Unlocking Radical Innovation Through AI Orientation: The Roles of Knowledge Search, Knowledge Recombination Creation, and CEO Openness

Artificial intelligence (AI) is crucial for driving radical innovation, which is key for firms to gain and maintain long-term competitive advantage. However, relatively little is known about how radical innovation is shaped by strategic direction regarding AI, and the perspective from when this innovation takes place. Drawing on the knowledge-based view and the upper echelons theory, this study delves into how and when AI orientation impacts radical innovation. Based on data from 510 Chinese manufacturing listed firms over the period 2013–2023, our study demonstrates a significant positive effect of AI orientation on radical innovation, and provides evidence consistent with positive indirect associations through knowledge search and knowledge recombination creation. Our findings also provide evidence that CEO openness may strengthen the positive relationships of AI orientation with radical innovation and knowledge search. Further, our findings make contributions to strategic orientation and technological innovation literature, and offer implications for practice in AI-innovation research by stressing the influence of knowledge and CEO personality in radical innovation domains.