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on Business Economics |
| By: | Ivan Yotzov; Jose Maria Barrero; Nicholas Bloom; Philip Bunn; Steven J. Davis; Kevin M. Foster; Aaron Jalca; Brent H. Meyer; Paul Mizen; Michael A. Navarrete; Pawel Smietanka; Gregory Thwaites; Ben Zhe Wang |
| Abstract: | We present the first representative international data on firm-level AI use. We survey almost 6000 CFOs, CEOs and executives from stratified firm samples across the US, UK, Germany and Australia. We find four key facts. First, around 70% of firms actively use AI, particularly younger, more productive firms. Second, while over two thirds of top executives regularly use AI, their average use is only 1.5 hours a week, with one quarter reporting no AI use. Third, firms report little impact of AI over the last 3 years, with over 80% of firms reporting no impact on either employment or productivity. Fourth, firms predict sizable impacts over the next 3 years, forecasting AI will boost productivity by 1.4%, increase output by 0.8% and cut employment by 0.7%. We also survey individual employees who predict a 0.5% increase in employment in the next 3 years as a result of AI. This contrast implies a sizable gap in expectations, with senior executives predicting reductions in employment from AI and employees predicting net job creation. |
| JEL: | E0 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34836 |
| By: | Francesco Androni (Gran Sasso Science Institute); Andrea Ascani (Gran Sasso Science Institute); Alberto Marzucchi (Gran Sasso Science Institute) |
| Abstract: | The phenomenon of zombie firms has been increasing through time in the last decades. Prior re search has extensively examined the role of zombie firms in credit misallocation and weak insolvency regimes However, limited attention is paid to how the competitive environment has influenced its surge. The study aims at linking the diffusion of zombie formation with the field of industrial dynam ics. The analysis focuses on whether the intensity of competition influences the diffusion of zombie f irms, by assessing competition forces such as firm entry and innovation intensity. We use micro aggregated data at the region-sector level to analyse the diffusion of zombie firms in Italy for the years from 2014 to 2020, and identify a substantive role of reallocation forces in driving the shares of zombie firms. Competition in the form of entry and, albeit more weakly, innovation intensity reduces the diffusion of zombie firms, ultimately showing that a decrease in competition intensity is part of the phenomenon. This research contributes to understanding the relationship between zombie firms and sluggish economic activity, describing further factors that affect their formation and persistence. |
| Keywords: | Zombie firms; competition; firm entry; innovation; industrial dynamics |
| JEL: | O33 O31 L25 R11 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:ahy:wpaper:wp65 |
| By: | Alexis Antoniades; Chuan He; Zheming Liang; Mingzhi Jimmy Xu |
| Abstract: | Early adoption of artificial intelligence (AI) reshaped how firms responded to market dynamics by enhancing data collection and analysis. Linking China's universe of customs shipments to millions of online job ads, we tracked AI hiring in sales, marketing, and analytics to build a firm-level proxy for non-production AI and map its exposure across products within firms. To structure our analysis, we introduce a model in which firms confront asymmetric information about heterogeneous consumer preferences and show that AI mitigates these frictions by sharpening firms' ability to learn demand patterns across markets. The model predicts — and the data confirm — that AI-intensive firms fine-tune their product mix and prices with greater precision: they are more likely to export, expand their product lines, and adjust market choices. Crucially, this refinement appears as narrower price dispersion but wider quantity dispersion across destinations — effects strongest for differentiated goods, larger firms, and sales to high-income economies. Together, the evidence shows that AI eases demand-side information frictions, allowing firms to optimize their global reach strategies. |
| Keywords: | artificial intelligence, export behavior, product differentiation |
| JEL: | F14 O14 J24 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12456 |
| By: | Talent Nesongano; Carol Newman; John Rand; Marvin Suesse |
| Abstract: | This paper investigates the extent to which the historical legacy of apartheid laws explains contemporary misallocation and firm productivity in South Africa. During the apartheid era (1948-1994), job reservations, closed-shop agreements, and minimum-wage policies were implemented to restrict occupational mobility for Black workers and to insulate White employees from competition. |
| Keywords: | South Africa, Apartheid, Discrimination, Misallocation, Labour, Firm productivity |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:unu:wpaper:wp-2026-15 |
| By: | Kuosmanen, Natalia; Kuosmanen, Timo; Zhou, Xun |
