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Looking in the rear-view mirror: Evidence from artificial intelligence investment, labour market conditions and firm growth.

Salia, Samuel, Tingbani, Ishmael, Hartwell, Christopher and Alhassan, Yahaya (2024) Looking in the rear-view mirror: Evidence from artificial intelligence investment, labour market conditions and firm growth. International Journal of Finance and Economics. ISSN 1076-9307

Item Type: Article

Abstract

The lure of artificial intelligence (AI) has increased with its accessibility and sophistication, leading firms to explore the use of AI as a way to increase productivity. This paper studies the impact of AI investment on firm growth and the sensitivity of this relationship to labour market conditions. Using the generalised method of moments (GMM) estimation on 1,950 unique American firms over 1996-2016, we show that a 10% increase in AI investment leads to an increase in firm growth by 0.04%. However, this result is highly sensitive to labour market conditions, as labour productivity can positively impact firm growth, but labour cost and labour share negatively influence firm growth. These results offer original insights into an essential channel via which investment in AI may mediate firm growth.

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More Information

Depositing User: Yahaya Alhassan

Identifiers

Item ID: 17267
Identification Number: https://doi.org/10.1002/ijfe.2945
ISSN: 1076-9307
URI: http://sure.sunderland.ac.uk/id/eprint/17267
Official URL: https://onlinelibrary.wiley.com/doi/full/10.1002/i...

Users with ORCIDS

ORCID for Samuel Salia: ORCID iD orcid.org/0000-0002-5651-5009
ORCID for Yahaya Alhassan: ORCID iD orcid.org/0000-0001-6700-635X

Catalogue record

Date Deposited: 29 Jan 2024 09:37
Last Modified: 29 Apr 2024 10:45

Contributors

Author: Samuel Salia ORCID iD
Author: Yahaya Alhassan ORCID iD
Author: Ishmael Tingbani
Author: Christopher Hartwell

University Divisions

University of Sunderland in London

Subjects

Business and Management > Accounting and Finance
Business and Management

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