Ethical AI in Service Innovation: Balancing Benefits and Risks in a Digital Age

The integration of artificial intelligence (AI) into service innovation has sparked significant technological advancements, reshaping various sectors. However, this transformative wave has raised ethical concerns regarding AI's role in service innovation within companies. AI-powered innovations have become indispensable in modern business strategies, enhancing customer experiences and operational efficiencies across diverse industries. Despite the potential benefits, academic research falls short in offering strategic insights for effectively leveraging AI-powered service innovation. Ethical considerations have emerged as a pivotal issue, necessitating a re-examination of responsible innovation practices. Ethical AI principles, emphasizing fairness, transparency, and accountability, are crucial for fostering trust among stakeholders. Institutional Theory provides a framework to understand how organizations respond to ethical expectations and regulatory frameworks surrounding AI deployment. This conceptual study aims to uncover insights into organizational responses to ethical AI deployment in service innovation through an institutional theory lens, thereby informing future research endeavors and industry practices in the dynamic landscape of AI-driven service innovation.