Enhancing knowledge spillover of innovation through artificial intelligence: an empirical investigation

Abstract Effective technological innovation relies on having ample knowledge resources to enhance firm performance and knowledge creation. Innovators seek both internal and external knowledge, actively engaging in a continuous search for these valuable resources. Knowledge collaboration is a specific strategy that innovative firms can follow during Artificial Intelligence (AI) adoption processes. This study investigates the role of AI and knowledge collaboration in firm innovation. Using data from 14,143 firms in the UK between 2004 and 2020, we explore how AI adoption impacts knowledge spillover of innovation. Our findings suggest that firms adopting AI can enhance their innovation performance if it complements firm’s own investment in R&D. AI adoption can substitute knowledge collaboration with certain external partners. The results help us to rethink resource allocation for knowledge spillover of innovation in the era of AI and digital technologies.