Artificial Intelligence and Business Model Transformation in The Digital Economy

Abstract

Artificial intelligence has emerged as a transformative force in the digital economy, reshaping how firms compete, innovate, and create value. While many organizations adopt AI to improve operational efficiency, its broader implications for business model design remain under-theorized. This study aims to reconceptualize artificial intelligence as a structural driver of business model evolution rather than merely a technological enhancer. The research employs a qualitative, theory-building design grounded in conceptual synthesis. It integrates insights from business model theory, strategic management, innovation theory, and digital economics to develop a coherent analytical framework. Data were drawn from peer-reviewed academic literature and authoritative industry reports through a structured review process. Analytical dimensions focused on value proposition transformation, revenue architecture reconfiguration, cost structure dynamics, and firm–customer relationship evolution. The findings indicate that AI fundamentally transforms value creation by embedding predictive intelligence, enabling dynamic revenue models, reducing marginal costs through algorithmic scalability, and strengthening competitive positioning via data accumulation and continuous engagement. The study concludes that artificial intelligence operates as a structural foundation of modern business models, redefining the logic of value creation and competitive advantage in the digital economy. This research contributes to the field by bridging the conceptual gap between AI capability research and foundational business model theory, offering an integrated framework for understanding AI-driven strategic transformation.