Artificial intelligence: how networks are controlling firms’ AI expertise

Working closely with an international network of scientists, the KOF Innovation Group is researching how firms, performance and markets are changing as a result of the digital transformation. Particular attention is being paid to artificial intelligence (AI). To find out how firms are using AI, the researchers have trained a transformer language model. To do so, they used text data from over 1.1 million websites and created a hyperlink network of more than 380,000 firms across Germany, Austria and Switzerland.

The results of the sample show that 2.2 per cent of firms have in-depth knowledge of AI, which is already having an impact on their business activities. AI is deeply embedded in some sectors such as ICT services, engineering, retail and wholesale.

The findings of this analysis show that the introduction of AI is associated with three significant channels of epidemic effects. Firstly, the location of the firm plays a role, especially if it is located in an industrial and/or regional hotspot associated with the production of AI expertise. This exposes the firm to a high degree of indirect pressure, which can potentially lead to a ‘follower’ adoption approach.

Secondly, the firm’s integration into the AI knowledge network affects further dissemination. The more closed the system of AI users is, the less likely it is to spread further, the authors of the study argue.

Thirdly, the existence of strong direct links between firms increases the probability of AI knowledge transfers. However, the effectiveness of the direct transfer of AI knowledge depends on the cognitive proximity of partners, the strength of the link and the depth of the expertise shared. Strong direct links between firms seem to transcend geographical distance and could thus be a potential focus for policy measures to encourage diffusion beyond local clusters.