--- title: "Artificial intelligence, firm growth, and product innovation · AI Fault Line" url: https://aifaultline.com/research/p/doi-10-1016-j-jfineco-2023-103745/ description: "AI Fault Line is a neutral, evidence-cited field guide to why experts looking at the same developments disagree about AI's effect on productivity, jobs, inequality, regulation and the pace of change." --- [Research](https://aifaultline.com/research/) # Artificial intelligence, firm growth, and product innovation Tania Babina, Anastassia Fedyk, Alex Xi He, James Hodson · Journal of Financial Economics · 23 Nov 2023 [Read original source](https://doi.org/10.1016/j.jfineco.2023.103745) Open access Where this sits in the debate - [Will AI actually boost productivity and growth?](https://aifaultline.com/debate/productivity/) · its finding supports the claim ([why studies differ](https://aifaultline.com/debate/productivity/#why)) - [Will AI destroy more jobs than it creates?](https://aifaultline.com/debate/jobs/) Direction of the finding as read from the abstract by an AI model ([AI-written](https://aifaultline.com/about/)). ## Abstract 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. ## About this publication **Leading field journal.** A leading journal in economics or a neighbouring field (on the Tinbergen Institute’s A list or near the top of the RePEc ranking), or a top-rated computer-science venue. Placed by: Tinbergen Institute A list. [How sources are ranked](https://aifaultline.com/about/#source-ranking). Published 2023 (35 months ago) Citations 1467 (OpenAlex) ## Citations in context [Chart: 1467 citations, cohort median 397.5] 1467 citations — 100th percentile among the 8 indexed papers from 2023 in this collection. Citation counts favor older papers; this compares only same-year papers here, not the whole literature. [Chart: published 2023] □ added to this collection in 2026. author affiliation matches seed institutions columbia university, university of california, university of maryland — part of why this paper is in the collection. ## More on this topic Related by theme, not necessarily by method or conclusion. - [The Effects of Generative AI on High Skilled Work: Evidence from Three Field Experiments with Software Developers](https://aifaultline.com/research/p/doi-10-2139-ssrn-4945566/) SSRN · 2024 - [GPTs are GPTs: An Early Look at the Labor Market Impact Potential of Large Language Models](https://aifaultline.com/research/p/doi-10-48550-arxiv-2303-10130/) arXiv · 2023 - [Extending “GPTs Are GPTs” to Firms](https://aifaultline.com/research/p/doi-10-1257-pandp-20251045/) AEA Papers and Proceedings · 2025 - [New Frontiers: The Origins and Content of New Work, 1940–2018](https://aifaultline.com/research/p/doi-10-1093-qje-qjae008/) The Quarterly Journal of Economics · 2024 Overview assembled automatically from collected metadata. [How this site is built](https://aifaultline.com/about/).