Artificial Intelligence capabilities in Digital Servitization: Identifying digital opportunities for different service types

The advancement of digital technologies and the pursuit of higher-value solutions have driven companies to expand their portfolios with smart products and digital services, resulting in the innovation known as 'digital servitization.' This concept merges servitization —integrating services with products— and digitization —enhancing operations through digital technologies. While previous research has examined digital servitization and smart technologies, a gap remains in understanding how Artificial Intelligence (AI) specifically supports various types of digital servitization across both back-office and front-office activities. This study addresses this gap by investigating how AI enhances digital servitization through six case studies of companies implementing AI-driven servitized solutions. Adopting a capability theoretical perspective, we analyze the application of AI in both back-office and front-office activities for the delivery of base, intermediate, and advanced services. Our findings reveal that AI's role varies by service type, affecting customer interactions and operational tasks differently. We present a theoretical framework with five propositions that elucidate how AI capabilities enhance digital servitization. This framework gives scholars a refined understanding of AI's roles beyond the generalized black box approach and offers practitioners practical insights on leveraging AI for digital transformation.