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The Impact of AI and Innovation on MNEs’ Product Market and Financial Performance

Author

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  • Shumi Akhtar

    (Finance Discipline, Business School, University of Sydney, Building H69, Sydney, NSW 2006, Australia)

  • Farida Akhtar

    (Department of Actuarial Studies and Business Analytics, Macquarie Business School, Macquarie University, Balaclava Road, North Ryde, Sydney, NSW 2109, Australia)

  • Jiongcheng Lu

    (Finance Discipline, Business School, University of Sydney, Building H69, Sydney, NSW 2006, Australia)

Abstract

This study empirically examines how artificial intelligence (AI) adoption and innovation shape product market dynamics and financial performance in multinational enterprises (MNEs) using a global firm sample over 1980–2023. We construct an unbalanced panel dataset by integrating textual analysis, manual verification, and data merged from nine major databases, identifying 411 AI-classified MNEs and a matched 411 non-AI MNEs. Using panel regression models with industry and year fixed effects, we test how AI intensity (the proportion of AI-related products/assets) and R&D—individually and jointly—affect product portfolio breadth and change, market share, industry concentration (HHI), and profitability. The results show that greater AI integration is associated with higher product diversification and a stronger competitive positioning, and that the interaction of AI and R&D is particularly important for explaining market share, concentration, and profitability differences across AI and non-AI MNEs. Overall, the findings highlight the strategic value of aligning AI adoption with innovation investments to strengthen product market outcomes and financial performance in global markets.

Suggested Citation

  • Shumi Akhtar & Farida Akhtar & Jiongcheng Lu, 2026. "The Impact of AI and Innovation on MNEs’ Product Market and Financial Performance," JRFM, MDPI, vol. 19(2), pages 1-35, February.
    • Handle: RePEc:gam:jjrfmx:v:19:y:2026:i:2:p:124-:d:1858468
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