The Impact of Artificial Intelligence (AI) Capability on Service Innovation in the Public Sector of Malaysia: A Proposed Conceptual Model

Abstract

The integration of AI into the public sector has garnered attention for its potential to enhance service innovation, yet limited research has focused on this context, especially within government institutions. This study aims to bridge that gap by proposing a conceptual model to examine the impact of AI capability on public service innovation. Additionally, it explores how workforce agility moderates this relationship, positing that AI alone is insufficient to drive innovation unless accompanied by an adaptable and responsive workforce. By focusing on the Malaysian public sector, where digital transformation initiatives are in progress, this research is timely. The methodology involves developing a framework to empirically test the relationships between AI capabilities and service innovation, with workforce agility as a moderating factor. The study concludes that workforce agility is pivotal for maximizing AI's potential in public service contexts, where unique challenges such as resource limitations and bureaucratic rigidity exist. Future research can benefit from this model by further exploring how AI investments, coupled with a dynamic workforce, can improve public service delivery. Recommendations are provided for policymakers to prioritize workforce adaptability in AI-driven innovations.