-Creation: How AI Capability Is Linked to Business Model Innovation in Digital Firms

Despite substantial AI technology investment, many firms fail to translate isolated AI applications into integrated capabilities that deliver strategic returns and drive business model changes. Grounded in service-dominant logic (SDL), this study proposes and empirically tests a theoretical framework that positions AI capability (AIC) as a key antecedent in the nomological network of business model innovation (BMI). Drawing on a three-wave, two-week-interval longitudinal survey of 193 Chinese digital-intensive firms across IT, technical services, and digital leasing industries, and employing PLS-SEM, we examine associations among focal constructs, specifically, the mediating role of customer responsiveness (CR) and the moderating effect of digital organizational culture (DOC). This design mitigates common method bias and establishes temporal causal ordering. Empirical results indicate that AIC positively relates to BMI both directly and indirectly through CR, and that DOC significantly enhances the indirect effect of AIC on BMI via CR, particularly under high levels of AI-enabled sensing and interpretation. However, causal inference is limited by the cross-sectional nature of the data and self-reported measures. This study makes three key theoretical contributions. First, we identify CR as a market-oriented mechanism linking AIC to BMI, shifting focus from prior internal efficiency-focused mechanisms to customer-centric value co-creation. Second, we extend SDL to the AI context by clarifying how DOC shapes the strategic transformation of ambiguous probabilistic AI outputs into market-oriented actions. Third, we introduce DOC as an internal boundary condition for AIC, complementing prior research on external environmental moderators. These findings provide actionable guidance for managers seeking to unlock the strategic value of AI investments. Findings reflect statistical associations rather than confirmed causal effects, and results are based on perceptual survey data from Chinese digital firms.