The Impacts of Artificial Intelligence on Business Innovation: A Comprehensive Review of Applications, Organizational Challenges, and Ethical Considerations

This review synthesizes current knowledge on the transformative impacts of artificial intelligence (AI)—computational systems capable of performing tasks requiring human-like reasoning—on business innovation. It addresses the potential of AI to reshape strategies, operations, and value creation across various industries. Key themes include AI-driven business model innovation, human–AI collaboration, ethical governance, operational efficiency, customer experience personalization, organizational capability development, and adoption disparities. AI enables scalable product development, personalized service delivery, and data-driven strategic decisions. Successful implementations hinge on overcoming technical, cultural, and ethical barriers, with ethical AI adoption enhancing consumer trust and competitiveness, positioning responsible innovation as a strategic imperative. For practitioners, this review offers evidence-based frameworks for aligning AI with business objectives. For academics, it identifies research frontiers, including longitudinal impacts, context-specific roadmaps for small- and medium-sized enterprises, and sustainable innovation pathways. This review conceptualizes AI as a driver of systemic organizational transformation, requiring continuous learning, ethical foresight, and strategic ability for competitive advantage.