From Tool to Dynamic Capability: How Generative AI Reshapes Digital Marketing Strategy and Sustains Competitive Advantage

Abstract

The widespread adoption of Generative Artificial Intelligence (GenAI) is significantly transforming digital marketing practices across a range of industries. Despite this rapid development, existing studies have predominantly approached GenAI as a tactical tool rather than recognizing it as a strategic organizational capability. Building on Dynamic Capability Theory (Teece, 2007; Helfat & Peteraf, 2003), this qualitative research investigates how organizations convert GenAI from a functional resource into a strategic capability that supports long-term competitive advantage. To explore this transformation, a multiple-case study was carried out involving 18 B2C culinary firms that have integrated GenAI into their digital marketing activities. By applying the Gioia methodology (Gioia et al., 2013), the study uncovers a four-stage capability development process: AI Sensing, AI Seizing, AI Transforming, and the Institutionalization of AI-enabled Value Co-Creation. The findings reveal that sustainable competitive advantage does not stem solely from the adoption of technology, but from the extent to which GenAI is embedded within organizational processes through structured human–AI collaboration and effective governance systems. This study therefore conceptualizes Generative AI Capability as a socio-technical dynamic capability and contributes to the extension of Dynamic Capability Theory within the context of AI-driven marketing strategy.