Tag Archives: firm-level

The New Industrial Revolution: AI, Labor Unions, and the Future of Work

Park, Jiyong, Myunghwan Lee, Yoonseock Son, Gene Moo Lee “The New Industrial Revolution: AI, Labor Unions, and the Future of Work”, Work-in-Progress.

  • The first three authors equally contributed to the work.
  • Presentations: CIST (2024), WISE (2024).
  • Nominated for Best Paper Award at WISE 2024

As a general-purpose technology, Artificial Intelligence (AI) has profoundly transformed the human labor landscape with its capability to perform complex tasks. Despite ongoing debates about AI’s role in the future of work, there remains a limited understanding of how a firm’s endeavors to strengthen its AI capabilities interweave with its workforce. Reflecting on the ongoing role of labor unions in responding to technological advancements, we investigate the impact of unionization on AI investments and their subsequent effects on firm value. Utilizing datasets on labor elections and AI-skilled labor, we construct measures for unionization and AI investment. Based on a regression discontinuity design framework, our results indicate that while AI investments lead to an improvement in firm value, unionization decreases AI investments in the following 5 years, implying that labor unions have an indirect negative impact on firm value by hampering AI investments. We also provide suggestive evidence of the competition between firms and labor unions in resource allocation between AI investments and employment as a potential mechanism through which labor unions may hinder AI investments. This research advances our understanding of corporate AI strategies by recognizing labor unions as a crucial stakeholder, enriching the discourse on the literature on the business value of AI and IT.

Jaecheol Park’s PhD Proposal: Strategic Roles of AI and Mobile Management on Performance: Evidence from U.S. Public Firms

Jaecheol Park (2024) “Strategic Roles of AI and Mobile Management on Performance: Evidence from U.S. Public Firms”, Ph.D. Dissertation Proposal, University of British Columbia. https://jaecheol-park.github.io/

Supervisor: Gene Moo Lee

Supervisory Committee Members: J. Frank Li, Jiyong Park (Georgia)

The integration of emerging technologies such as Artificial Intelligence (AI) and mobile IT into the workplace is transforming how businesses operate. Despite the increasing prevalence and importance of AI and mobile IT, there is limited research on how firms can strategically manage these technologies to achieve competitive advantage and enhance performance. This dissertation consists of two large-scale empirical studies on U.S. public firms, aiming to provide new theoretical and managerial insights into how firms can harness the power of these technologies to drive success.

The first chapter investigates the impact of mobile device management (MDM) on firm performance during the recent pandemic, highlighting the importance of MDM in digital resilience. Drawing on the resource-based view and a novel proprietary dataset from a global MDM provider for U.S. public firms, we find that firms with MDM have better financial performance during the pandemic, demonstrating greater resilience to the shock. Additionally, we explore the moderating role of external and internal factors, revealing that firms with high environmental munificence or those with low IT capabilities experience greater resilience effects from MDM. This study contributes to the work-from-home and hybrid work literature by emphasizing the business value of MDM and its crucial role in building digital resilience.

The second chapter investigates the effect of AI strategic orientation on firm performance with a dual lens on product and process orientation. We create a novel measure of AI orientation by employing a large language model to assess business descriptions in Form 10-K filings, and identify an increasing trend of AI disclosure among U.S. public firms. By dissecting firms’ AI disclosure into AI washing and AI (product and process) orientation, our long-difference analyses show that AI orientation significantly affects costs, sales, and market value but AI washing does not, showing the importance of strategic deployment of AI to create business value. Moreover, we find the heterogeneous effects between AI product and process orientation on performance. This study contributes to the recent AI management literature by providing the strategic role of AI orientation on firm performance.

The findings of the dissertation offer valuable insights for academics, practitioners, and policymakers seeking to understand and leverage these emerging technologies’ full potential. From an academic perspective, this dissertation contributes to the literature on the business value of IT and AI by empirically demonstrating the business value of MDM and AI strategies. From an industry perspective, this research provides actionable guidance for businesses looking to leverage the power of MDM and AI to achieve strategic goals and drive success in the digital age.

Exploring the Influence of Machine Learning on Organizational Learning: An Empirical Analysis of Publicly Listed Organizations

Lee, Myunghwan, Timo Sturm, Gene Moo Lee “Exploring the Influence of Machine Learning on Organizational Learning: An Empirical Analysis of Publicly Listed Organizations”, Work-in-Progress.

  • Presentations: JUSWIS 2024, KrAIS Summer 2024
  • Best Short Paper Award at KrAIS Summer Workshop 2024.

We contribute to the literature on the role of machine learning (ML) in organizational learning by examining two key learning tendencies: exploitation and exploration. We analyze the effect of ML investments on organizations’ learning tendency, which in turn influences firm performance and survival. Our findings suggest that ML primarily shifts organizations towards exploration and that ML-induced learning tendency fully mediates the positive relationship between ML investments and organization survival. Notably, we find that non-IT organizations with exploitative tendencies can effectively shift towards exploration through ML investments. To our knowledge, this study provides the first large-scale empirical insights into ML’s impact on organizations’ learning tendency and performance outcomes, offering valuable insights for rethinking organizational learning in the age of ML.

