Author:

Keywords:

Artificial Intelligence, CIS data, Germany, Innovation, Social Sciences, Management, Business & Economics, BIG DATA, GROWTH, C24/17/008#54270892, G0C6921N#56129079, 1402 Applied Economics, 1503 Business and Management, 1505 Marketing, Science Studies, 3507 Strategy, management and organisational behaviour, 3801 Applied economics

Abstract:

This paper analyses the link between the use of Artificial Intelligence (AI) and innovation performance in firms. Based on firm-level data from the German part of the Community Innovation Survey (CIS) 2018, we examine the role of different AI methods and application areas in innovation. The results show that 5.8% of firms in Germany were actively using AI in their business operations or products and services in 2019. We find that the use of AI is associated with annual sales with world-first product innovations in these firms of about €16 billion (i.e. 18% of total annual sales of world-first innovations). In addition, AI technologies have been used in process innovation that contributed to about 6% of total annual cost savings of the German business sector. Firms that apply AI broadly (using different methods for different applications areas) and that have already several years of experience in using AI obtain significantly higher innovation results. These positive findings on the role for AI for innovation have to be interpreted with caution as they refer to a specific country (Germany) in a situation where AI starts to diffuse rapidly.