Artificial Intelligence, Alliances, and Innovation

Strategy & Business Policy

Speaker: Evan Rawley

Associate Professor - Uconn University

Conference  Jouy-en-Josas T022

Abstract:

Firms increasingly rely on artificial intelligence (AI) and alliances to innovate in knowledge-intensive environments.  In this paper, we examine the influence AI on research and development (R&D), proposing that AI reduces inter-firm coordination costs, allowing R&D alliances to flourish.  Empirically, we approximate a firm’s AI resources using patents and job postings to analyze the relationship amongst AI, R&D alliances, and drug innovation in the pharmaceutical industry.  Our findings show that that firms with greater AI resources shift their locus of innovation toward R&D alliances, and develop more drugs from their alliances.  Moreover, we observe a key mechanism behind the results:  AI is particularly useful in exploiting information held by counterparties within an alliance.  Taken together, our study highlights the complementary role of AI and alliances, shedding light on how modern organizational and technological advancements jointly shape the production of innovation.