Artificial intelligence pays off when businesses go all in
In a new paper, Choi and his co-authors find that firms need to be ready to make a significant investment in AI to see any gains, because limited AI adoption doesn’t contribute to revenue growth. Only when firms increase their intensity of AI adoption to at least 25% — meaning that they are using a quarter of the AI tools currently available to them — do growth rates pick up and investments in AI start to pay off.
Execution, Organization, Vision & Strategy
Management & Leadership
Research & Reports
2023-05-22 12:28 Weblink Research & Reports
This paper examines how high-tech venture performance varies with AI-adoption intensity. We find that firm revenue increases only after sufficient investment in AI, and the benefits of AI adoption are greater at firms that also invest in complementary technologies and pursue internal R&D strategy. Specifically, AI adoption at low levels does not suggest significant revenue growth, but, as the intensity of AI adoption increases revenue growth occurs. We find that such performance gains from adoption is larger among firms that invest in complementary technologies such as cloud computing and database systems. Moreover, the positive relationship between AI adoption intensity and revenue growth is stronger among firms that pursue a more exclusive R&D strategy specific to the venture.