The art of the successful dance: The investigation of AI adoption on firm performance

With the global technological developments in the past decades, AI has been widely adopted in firms' business and marketing strategies, aiming to create more positive outcomes. While most of the extant literature studying a firm's performance outcomes focuses on a single factor (e.g., salespeople and supply chain productivity), there is a lack of research examining the AI's impacts on the total changes in a firm's production efficiency from multi-factor inputs and the changes in the overall customer base, instead of individual customers' experience. Accordingly, this paper aims to understand the impacts of AI adoption on the overall business performance from the perspectives of firms, employees, and customers, and explore the moderating effect of a firm's market power and external AI policy. It conducts interdisciplinary research, using a mixed-method approach, with a combination of 2852 Chinese listed firms' data spanning from 2010 to 2022 and semi-structured interviews with 5 board-level directors in Chinese listed firms. The results reveal the impacts of AI adoption on the increase of total firm productivity, positive change in employment, and reduced customer concentration. The moderation effects of a firm's market power and AI policy are confirmed for these impacts. It encourages future studies to investigate AI adoption in different business environments from the firm, employee, and customer perspectives.