AI transformation, resource reallocation, and corporate capacity utilization
TL;DR
It is found that the AI policy did not enhance corporate capacity utilization, and this negative effect is particularly pronounced for firms with longer operational histories, higher asset specificity, and greater market concentration.
Abstract
Artificial intelligence (AI) is reshaping the global economic landscape, prompting China to initiate a new wave of AI application pilot programs. Using the AI Application Pilot Zones policy as a quasi-natural experiment, this study examines the impact of an AI-driven transformation on corporate capacity utilization rates and its underlying mechanisms. Based on 44,537 firm-year observations from publicly listed Chinese companies between 2007 and 2023, and employing two-way fixed effects (TWFE) and staggered difference-in-differences (DID) methodologies, we find that the AI policy did not enhance corporate capacity utilization. On average, this led to a 0.516 percentage point decline. This negative effect is particularly pronounced for firms with longer operational histories, higher asset specificity, and greater market concentration. Mechanistic analysis revealed that short-term impacts operate through resource reallocation and demand shock effects. This study further discusses other unintended consequences of the policy, offering insights for refining AI-related policies to promote broader AI adoption.