How do incumbents use AI technologies to strategically renew their innovation portfolios?

The strategic use of Artificial Intelligence (AI) to enhance firms' innovation and drive sector-specific technological progress remains underexplored. This study proposes a typology of AI-based inventions, distinguishing between Discontinuous Strategic Renewal Inventions ( DSRI ) that initiate new technological directions, Follow-on DSRI that extend developments along those new paths, and Continuous Strategic Renewal Inventions ( CSRI ) that augment existing innovation portfolios. Focusing on the agricultural sector, we analyse a dataset of 14,400 patents from incumbents and new entrants that have leveraged their expertise to integrate AI technologies into their innovation strategies. Using negative binomial regression, we investigate the impact of these AI invention types on strategic renewal efforts. Our results underscore the pivotal role of DSRI , particularly Follow-on DSRI , in driving technological advancement. Contrary to prevailing assumptions, we find that the benefits of strategically implementing AI vary markedly between industries, with traditional agricultural firms typically making greater gains than entrants from the electronics or machinery sectors. The study underscores the strategic imperative for old and new players in the market to persistently explore disruptive AI technologies to unlock new technological avenues and competitive advantages. • A taxonomy for AI usages in strategic renewal • Taxonomy tested in the agriculture industry's strategic renewal context • Discontinuous renewal has stronger impact on future innovations than continuous. • Following discontinuous strategic renewal amplifies impacts on future inventions. • AI-based invention value varies by industry, favoring (local) incumbents.