Artificial Intelligence and firm strategies: A pathway to enhanced productivity

This study examines the strategic impact of artificial intelligence (AI) on firm productivity, with a focus on how different strategic goals – customer centricity, international market expansion, and environmental sustainability - interact with AI adoption. We combine professional skills data from LinkedIn with information on innovation activities and strategic objectives collected from company websites for a sample of 1800 manufacturing firms. Using an augmented Cobb–Douglas production function and a two-stage estimation approach, our analysis shows that firms with higher levels of AI intensity tend to exhibit higher production efficiency. However, firms emphasizing customer centricity tend to be less productive, while firms combining higher AI intensity with an international market orientation tend to exhibit higher productivity. By contrast, we find no statistically significant link between AI use and productivity when the strategic goal is environmental sustainability. Overall, the study fills a gap in understanding the role of AI in shaping firm productivity across different strategic orientations, offering valuable insights for optimizing AI intensity and aligning it with strategic planning