Artificial intelligence, firm growth, and product innovation

Искусственный интеллект, рост фирм и продуктовые инновации
Anastassia Fedyk, James Hodson, Tania Babina, Alex Xi He
2023-11-23

artificial intelligencefirm growthfirm-level AI investmentsindustry concentrationproduct innovation
We study the use and economic impact of AI technologies. We propose a new measure of firm-level AI investments using employee resumes. Our measure reveals a stark increase in AI investments across sectors. AI-investing firms experience higher growth in sales, employment, and market valuations. This growth comes primarily through increased product innovation. Our results are robust to instrumenting AI investments using firms' exposure to universities' supply of AI graduates. AI-powered growth concentrates among larger firms and is associated with higher industry concentration. Our results highlight that new technologies like AI can contribute to growth and superstar firms through product innovation.
1
AI-associated firm growth occurs primarily through increased product innovation.
2
AI-driven growth is concentrated among larger firms and associated with greater industry concentration, contributing to superstar-firm dynamics.
3
Firms investing in AI experience higher growth in sales, employment, and market valuations.
4
Results remain robust when AI investment is instrumented using firms’ exposure to universities’ supply of AI graduates.
5
The study introduces a firm-level measure of AI investment based on employee resumes, revealing a sharp increase in AI investment across sectors.

AI-investing firms

The effects of AI investment on firm growth, product innovation, and industry concentration

Publication Details
Publication Date
2023-11-23
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Authors
Anastassia Fedyk
James Hodson
Tania Babina
Alex Xi He
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