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

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.

Navigating the AI Landscape: Sectoral Insights on Integration and Impact

“…Nonetheless, all is different from employment rates and artificial intelligence, according to Grashof and Kopka (2023), who measure the risks of artificial intelligence in terms of benefiting a given labor force segment compared to others. Grashof and Kopka (2023) begin their assessment of AI risks by looking at the layoffs experienced since the inception of Engineering International, Volume 12, No. 1 (2024) artificial intelligence on factory floors and plant machinery as more workers become replaced with no alternative solutions.…”

“…Worker replacement continues to rise across businesses in New York, according to Grashof and Kopka (2023), because artificial intelligence is taking over these roles and working more efficiently than humans. Despite the low rate of technological displacement, wage-level employees in production firms and plant machinery have had their wages reduced significantly, leaving them in a dire economic situation.…”

What technologies are at the core of AI?

“…Early analysis by Tseng and Ting (2013 [18]) focuses on AI fields related to problem reasoning and solving, machine learning, network structure, and knowledge processing (of the single technological class "Data Processing: AI") to examine their trends in the US through patent quantity and quality measures. Lately, the literature moved beyond the sole use of technological classes and started exploiting keywords sometimes in combination with more advanced machine learning techniques to further identify AI-related innovation, e.g., by parsing patent text (Damioli, Van Roy and Vertesy, 2021 [19]; Giczy, Pairolero and Toole, 2021 [20]). In fact, the use of keywords and text mining techniques are increasingly used to capture patents referring to technologies highly relevant to AI (De Prato and Cardona, 2019 [21]; European Commission.…”

“…This contrasts with the continued growth of AI innovations observed when relying on keywords, such as natural language processing, robotics, or neural networks (reflecting recent progress in dominant subject areas) or WIPO patents. While the USPTO classifies AI innovations using a trained ML classifier on patent text and citations (Giczy, Pairolero and Toole, 2021 [20]), WIPO combines a set of keywords with computer-specific technological classification codes (WIPO, 2019 [24]).…”

How Does Manufacturing Intelligentization Influence Innovation in China from a Nonlinear Perspective and Economic Servitization Background?

“…Truong and Papagiannidis (2022) believe that artificial intelligence may acquire some creative ability by combining data in new ways to produce novel content, but whether it positively impacts disruptive innovation is unclear [18]. Grashof and Kopka (2022) further found that large companies increase radical innovation from artificial intelligence applications, while small and medium-sized enterprises use artificial intelligence technology as a general-purpose technology to promote fundamental innovation [19]. Rammer et al (2022) also found the prominent role of AI in world-first innovations [20].…”