Gen-AI’s effects on new value propositions in business model innovation: Evidence from information technology industry

Dequn Teng, Chen Ye and Veronica Martinez

Technovation, 2025, vol. 143, issue C

Abstract: Generative AI (Gen-AI) with its evolving natural language capabilities is dramatically changing the way that businesses operate and customers consume their products and services. While existing literature discusses Gen-AI’s impact on computer science and engineering, its adoption significantly influences business models across various industries. This paper focuses on how Gen-AI affects new value propositions within business model innovation (BMI). The qualitative research method is adopted in this research. The data is collected and analyzed through 32 semi-structured interviews and archival sources. The study identifies five approaches — knowledge querying-based cloud solutions, content creation, AI agents, foundation models, and upstream industry chain infrastructure — that Gen-AI affects new value propositions in BMI. This research introduces empirical evidence from the information technology (IT) industry, broadening the contextual boundaries of Gen-AI’s new value propositions in BMI. The study advances beyond isolated mechanisms, providing a quadrant view and process map to illustrate the interrelated dynamic effects of Gen-AI’s new value propositions in both radical and incremental BMI.

Keywords: Generative AI; Value proposition; Business model innovation; Information technology (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:techno:v:143:y:2025:i:c:s0166497225000239

DOI: 10.1016/j.technovation.2025.103191

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