Whether, How and When Do Artificial Intelligence Technologies Improve Enterprise Total Factor Productivity?

Abstract

The progress of artificial intelligence (AI) technology has significantly impacted economic growth. Research into the correlation between AI technology and total factor productivity (TFP) in enterprises enhances our understanding of how AI fosters economic efficiency and effectiveness. This study, based on 40,960 data points from 4,395 listed Chinese companies between 2003 and 2022, identifies the beneficial impact of AI technologies on corporate TFP, demonstrating that each additional unit of AI technology increases TFP by 0.046 units. The proposed approach using a Random Forest approach further refines these findings. The empirical results of Random Forest model include correlations of variables, trends in TFP over time, and a comparison of actual versus predicted TFP values, offering deeper insights into the factors driving productivity. Further analysis reveals that corporate innovation capabilities mediate this relationship, accounting for 22.176% of the total effect. Additionally, the infusion of youth into the top management team (TMT) positively moderates the impact of AI technology on TFP. The study’s findings provide a comprehensive understanding of the mechanisms through which AI technologies enhance corporate operations and growth. This pioneering study offers valuable insights for policymaking and business management, outlining a robust framework for leveraging AI to improve enterprise productivity.