Unpacking the Inverted U-shape between Regional AI and Business Performance

Ren Lu, Fei Zheng, Shan-Na Ma and Ruilin Yang

International Journal of the Economics of Business, 2024, vol. 31, issue 1, 49-70

Abstract: This study examines how regional artificial intelligence (AI) influences firms’ business performance from the viewpoint of economic geography. We employ the instrumental variable method to analyze 3633 American listed companies. We find the “regional AI and business performance” relationship appears in an inverted U-shape. By applying the plausible instrumental variable method, our robustness check suggests that our findings are reliable. Theoretically, our paper enriches current regional AI studies with firm-level evidence; practically, our paper sheds light on how to make firm location decisions in the AI era.

Date: 2024
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DOI: 10.1080/13571516.2023.2271755

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