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The Diffusion of Artificial Intelligence Across Firms: Evidence from Europe

Author

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  • Garbers, Julio

    (LISER)

  • Gregory, Terry

    (LISER)

Abstract

We develop a novel firm-level indicator of Artificial Intelligence adoption in Europe (MAP-AI) by extracting information from more than three million firm websites in Belgium, France, Germany, and Luxembourg between 2016 and 2024 using a Large Language Model. The indicator captures realized AI use as publicly signaled by firms, rather than potential exposure, and distinguishes firms by their role in the AI ecosystem and the type of AI technologies employed. Validation against human-coded benchmarks and external data confirms high accuracy. We show that the share of AI-active firms increased from 1% in 2016 to 12% in 2024, with a marked acceleration after 2022. This growth reflects a structural shift toward widespread adoption and more integrated AI use, including generative AI. AI adoption is concentrated among larger, younger, knowledge-intensive firms in urban regions, with workforce skills emerging as a key driver. Foundational data skills are necessary for adoption, while specialized AI skills—such as machine learning and natural language processing—act as strong complements, highlighting the central role of human capital in AI diffusion.

Suggested Citation

  • Garbers, Julio & Gregory, Terry, 2026. "The Diffusion of Artificial Intelligence Across Firms: Evidence from Europe," IZA Discussion Papers 18434, IZA Network @ LISER.
    • Handle: RePEc:iza:izadps:dp18434
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    JEL classification:

    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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