Artificial intelligence (AI) adoption is reshaping how digital companies create, deliver, and capture value, yet its effect on business model innovation (BMI) is neither automatic nor uniform. This study aims to explain the mechanisms through which AI adoption drives BMI in digital companies. Using a conceptual literature review designed as a theory synthesis, the study integrates 23 peer-reviewed articles published between 2017 and 2024 on AI capability, business model innovation, digital transformation, and dynamic capabilities. The synthesis shows that AI affects all four business model dimensions: it personalizes the value proposition, combines automation and augmentation in value creation, automates and scales value delivery, and opens data-driven revenue and cost mechanisms for value capture. These effects materialize when AI adoption is converted into AI capability and orchestrated through sensing, seizing, and reconfiguring capabilities, whereas weak data governance, skill gaps, and micro-level organizational barriers can inhibit them. The study proposes an integrative framework and five research propositions linking AI adoption, AI capability, dynamic capabilities, and BMI. Digital companies are advised to evaluate AI investments by their contribution to business model change and to build data governance, talent, and cross-functional coordination alongside the technology.
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