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The impact of generative artificial intelligence on innovation: Evidence from software products.

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Title: The impact of generative artificial intelligence on innovation: Evidence from software products.
Authors: Yılmaz, Erdem Doğukan1 (AUTHOR) erdemdogukan.yilmaz@insead.edu, Meyer, Tim2 (AUTHOR)
Source: Strategic Management Journal (John Wiley & Sons, Inc.). Aug2026, p1. 50p. 14 Illustrations.
Subject Terms: *Generative artificial intelligence, *Computer software development, *Technological innovations, *New product development, *Computer software, *Diffusion of innovations
Reviews & Products: Mozilla Firefox (Computer software)
Abstract: Research Summary Managerial Summary We study the impact of generative artificial intelligence (GAI) tools on product‐level innovation outcomes in the context of software products. Specifically, we illustrate how GAI can alter the direction of innovation by shifting the activities of developers away from generational innovation and toward original innovation, which may be new to the market but not necessarily more novel than previous innovations. We argue that this shift is driven by GAI's ability to facilitate tasks in both the ideation and implementation of software products, which enables some developers to create software products that were previously beyond their reach, while allowing others to reallocate their effort with respect to different activities. Our analyses in the context of browser add‐ons provide empirical evidence for these arguments. We discuss implications for innovation research and the generalizability of our findings to other domains.Generative AI tools are changing how organizations innovate. Studying the Firefox browser add‐on ecosystem, we find that after ChatGPT's release, the number of new add‐ons increased by 34%, driven by both existing and first‐time developers. However, developers simultaneously reduced improvements to their existing add‐ons by 20%, redirecting effort toward new projects. While new add‐ons drew on a broader set of knowledge domains, they were not substantially different from what already existed. This suggests that generative AI helps developers efficiently combine existing knowledge rather than produce truly novel ideas. For platform managers and business leaders, these findings highlight that although Generative AI can democratize product creation and accelerate new product launches, it may require new strategies to maintain product quality and encourage genuine novelty. [ABSTRACT FROM AUTHOR]
Copyright of Strategic Management Journal (John Wiley & Sons, Inc.) is the property of John Wiley & Sons, Inc. and its content may not be copied or emailed to multiple sites without the copyright holder's express written permission. Additionally, content may not be used with any artificial intelligence tools or machine learning technologies. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)
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  Data: The impact of generative artificial intelligence on innovation: Evidence from software products.
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  Data: *<searchLink fieldCode="DE" term="%22Generative+artificial+intelligence%22">Generative artificial intelligence</searchLink><br />*<searchLink fieldCode="DE" term="%22Computer+software+development%22">Computer software development</searchLink><br />*<searchLink fieldCode="DE" term="%22Technological+innovations%22">Technological innovations</searchLink><br />*<searchLink fieldCode="DE" term="%22New+product+development%22">New product development</searchLink><br />*<searchLink fieldCode="DE" term="%22Computer+software%22">Computer software</searchLink><br />*<searchLink fieldCode="DE" term="%22Diffusion+of+innovations%22">Diffusion of innovations</searchLink>
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  Data: Research Summary Managerial Summary We study the impact of generative artificial intelligence (GAI) tools on product‐level innovation outcomes in the context of software products. Specifically, we illustrate how GAI can alter the direction of innovation by shifting the activities of developers away from generational innovation and toward original innovation, which may be new to the market but not necessarily more novel than previous innovations. We argue that this shift is driven by GAI's ability to facilitate tasks in both the ideation and implementation of software products, which enables some developers to create software products that were previously beyond their reach, while allowing others to reallocate their effort with respect to different activities. Our analyses in the context of browser add‐ons provide empirical evidence for these arguments. We discuss implications for innovation research and the generalizability of our findings to other domains.Generative AI tools are changing how organizations innovate. Studying the Firefox browser add‐on ecosystem, we find that after ChatGPT's release, the number of new add‐ons increased by 34%, driven by both existing and first‐time developers. However, developers simultaneously reduced improvements to their existing add‐ons by 20%, redirecting effort toward new projects. While new add‐ons drew on a broader set of knowledge domains, they were not substantially different from what already existed. This suggests that generative AI helps developers efficiently combine existing knowledge rather than produce truly novel ideas. For platform managers and business leaders, these findings highlight that although Generative AI can democratize product creation and accelerate new product launches, it may require new strategies to maintain product quality and encourage genuine novelty. [ABSTRACT FROM AUTHOR]
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  Data: <i>Copyright of Strategic Management Journal (John Wiley & Sons, Inc.) is the property of John Wiley & Sons, Inc. and its content may not be copied or emailed to multiple sites without the copyright holder's express written permission. Additionally, content may not be used with any artificial intelligence tools or machine learning technologies. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract.</i> (Copyright applies to all Abstracts.)
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        Text: English
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      – SubjectFull: Generative artificial intelligence
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      – SubjectFull: Computer software development
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      – SubjectFull: Technological innovations
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      – SubjectFull: New product development
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      – SubjectFull: Computer software
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      – SubjectFull: Diffusion of innovations
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      – SubjectFull: Mozilla Firefox (Computer software)
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      – TitleFull: The impact of generative artificial intelligence on innovation: Evidence from software products.
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              M: 08
              Text: Aug2026
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              Y: 2026
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