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on Business Economics |
| By: | Thomas Licht; Klaus Wohlrabe |
| Abstract: | This paper examines the adoption of Artificial Intelligence (AI) among German firms, leveraging firm-level data from the ifo Business Survey. We analyze the diffusion of AI across sectors and firm sizes, showing a significant increase in AI usage from 2023 to 2024, particularly in manufacturing and services. The survey data allows us to explore not only sectoral patterns of adoption but also the drivers and barriers that firms face, including firm-specific characteristics and industry dynamics. Additionally, we investigate the role of managerial traits, such as risk tolerance and patience, in shaping AI adoption decisions. Finally, we assess the potential pro-ductivity impacts of AI at the firm level, with a focus on the expected long-term benefits of AI for different sectors of the German economy. Our findings contribute to the growing body of research on AI adoption by providing new evidence from a non-US context, offering valuable insights for both academia and politics. |
| Keywords: | artificial intelligence, AI, ifo business survey, productivity |
| JEL: | M15 O30 C83 L20 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11459 |
| By: | Scur, Daniela; Ohlmacher, Scott W.; Van Reenen, John; Bennedsend, Morten; Bloom, Nick; Choudhary, M. Ali; Foster, Lucia; Groenewegen, Jesse; Grover, Arti; Hardemanh, Sjoerd; Iacovone, Leonardo; Kambayashi, Ryo; Laible, Marie-Christine; Lemos, Renata; Li, Hongbin; Linarello, Andrea; Maliranta, Mika; Medvedevi, Denis; Mengo, Charlotte; Touya, John Miles; Mandirola, Natalia; Ohlsbom, Roope; Ohyamas, Atsushi; Patnaik, Megha; Pereira-López, Mariana; Sadun, Raffaella; Senga, Tatsuro; Qian, Franklin; Zimmermann, Florian |
| Abstract: | A country’s national income broadly depends on the quantity and quality of workers and capital. But how well these factors are managed within and between firms may be a key determinant of a country’s productivity and its GDP. Although social scientists have long studied the role of management practices in shaping business performance, their primary tool has been individual case studies. While useful for theory-building, such qualitative work is hard to scale and quantify. We present a large, scalable dataset measuring structured management practices at the business level across multiple countries. We measure practices related to performance monitoring, target-setting, and human resources. We document a set of key stylized facts, which we label “the international empirics of management”. In all countries, firms with more structured practices tend to also have superior economic performance: they are larger in scale, are more profitable, have higher labor productivity and are more likely to export. This consistency was not obvious ex-ante, and being able to quantify these relationships is valuable. We also document significant variation in practices across and within countries, which is important in explaining differences in the wealth of nations. The positive relationship between firm size and structured management practices is stronger in countries with more open and free markets, suggesting that stronger competition may allow firms with more structured management practices to grow larger, thereby potentially raising aggregate national income. |
| Keywords: | management practices; productivity; firm performance; misallocation |
| JEL: | J1 J50 |
| Date: | 2024–11–05 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:125967 |
| By: | Leonardo Bortolan; Atreya Dey; Luca Taschini |
| Abstract: | We establish the financial materiality of temperature variability by demonstrating its impact on US firms and investors. A long-short strategy that sorts firms based on exposure earns a market-adjusted alpha of 39 basis points per month. This variability metric is related to aggregate decreases in firm profitability, with asymmetric effects across industries. These outcomes are driven by reductions in consumer demand and labor productivity coupled with changes in media and investor attention. The geographically scalable statistical framework provides a reference for assessing the quantitative effects of climate-related physical risks, offering a metric for improving the disclosure of material climate risks. |
| Keywords: | corporate climate reporting, climate attention, temperature variability, stock returns, firm performance |
| JEL: | C21 C23 G12 G32 Q54 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11438 |
| By: | Kim, Jinhwan (Stanford U); Valentine, Kristen (U of Georgia) |
| Abstract: | Innovative public firms sell 9.6% (615) more patents in the last month, relative to the first half of the fiscal year. Consistent with reporting incentives driving these sales, they are more pronounced among firms with strong incentives to meet earnings expectations. Patents sold in the last month are litigated more frequently because they are disproportionately sold to “patent trolls†, who opportunistically acquire patents to engage in litigation. We find anti-troll laws reduce opportunistic acquisition among trolls. We highlight a novel consequence of corporate reporting incentives: its contribution to strategic patent sales, which in turn impact the market for innovation. |
| JEL: | D23 M40 M41 O30 O31 O32 O34 |
| Date: | 2024–02 |
| URL: | https://d.repec.org/n?u=RePEc:ecl:stabus:4162 |
| By: | Christina Brinkmann (University of Bonn) |
| Abstract: | I study how firms’ labor hoarding, driven by their reliance on firm-specific human capital, affects their hedging of other business risks. Leveraging German administrative data on short-time work, combined with matched employer-employee data and firm financial information, I develop a firm-level measure of hoarded labor. I formalize the hypothesized risk trade-off in a stylized model featuring demand uncertainty and uncertainty around an unrelated price risk that can be hedged at a cost. Empirically, labor-hoarding firms exhibit larger comovements of their cash flows (CF) with demand fluctuations, illustrating the upside potential of hoarded labor functioning as a capacity increase. However, labor hoarding is not linked to higher overall CF volatility; instead, it is linked to reduced foreign-exchange (FX) risk as one specific price risk. FX risk can substantially contribute to CF volatility, especially for smaller, globally exporting firms that are sensitive to the driving forces of labor hoarding suggested by the model: idiosyncratic demand risk and reliance on firm-specific human capital. I instrument hoarded labor with proxies for firm-specific human capital and find that firms hedge their FX risk more in response to greater labor hoarding. These findings offer a new perspective on firms’ willingness to assume risk in the context of labor market rigidities and institutions. |
| Keywords: | Labor hoarding, human capital, risk management, FX risk |
| JEL: | J01 J24 G00 G32 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:ajk:ajkdps:343 |