Artificial intelligence focus and firm performance

Abstract

Artificial Intelligence is poised to transform all facets of marketing. In this study, we examine the link between firms’ focus on AI in their 10-K reports and their gross and net operating efficiency. 10-K reports are a salient source of insight into an array of issues in accounting and finance research, yet remain relatively overlooked in marketing. Drawing upon economic and marketing theory, we develop a guiding framework to show how firms’ AI focus could be related to gross and net operating efficiency. We then use a system of simultaneous equations to empirically test the relationship between AI focus and operating efficiency. Our findings confirm that US-listed firms are in a state of impending transformation with regards to AI. We show how AI focus is associated with improvements in net profitability, net operating efficiency and return on marketing-related investment while reducing adspend and creating jobs.