Digital Twin-Enabled Business Innovation Within and Beyond the Firm: A Systematic Literature Review and Innovation Typology

Digital twins (DTs) enable innovation across industries. While business discourse promotes DTs as catalysts for new business models, the academic literature lacks a cohesive understanding of how DTs enable different types of business innovation and what distinguishes cross-organizational innovation from firm-level innovation. This paper conducts a systematic literature review of 60 articles, analyzing 25 business innovation cases through a typology derived from established frameworks extended to address cross-organizational innovation. Process innovation appeared in nearly all the cases (24 of 25), confirming DTs’ fundamental role as operational technology. Product innovation manifests in two patterns: the twin as offering and the twin enabling offerings. paradigm innovation appeared in over half of cases, taking context-specific forms including business model transformation, governance mechanisms, and organizational restructuring. Beyond-firm innovation clusters in healthcare, smart cities, sustainability transitions, and energy systems where cross-organizational coordination is required. Beyond-firm cases consistently co-occur with paradigm innovation and exhibit higher innovation type diversity than single-firm cases, suggesting that cross-boundary coordination requires accompanying organizational restructuring. The study contributes a Digital Twin Innovation Typology extending established frameworks to capture innovation no single firm can achieve alone. Practical implications address how domain context shapes innovation potential and coordination mechanisms required for beyond-firm innovation.