Artificial Intelligence and Firm Internationalization: Evidence from Chinese Listed Companies

Saydalikhujaeva Muroda

doi:10.6981/FEM.202610_7(10).0003

Authors

Saydalikhujaeva Muroda School of Economics and Management, Shanghai Second Polytechnic University, Shanghai, China

DOI:

https://doi.org/10.6981/FEM.202610_7(10).0003

Keywords:

Artificial Intelligence; Firm Internationalization; Dynamic Capabilities; R&D Investment; Ownership Structure; Chinese Listed Companies.

Abstract

This study examines whether firm-level artificial intelligence (AI)-related strategic intensity is associated with the internationalization of Chinese listed companies - whether that association depends on complementary R&D resources and ownership structure. The research employs an unbalanced panel of data covering the period from 2017 to 2024 with a final regression sample comprised of 31,839 firm-years of data from a total of 5,211 firms in the sample. The level of internationalization is determined as the natural logarithm of 1 + the number of active foreign subsidiaries, thereby reflecting the organizational volume of an existing foreign presence by any company. The level of AI is taken as a natural logarithm of 1 + the frequency of AI-related phrases in management discussion and analysis and interpreted as a measure of AI-related textual or strategic intensity instead of actual monetary investments in AI. Firm and year fixed-effects models with firm-clustered standard errors show a positive AI-internationalization association (coefficient = 0.0179, SE = 0.0051, p < 0.01).As investment in domestic R&D grows, the association becomes stronger (AI × R&D coefficient equals 0.0096 (SE = 0.0037, p = 0.0087)). Ownership effect is more ambiguous – AI coefficient is positive for private enterprises and negligible for companies with state ownership, and the slope in terms of ownership variation is only marginally significant (at the 10% level, p = 0.0821). Stability of the positive correlation in different variations of outcome definitions, lagged AI variable, the sample with the omitted gap, fixed-effects Poisson estimation, the size of firms and extra controls is also important. Results conform with the interpretation of the findings referring to the dynamics of the development of contingencies since AI – internationalization connection is stronger if complementing internal R&D investments are larger. The research, being observational, provides evidence of correlation but not causes.

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