From algorithms to invention: AI's impact on corporate innovation output and efficiency
Quarterly Review of Economics and Finance, vol.104, 2025 (SSCI, Scopus)
- Publication Type: Article / Article
- Volume: 104
- Publication Date: 2025
- Doi Number: 10.1016/j.qref.2025.102042
- Journal Name: Quarterly Review of Economics and Finance
- Journal Indexes: Social Sciences Citation Index (SSCI), Scopus, Periodicals Index Online, ABI/INFORM, Business Source Elite, Business Source Premier, EconLit, Public Affairs Index
- Keywords: Artificial intelligence, Corporate innovation, Corporate strategy, Data assetization, Supply‑chain diversification
- Open Archive Collection: Article
- Azerbaijan State University of Economics (UNEC) Affiliated: Yes
Abstract
This paper explores how artificial intelligence (AI) drives corporate innovation. Using a procurement‑based AI adoption index, patent records, and supply‑chain data from 4004 A-share firms over 2011–2023, we find that greater AI adoption significantly increases the output and efficiency of firms' innovation. We propose a dual‑channel model in which AI enhances knowledge creation and reuse (knowledge orchestration) and transforms data into actionable environmental assets (data assetization). Heterogeneity analysis reveals that large incumbents and growth‑stage firms leverage AI most effectively for innovation outputs and efficiency. Further analysis shows that AI-driven innovation is amplified in firms with executives who have information technology backgrounds, and that highly innovative firms diversify their supply chain to reduce resource risk. Our results demonstrate AI's potential to advance corporate innovation. We conclude with policy recommendations for municipal planners and corporate strategists to enhance firms’ competitive advantage and promote the development of AI.