The AI adoption paradox: institutional pressures vs. strategic distinctiveness in entrepreneurial ventures

Purpose This study aims to explain why entrepreneurial ventures adopt artificial intelligence, whether to conform to institutional expectations or to compete and how the depth of adoption translates into distinctive, defensible capabilities. Design/methodology/approach This conceptual paper theorises an AI adoption continuum framework comprising three stages: symbolic, process-embedded and architectural. The framework integrates institutional pressures, resource endowments and dynamic capabilities to explain ventures’ positioning along this continuum. Institutional pressures establish a legitimacy floor. Resource-capability configurations determine a differentiation ceiling. Where a venture positions itself between these two constraints is what determines whether its AI adoption yields distinctive capabilities or only competitive parity. Findings AI adoption in entrepreneurial ventures is better understood as strategic positioning than as a binary decision. Symbolic adoption can be rational when legitimacy demands are high and resources are constrained, but deeper adoption does not automatically yield advantage. Ventures with weak DC often stagnate despite strong resource endowments and generic AI implementations produce competitive parity regardless of adoption depth. These patterns help explain why ventures facing similar institutional pressures converge on baseline adoption rates while diverging in competitive outcomes. Originality/value The study advances information systems adoption theory in two ways. It offers a reconciliation of institutional conformity and competitive strategy within a single framework, through a floor-ceiling-conversion architecture that treats legitimacy and differentiation as simultaneous rather than sequential concerns. It also reframes AI adoption stages as strategic positions rather than developmental phases, which helps account for why ventures with similar adoption profiles can develop different capabilities.