| Abstract: | Abstract A structural shift from fossil fuel-based energy systems to renewable, sustainable energy sources critically depends on research and development (R&D) activities at the firm-level. This study examines the contribution of R&D spillovers from other firms to greenhouse gas (GHG) emissions in Finnish energy-intensive manufacturing industries. We link firm-level GHG emissions to financial and innovation data for 230 firms in the pulp and paper, chemicals, non-metallic minerals, and basic metals industries over 2000–2019. We derive emissions-generating functions based on a directional distance function framework, and estimate them using shape-constrained semiparametric regression. Our key result is that R&D spillovers have a strong statistically significant association with the firm-level GHG emissions. However, the signs and magnitudes of the spillovers differ across industries. In the chemical industry, intra-industry R&D spillover is associated with lower emissions, whereas in the pulp and paper and the basic metals industries, intra-industry R&D spillover is associated with higher emissions. These results demonstrate that R&D spillovers do not self-evidently lower emissions, but can also contribute to higher emissions. Our findings also reveal an important channel of inter-industry R&D spillovers through material flows, highlighting the pivotal role of the chemical industry for the GHG abatement in the pulp and paper production and non-metallic minerals industry. |
| Keywords: | Carbon dioxide emissions, Environmental performance, Green productivity, Sustainability, Technology spillovers |
| JEL: | D24 O33 Q52 Q55 Q56 |
| Date: | 2026–02–23 |
| URL: | https://d.repec.org/n?u=RePEc:rif:wpaper:136 |
| By: | Aguirre, Emilie |
| Abstract: | Founders, employees, consumers, and even funders increasingly expect businesses to pursue social goals alongside financial performance. Yet even the most committed firms have found it difficult to maintain social performance over time. Scholars in economics, management, and law have put forth several explanations for this "mission drift, " including inappropriate governance, poor management, lack of genuine commitment, and threat of takeovers. Puzzlingly, research to date primarily focuses on later-stage firms, even though the events and decisions that take place in a firm's early stages can critically impact retention of its social performance. Drawing from over five years of qualitative field research at six firms, this Article argues that a company's early-stage financing can have lasting consequences for social performance. I find that the structure of VC - the most prestigious and coveted form of startup funding - shifts organizational focus toward prioritizing rapid growth and exit, implicitly crowding out firm social performance. I find this dynamic occurs even when VCs package themselves as "impact investors" committed to preserving social performance. This study underscores the need to reorient impact VC models and startup corporate governance to avoid losing sight of social aspirations. It also has implications for corporate law and finance more broadly, challenging whether the current legal system operates optimally to achieve efficiency, promote innovation, and serve societal goals. |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:cbscwp:336737 |
| By: | Filip Premik (Monash University); Dan Yu (University of Alberta) |
| Abstract: | We study how heterogeneity in capital inputs affects firm performance. Drawing on detailed data on municipal bus fleets in Poland, we exploit plausibly exogenous variation generated by public procurement and nationality coordinated sales behaviour of bus manufactures to identify the casual effects of variety fleet composition across brands and other technical dimensions. More heterogeneous fleets exhibit lower vehicle utilization and, for a fixed emphasize that the production capacity of capital depends on its internal structure, not only on its aggregate quantity or value. |
| Keywords: | Heterogeneous capital, capital utilization, productivity, fleet compositon, organization of production |
| JEL: | D24 L23 L62 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:mos:moswps:2026-02 |
| By: | Mert Demirer; John J. Horton; Nicole Immorlica; Brendan Lucier; Peyman Shahidi |
| Abstract: | Production is a sequence of steps that can be executed (1) manually, (2) augmented with AI, or (3) fully automated within contiguous AI-executed steps called “chains.” Firms optimally bundle steps into tasks and then jobs, trading off specialization gains against coordination costs. We characterize the optimal assignment of humans and AI to steps and the firm’s resulting job structure, showing that comparative advantage logic can fail with AI chaining. The model implies non-linear productivity gains from AI quality improvements and admits a CES representation at the macro level. Empirical evidence supports the model’s key predictions that (1) AI-executed steps co-occur in chains, (2) dispersion of AI-exposed steps lowers AI execution at the job level, and (3) adjacency to AI-executed steps increases the likelihood that a step is AI-executed. |
| JEL: | D24 J23 J24 O33 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34859 |