Unpacking AI Transformation: The Impact of AI Strategies on Firm Performance from the Dynamic Capabilities Perspective

Park, Jaecheol, Myunghwan Lee, J. Frank Li, Gene Moo Lee “Unpacking AI Transformation: The Impact of AI Strategies on Firm Performance from the Dynamic Capabilities Perspective,” Work-in-Progress.

  • Presentations: UBC (2024), CIST (2024), INFORMS (2024), BIGS (2024), KrAIS (2024)
  • Best Paper Award at BIGS 2024
  • Best Student Paper Award at KrAIS 2024

Artificial intelligence (AI) technologies hold great potential for large-scale economic impact. Aligned with this trend, recent studies explore the adoption impact of AI technologies on firm performance. However, they predominantly measure firms’ AI capabilities with input (e.g., labor/job posting) or output (e.g., patents), neglecting to consider the strategic direction toward AI in business operations and value creation. In this paper, we empirically examine how firms’ AI strategic orientation affects firm performance from the dynamic capabilities perspective. We create a novel firm-year AI strategic orientation measure by employing a large language model to analyze business descriptions in Form 10-K filings and identify an increasing trend and changing status of AI strategies among U.S. public firms. Our long-difference analysis shows that AI strategic orientation is associated with greater operating cost, capital expenditure, and market value but not sales, showing the importance of strategic direction toward AI to create business value. By further dissecting firms’ AI strategic orientation into AI awareness, AI product orientation, and AI process orientation, we find that AI awareness is generally not related to performance, that AI product orientation is associated with short-term increased operating expenses and long-term market value, and that AI process orientation is associated with long-term increased costs and sales. Moreover, we find the negative moderating effect of environmental dynamism on AI process orientation. This study contributes to the recent AI strategy and management literature by providing the strategic role of AI orientation on firm performance. 

The Effect of Mobile Device Management on Work-from-home Productivity: Insights from U.S. Public Firms

Park, Jaecheol, Myunghwan Lee, Gene Moo Lee “The Effect of Mobile Device Management on Work-from-home Productivity: Insights from U.S. Public Firms”, Work-in-Progress.

  • Presentations: UBC 2023, MSISR 2023, KrAIS 2023, WeB 2023, AOM 2024
  • Best Paper Nomination at WeB 2023

The use of mobile IT, providing employees with accessibility, flexibility, and connectivity, has become increasingly vital for businesses, especially for work-from-home during the COVID-19 pandemic. However, despite its prevalence and importance in the industry, the business value of mobile device management (MDM) and its role in establishing digital resilience remain underexplored in the literature. To address this research gap, our study examines the effect of MDM on a firm’s resilience to the pandemic. Drawing on the resource-based view (RBV), we find that firms with MDM have better financial performance during the pandemic, demonstrating greater resilience to the shock. Additionally, we explore the moderating role of external and internal factors, revealing that firms with high environmental munificence or those with low IT capabilities experience greater resilience effects from MDM. Furthermore, we observe heterogeneous effects across industries that firms in industry sectors demanding greater mobility have a greater resilience effect from MDM. This study contributes to the information systems literature by emphasizing the business value of MDM and its crucial role in building digital resilience.

Disrupt with AI: The Impact of Deep Learning Capabilities on Exploratory Innovation

Lee, Myunghwan, Victor Cui, Gene Moo Lee. “Disrupt with AI: The Impact of Deep Learning Capabilities on Exploratory Innovation”, AOM 2023

Given the importance of exploratory innovation in fostering firms’ sustainable competitive advantages, firms often depend on technological assets or inter-firm relationships to pursue exploration. Regarded as a general-purpose technology, deep learning (DL)-based artificial intelligence (AI) can be an exploratory innovation-seeking instrument for firms in searching unexplored resources and thereby broadening their boundary. Drawing on the theories of organizational learning and path dependence, we hypothesize the impact of a firm’s DL capabilities on exploratory innovation and how DL capabilities interact with conventional pathbreaking activities such as technical assets and inter-firm relationships. Our empirical investigations, based on a novel DL capabilities measure constructed from comprehensive datasets on AI conferences and patents, show that DL capabilities have positive impacts on exploratory innovation. The results also show that extant technological assets (i.e., structured data management capabilities) and inter-firm relationships remedy the constraints on a firm’s innovation-seeking behaviors and that these path-breaking activities negatively moderate the positive impact of DL capabilities on exploratory innovation. To our knowledge, this is the first large-scale empirical study to investigate how DL affects exploratory innovation, contributing to the emerging literature on AI and innovation.

