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Artificial intelligence and radical innovation: an opportunity for all companies?

Author

Listed:
  • Nils Grashof

    (Friedrich Schiller University Jena)

  • Alexander Kopka

    (University of Bremen)

Abstract

Artificial intelligence (AI) is often seen as a key technology for future economic growth. However, its concrete effects on the emergence of radical innovations and the associated socio-economic impacts, through increasing divergence between smaller and larger firms, have not yet been systematically researched. This paper addresses this by investigating the extent to which AI-related knowledge influences the emergence of radical innovations and differentiates between SMEs and large firms. Based on a unique dataset of European firms combining firm-level data with patent data, we find a nuanced influence from AI. While AI applications assert a positive influence, AI techniques negatively influence the emergence of radical innovations. Being an SME significantly moderates these effects. Larger firms gain from AI applications, whereas SMEs gain from AI techniques. Therefore, AI knowledge in itself is not a general answer to increase the likelihood of creating radical innovation. Instead, a more differentiated view on AI is needed.

Suggested Citation

  • Nils Grashof & Alexander Kopka, 2023. "Artificial intelligence and radical innovation: an opportunity for all companies?," Small Business Economics, Springer, vol. 61(2), pages 771-797, August.
    • Handle: RePEc:kap:sbusec:v:61:y:2023:i:2:d:10.1007_s11187-022-00698-3
    DOI: 10.1007/s11187-022-00698-3
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    More about this item

    Keywords

    Radical innovations; Divergence; AI; Artificial intelligence; Firm level;
    All these keywords.

    JEL classification:

    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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