Artificial intelligence, firm growth, and product 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.

Automated summary

This study examines the use and economic impact of AI technologies, measuring firm-level AI investments using employee resumes. The findings show a significant increase in AI investments across industries. Companies investing in AI experience higher growth in sales, employment, and market valuations, primarily driven by increased product innovation. The growth powered by AI is concentrated among larger firms and is associated with higher industry concentration.