Park, Jiyong, Myunghwan Lee, Yoonseock Son, Gene Moo Lee. “From Resistance to Collaboration: Labor Unions, AI Investment, and Firm Value”, Under Review.

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

Despite ongoing debates about Artificial Intelligence (AI) and the future of work, little is known about how firms’ efforts to strengthen AI capabilities affect their workforce dynamics. As labor unions emerge as key stakeholders in the societal discourse on AI, we investigate how unionization influences firms’ AI investments and moderates their impact on firm value. Drawing on a novel dataset of U.S. public firms that integrates human capital-based measures of AI investment, unionization status, and a range of firm operations and employee perceptions, we employ a long-difference design to capture changes in AI investment and firm value. Our findings show that unionization constrains AI investments, particularly in firms with low perceived job security and operations more exposed to AI disruption. This resistance, however, also enables firms to align AI adoption with workforce interests. Consistent with this view, we find that unions can amplify the value-creating effects of AI, most evident in firms with stronger labor relations, reflected in active employee involvement and higher job security satisfaction during AI investments. Taken together, these findings highlight unions’ dual role: constraining AI investments at the adoption stage but enhancing returns during the value-creation stage. This study offers important insights into how firms can strategically manage AI adoption in the presence of an organized workforce.