| By: | Andrea L. Eisfeldt; Barney Hartman-Glaser; Edward T. Kim; Ki Beom Lee |
| Abstract: | We develop a text-based measure of intangible investment intensity derived from firms’ 10-K filings, and offer a general methodology for semantic theme scoring (STS). Our approach further classifies disclosure text into knowledge, customer, and organization capital. Firms with high intangible intensity are smaller, younger, and invest heavily in R&D and human capital. The three subcomponents map cleanly to distinct economic firm types: knowledge-intensive firms are R&D-driven with high valuations and skilled labor; customer-intensive firms are mature, profitable, and commercially oriented; and organization-intensive firms are large, asset-heavy incumbents. Managerial expenditure descriptions thus provide informative signals about intangible investment, complementing financial statements in capturing corporate capital stocks. |
| JEL: | A0 C0 E0 E01 G0 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34882 |
| By: | Michele Fioretti; Alessandro Iaria; Aljoscha Janssen; Clement Mazet-Sonilhac; Robert K. Perrons |
| Abstract: | Contractual relationships between the state and private firms involving large irreversible investments are vulnerable to sovereign hold-up risk: anticipating that the state can unilaterally revise terms once capital is sunk, firms may underinvest. Causal evidence on this mechanism is scarce because sovereign commitment is typically bundled with broader institutional quality. We overcome this identification challenge by exploiting a natural experiment in the North Sea oil and gas industry. In 1985, a Norwegian Supreme Court ruling declared retroactive changes to petroleum licenses unconstitutional, while the UK retained the discretion to revise contracts. Using granular data on the universe of fields and firms from 1975 to 1995, we estimate the impact of this strengthening of sovereign commitment on the adoption of Enhanced Oil Recovery (EOR), a major extraction technology requiring large irreversible investments. Firms exposed to the ruling sharply increased EOR adoption and productivity, gaining market share through aggressive portfolio expansion. We find that private firms with preexisting EOR expertise – rather than state-owned enterprises – drove this transformation, leveraging this expertise to diversify into riskier geologies and adopt complementary technologies. These findings establish sovereign commitment as a primary determinant of investment and technology adoption. By tying the state's hands, the ruling transformed promises into credible commitments, effectively functioning as an industrial policy that unlocked a trajectory of technological deepening. While such constitutional protections are critical for investment, a global survey of constitutions reveals that only 30.6% of countries prohibit retroactive legislation beyond criminal law. |
| Date: | 2026–01–30 |
| URL: | https://d.repec.org/n?u=RePEc:bri:uobdis:26/824 |
| By: | Hale Utar |
| Abstract: | Using administrative longitudinal firm- and plant-level data from Mexico that links manufacturing firms to their customs records and covers the period 2014–2023, I examine whether US tariffs targeting China have contributed to a manufacturing revival in the southern part of North America. Leveraging the abrupt shift in US trade policy as a natural experiment, and constructing firm-level trade policy exposure measures based on firms’ pre-shock trade portfolios at the product level, I show that higher US tariffs on China significantly increased manufacturing output and employment. Adjustment occurs along both intensive and extensive margins, through expansion of existing plants and the establishment of new manufacturing plants by incumbent firms. Foreign multinationals and their domestic affiliates operating under Mexico’s export platform, IMMEX, drive these gains in manufacturing output and jobs, with U.S.-headquartered firms making a particularly notable contribution. The employment response is concentrated among production workers and technicians, particularly in technology-intensive industries embedded in North American supply-chains. These findings provide firm-level evidence that heightened import protection in the United States has stimulated manufacturing activity elsewhere in North America — namely, in Mexico. |
| Keywords: | trade war, global value chains, multinational firms, manufacturing, employment, nearshoring |
| JEL: | F13 F14 F23 F61 F68 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12425 |
| By: | Andrea Guccione; Pau Roldan-Blanco |
