Artificial Intelligence, Creative Destruction and Sustainable Industrial Growth: A Schumpeterian Framework for the Digital Economy

Abstract

Artificial Intelligence (AI) is rapidly transforming industries and organizational structures, representing a new wave of Schumpeterian creative destruction. While AI is recognized as a driver of innovation and productivity, research remains fragmented across productivity, business model innovation, labour markets, and innovation ecosystems. Consequently, the mechanisms through which AI contributes to sustainable industrial growth remain theoretically disconnected. This study develops a Schumpeterian conceptual framework explaining how AI, as a General Purpose Technology (GPT), drives sustainable industrial growth through technological innovation, organizational adaptation, and institutional evolution. Drawing upon Schumpeterian innovation theory, evolutionary economics, GPT theory, dynamic capabilities, business model innovation, and innovation ecosystems, the study synthesizes existing knowledge to identify how AI reshapes industrial systems and competitiveness. The framework integrates four reinforcing dimensions: productivity enhancement, business model innovation, labour market restructuring, and ecosystem reconfiguration. These mechanisms interact through feedback that reshapes firms, industries, and innovation systems. Sustainable industrial growth emerges not from AI adoption alone, but from interactions among technological capabilities, organizational transformation, human capital development, and collaborative innovation ecosystems. Investments in digital infrastructure, absorptive capacity, workforce reskilling, institutional quality, and governance are essential for resilient AI-driven transformation. By extending Schumpeterian innovation theory to the AI era, this study contributes an integrated framework linking AI-driven innovation, creative destruction, and sustainable industrial growth, providing a foundation for empirical research and policy development.