Ideas are Easy but Execution is Everything: Measuring the Impact of Stated AI Strategies and Capability on Firm Innovation Performance

Lee, Myunghwan, Gene Moo Lee (2022) “Ideas are Easy but Execution is Everything: Measuring the Impact of Stated AI Strategies and Capability on Firm Innovation Performance”, Work-in-Progress.

Contrary to the promise that AI will transform various industries, there are conflicting views on the impact of AI on firm performance. We argue that existing AI capability measures have two major limitations, limiting our understanding of the impact of AI in business. First, existing measures on AI capability do not distinguish between stated strategies and actual AI implementations. To distinguish stated AI strategy and actual AI capability, we collect various AI-related data sources, including AI conferences (e.g., NeurIPS, ICML, ICLR), patent filings (USPTO), inter-firm transactions related to AI adoption (FactSet), and AI strategies stated in 10-K annual reports. Second, while prior studies identified successful AI implementation factors (e.g., data integrity and intelligence augmentation) in a general context, little is known about the relationship between AI capabilities and in-depth innovation performance. We draw on the neo-institutional theory to articulate the firm-level AI strategies and construct a fine-grained AI capability measure that captures the unique characteristics of AI-strategy. Using our newly proposed AI capability measure and a novel dataset, we will study the impact of AI on firm innovation, contributing to the nascent literature on managing AI.

Robots Serve Humans: Does AI Robot Adoption Enhance Operational Efficiency and Customer Experience?

Lee, Myunghwan, Gene Moo Lee, Donghyuk Shin, Sang-Pil Han (2022) “Robots Serve Humans? Understanding the Economic and Societal Impacts of AI Robots in the Service Industry”, Working Paper.

  • Presented at WITS (2020), KrAIS (2020), UBC (2021), DS (2022)
  • Research assistants: Raymond Situ, Gallant Tang

Service providers, such as restaurants, have been adopting various robotics technologies to improve operational efficiency and increase customer satisfaction. AI Robotics technologies bring new restaurant experiences to customers by taking orders, cooking, and serving. While the impact of industrial robots has been well documented in the literature, little is known about the impact of customer-facing service robot adoption. To fill this gap, this work-in-progress study aims to analyze the impact of service robot adoption on restaurant service quality using 4,610 restaurants and their online customer reviews. We analyzed the treated effect of robot adoption using a difference-in-differences approach with propensity score and exact matching. Estimation results show that restaurant robot adoption has a positive impact on customer satisfaction, specifically on perceived service quality. This study provides both academic and practical implications on emerging AI robotics techniques.

What Fuels Growth? A Comparative Analysis of the Scaling Intensity of AI Start-ups

Schulte-Althoff, Matthias, Daniel Fuerstenau, Gene Moo Lee, Hannes Rothe, Robert Kauffman. “What Fuels Growth? A Comparative Analysis of the Scaling Intensity of AI Start-ups”. Working Paper. [ResearchGate]

  • Previous title: “A Scaling Perspective on AI startup”
  • Presented at HICSS 2021 (SITES mini-track), Copenhagen Business School 2021, FU Berlin 2021, University of Cologne 2021, University of Bremen 2021, Humboldt Institute for Internet and Society 2021, WITS 2022

We examine how firm revenue scales with labor for revenue-per-employee (RPE) and is moderated by firm-level AI investment. We compare AI start-ups, in which AI provides a competitive advantage, with digital platforms and service start-ups. We use propensity score matching to explain the scaling of start-ups and find evidence for sublinear scaling intensity for revenue as a function of labor. Our study suggests similar scaling intensities between AI and service start-ups, while platform start-ups produce higher scaling intensities. We show that an increase in employee counts is associated with major revenue increases for platform start-ups, while increases were modest for service and AI start-ups.

Corporate Social Network Analysis: A Deep Learning Approach

Cao, Rui, Gene Moo Lee, Hasan Cavusoglu. “Corporate Social Network Analysis: A Deep Learning Approach,” Working Paper.

Identifying inter-firm relationships is critical in understanding the industry landscape. However, due to the dynamic nature of such relationships, it is challenging to capture corporate social networks in a scalable and timely manner. To address this issue, this research develops a framework to build corporate social network representations by applying natural language processing (NLP) techniques on a corpus of 10-K filings, describing the reporting firms’ perceived relationships with other firms. Our framework uses named-entity recognition (NER) to locate the corporate names in the text, topic modeling to identify types of relationships included, and BERT to predict the type of relationship described in each sentence. To show the value of the network measures created by the proposed framework, we conduct two empirical analyses to see their impacts on firm performance. The first study shows that competition relationship and in-degree measurements on all relationship types have prediction power in estimating future earnings. The second study focuses on the difference between individual perspectives in an inter-firm social network. Such a difference is measured by the direction of mentions and is an indicator of a firm’s success in network governance. Receiving more mentions from other firms is a positive signal to network governance and it shows a significant positive correlation with firm performance next year.