| Abstract: | Firms' innovation outcomes depend on their ability to attract and retain talented inventors. What market frictions prevent the sorting between firms with high innovation potential and high-productivity inventors? How does this sorting impact aggregate innovation, growth and welfare? We address these questions both empirically and theoretically. Empirically, we show that firms facing strong competition in the product market employ more productive inventors, while less productive inventors tend to be allocated in concentrated industries. Theoretically, we embed a frictional labor market for inventors into an endogenous-growth model of strategic innovation. In line with the data, the model predicts that high-productivity inventors are disproportionately employed in firms that operate in competitive industries. We then use the model to quantify the growth and welfare implications of this inventor sorting. Our results show that matching frictions in the market for inventors impede the allocation of high- productivity inventors to firms with high implementation intensity, and are responsible for a 32% loss in economic growth. Industrial policies that subsidize R&D spending relax these frictions by boosting inventor productivity, helping high-quality inventors reallocate to firms with high implementation incentives. Under optimal subsidies, growth increases as much as 74 basis points, closing most of the gap in missing growth caused by frictions in the market for inventors. |
| Keywords: | innovation, inventors, R&D productivity, search |
| JEL: | L16 J6 O3 O4 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:bge:wpaper:1562 |
| By: | Adrien Concordel; Phuong Ho; Christopher R. Knittel |
| Abstract: | This paper compares the impacts of critical mineral price and oil price on an economy in a unified neoclassical growth model. Unlike oil price shocks, which affect the cost of utilizing existing capital (e.g., cars), critical mineral price shocks influence the cost of creating new capital (e.g., electric vehicles) without altering the cost of existing capital. We find that both types of shocks ultimately reduce output and welfare. However, oil-price increases are systematically more contractionary for the economy. Mineral-price increases generate comparatively larger adjustments in investment, capital, and external borrowing but smaller and more gradual losses in output and welfare, and in capital-rich economies can slightly raise long-run employment. These results imply that oil-price shocks remain the more serious threat to aggregate activity and welfare, whereas mineral-price shocks call for policies that smooth investment and external-balance-sheet adjustment (e.g., macroprudential tools and precautionary reserves or fiscal buffers). |
| JEL: | E22 E32 F41 Q41 Q43 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34847 |
| By: | Arntz, Melanie; Baum, Myriam; Brüll, Eduard; Dorau, Ralf; Hartwig, Matthias; Matthes, Britta; Meyer, Sophie-Charlotte; Schlenker, Oliver; Tisch, Anita; Wischniewski, Sascha |
| Abstract: | Artificial intelligence (AI) is diffusing rapidly in the workplace, yet aggregate productivity gains remain limited. This paper examines the dual diffusion of AI - through both formal, employer-led and informal, employee-initiated adoption - as potential explanation. Using a representative survey of nearly 10, 000 employees in Germany, we document a high extensive but low intensive margin of usage: while 64 percent use AI tools, only 20 percent use them frequently. This diffusion is strongly skill-biased and depends less on establishment and regional characteristics. While formality is associated with more frequent usage, training, AI-based supervision, and higher perceived productivity gains, it does not broaden access. These patterns suggest that widespread informal usage can coexist with limited productivity effects when complementary investments and organizational integration lag behind. |
| Keywords: | artificial intelligence, AI, technology diffusion, formal and informal adoption, training, algorithmic management, productivity, inequality |
| JEL: | O33 O32 J24 J81 C83 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:zewdip:336765 |
| By: | Daron Acemoglu; David Autor; Simon Johnson |
| Abstract: | This paper defines pro-worker technologies, including Artificial Intelligence, as technologies that make human skills and expertise more valuable by expanding worker capabilities. Our conceptual framework distinguishes among five categories of technological change: labor-augmenting, capital-augmenting, automating, expertise-leveling, and new task-creating. Only the last category is unambiguously pro-worker, generating demand for novel human expertise rather than commodifying it. We illustrate these distinctions through hypothetical and real-world examples spanning aviation maintenance, electrical services, custodial work, education, patent examination, and gig delivery. While AI’s capacity to automate work is substantial, we argue that its potential to serve as a collaborator, by extending human judgment, enabling new tasks, and accelerating skill acquisition, is equally transformative and currently underexploited. We identify market failures, including misaligned firm and developer incentives, path dependence, and a pervasive pro-automation ideology, that may lead to underinvestment in pro-worker AI. We consider nine policy directions that would change incentives, including targeted investments in health care and education, tax code reform, antitrust enforcement, and intellectual property protections for worker expertise. |
| JEL: | J23 J24 J31 M50 O33 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34854 |