How does competition in the development of artificial intelligence affect a firm’s technology search strategy? Evidence from the U.S. pharmaceutical industry

ABSTRACT

During technological shifts in which new technology threatens to substitute for existing technology, how do firms search for such new technology? Although several studies have demonstrated the benefits of collaboration among firms in the development of new technologies, research in this stream has largely overlooked the potential roles of competition. Our empirical analysis of U.S. pharmaceutical firms’ adoption of artificial intelligence in 2000–2019 shows that early and late entrants learn from each other. Specifically, late entrants learn basic technology from early entrants, and early entrants learn applied technology from late entrants.

KEYWORDS:

• Artificial intelligence
• competition
• technological change
• technology search

JEL CLASSIFICATION:

• O32
• O33
• C23

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Funding

This work was supported by the the Ministry of Education of the Republic of Korea and the National Research Foundation of Korea [2021R1A6A1A14045741].