How do innovations generated by AI differ qualitatively from traditional innovations and what are the consequences for a firm's competitive positioning?

Artificial intelligence (AI) is transforming how firms innovate, offering new ways to enhance decision-making, accelerate processes, and personalize customer experiences. While prior research has emphasized the quantitative benefits of AI—such as efficiency gains and cost reduction—this study focuses on the qualitative differences between AI-led and traditional innovation. Based on 35 expert interviews and 20 cross-sector case studies, we identify five qualitative dimensions distinguishing AI-led from traditional innovation: speed, scalability, efficiency, personalization, and creativity. The findings reveal that innovation is increasingly shaped by hybrid systems combining AI capabilities with human judgment and imagination. To conceptualize this transformation, we propose a sociotechnical hybrid innovation model, framing AI innovation as an outcome of interaction between technical and human subsystems. This model advances innovation theory by emphasizing co-creativity and ethical integration, and offers practical guidance for firms seeking to balance automation with human-centered design. The study contributes to both strategic management and innovation literature by illustrating how AI not only augments existing processes, but redefines the logic of innovation itself.