Technological Forecasting & Social Change 158 (2020) 120142

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Technological Forecasting & Social Change

journal homepage: www.elsevier.com/locate/techfore

Influence of artificial intelligence on technological innovation: Evidence T

from the panel data of china's manufacturing sectors
⁎
Jun Liua, , Huihong Changb, Jeffrey Yi-Lin Forrestc, Baohua Yangd
a
China Institute of Manufacturing Development & School of Management Science and Engineering, Nanjing University of Information Science &Technology, Nanjing
210044, China
b
College of Business, Nanjing University of Information Science & Technology, Nanjing 210044, China
c
School of Business, Slippery Rock University, Slippery Rock, PA 16057, USA
d
Business School, Jiangsu Normal University, Tongshan New District, Xuzhou, Jiangsu 221116, China

A R T I C LE I N FO A B S T R A C T

Keywords: This paper analyzes the impact of artificial intelligence (AI) on technological innovation through logic reasoning
artificial intelligence and empirical modeling. Based on the industrial robot data provided by the International Federation of Robotics
technological innovation (IFR) and the panel data of China's 14 manufacturing sectors from 2008 to 2017, this paper empirically analyzes
sector heterogeneity the impact of AI on technological innovation. Our analysis shows that the mechanism of how AI affects tech-
nological innovation is that the former promotes technological innovation through accelerating knowledge
creation and technology spillover, improving learning and absorptive capacities, while increasing R&D and
talent investment. Our empirical results indicate that under the condition of controlling intensity of R&D in-
vestment, FDI, ownership structure, technical imitation, AI significantly promotes technological innovation. And
the impact of AI on technological innovation experiences sector heterogeneity: AI has more significant impact on
the technological innovation of low-tech sectors. The higher the level of AI, the greater its impact on techno-
logical innovation. Based on our established conclusions, we provide corresponding suggestions and re-
commendations for managerial decision-making.

1. Introduction various departments for improving federal government's investment in

Artificial intelligence (AI) has been seen as the key to advancing the
‘fourth’ industrial revolution (Cheng and Peng, 2018;
Yogesh et al, 2019), and is applied increasingly in manufacturing, fi-
nance, education, medical care, logistics, etc., making people's lives
more intelligent and the whole society evolve in the direction of in-
telligence (Miller, 2019). By 2020, the global AI market is projected at
US$47 billion (Gabriel and Goertzel, 2019). To respond to the forever-
changing economic development pattern, nations from around the
world are making strategic adjustments by focusing on AI as their
strategic direction. For example, the Obama White House in 2016
published the following two important documents: Preparing for the
Future of Artificial Intelligence (OWH, 2016a) and The National Artificial
Intelligence Research and Development Strategic Plan (OWH, 2016b).
These documents clearly laid out seven major strategies for the devel-
opment of AI in the United States. On May 10, 2018, the White House
(WH, 2018) announces the creation of Select Committee on Artificial
Intelligence in order to combine the advantages and capabilities of
the area of AI. In May of 2018, the European Commission (EC, 2018)
submitted a report, entitled “Artificial Intelligence: An European Per-
spective.” The report describes the EU's position in the international
competition of AI, while develops an action plan, which involves in-
creasing investment in AI R&D and updating the education and training
system that is committed to reserve strength of European talent de-
velopment. The Japanese government also attaches great importance to
the development of AI. Its “Report on the 5th Science and Technology
Basic Plan (2016-2020)” (Government of Japan, 2015) clearly proposes
the establishment at the national level of a relatively complete R&D
promotion mechanism, centered on internet of things, big data, AI and
other technologies, and the materialization of a super intelligent society
through extending AI to all aspects of life.
In order to keep up with the international development and to sti-
mulate the economic restructuring, China also pays great attention to
the development of AI. In 2017, AI appears in the Report of the 19th
National Congress of the Communist Party of China (Xi, 2017) with the
purpose of advocating profound fusion of internet, big data and AI with

⁎
Corresponding author.
E-mail addresses: liujun@nuist.edu.cn (J. Liu), changhuihong@nuist.edu.cn (H. Chang), Jeffrey.forrest@sru.edu (J.Y.-L. Forrest).

https://doi.org/10.1016/j.techfore.2020.120142
Received 15 May 2019; Received in revised form 26 April 2020; Accepted 24 May 2020
Available online 17 June 2020
0040-1625/ © 2020 Elsevier Inc. All rights reserved.
J. Liu, et al.
the real economy. In December 2017, the Chinese government pub-
lishes the document, named “Three-Year Action Plan to Promote the
Development of a New Generation of AI Industry 2018-2020”
(MIIT.PRC, 2017). From the angle of promoting industrial develop-
ment, combined with the push for “Made in China 2025,” this docu-
ment refines and implements the tasks relevant to the development of
new generations of AI. Based on the stimulation of deep fusions of in-
formation and manufacturing technologies, it attempts to promote
further integration of AI technology and the real economy by empha-
sizing on the commercialization of newer generations of AI technolo-
gies. From a practical perspective, China has produced fruitful results in
the AI area and created certain advantages in the application of AI in
various manufacturing sectors, including manufacturing, finance, edu-
cation, medical imaging (Xiao and Liu, 2019). Especially, AI has be-
come one of the main strategic directions for emerging internet tech-
nology companies., and achieves great consequences. For example, in
the field of technological development, many Chinese technologies are
in the international leading position, such as Baidu's face recognition,
the speech recognition of iFlytek. According to the “WIPO Technology
Trends” released by the World Intellectual Property Organization
(WIPO) in 2019, the United States and China are far ahead of other
countries in patent applications in AI and related basic research
(Amit et al, 2019). And, China has developed significant advantages in
emerging deep learning technologies (Tao et al., 2019). In applications
of technologies, China also has gained some advantages: Firstly, in
terms of face recognition, the application of relevant technology in
store face payment, airport flight information retrieval and other life
scenarios are continuously improving the user experience and saving
user time. Secondly, in the development of automatic storage business,
for example, JD Shanghai Operation Center can organize, select and
deliver 200,000 orders every day by using automatic robot with only 4
people in charge. Thirdly, the level of industrial automation is getting
increasingly higher. According to data provided by the International
Federation of Robotics (IFR), the number of Chinese industrial robots
installed in 2018 was 154,032, exceeding the total number of robots
installed in Europe and the Americas.
The continuous application and development of AI in China and
other countries around the world may have a certain impact on tech-
nological innovation. However, research on the impact of AI on tech-
nological innovation is still relative rare with only a few scholars
mentioning it in their works. Zhou (2012) deems intelligentization of
manufacturing provides not only a common enabling technology for
mechanical product innovations, but also one for manufacturing tech-
nology innovations; it will make the manufacturing industry develop
into an integrated one that is both digitized and intelligentized, im-
proving the overall levels of product design, production and manage-
ment. Brynjolfsson and McAfee (2014) believe that the second machine
age, supported by AI, digitization, etc., will accomplish unprecedented
technological progress. Markoff (2016) considers the field of AI consists
of two aspects, one attempts to reproduce human capability and the
other to expand human capability to make better decisions through
utilizing the power of computers. Aghion et al (2017) maintains that a
key factor that determines how AI influences socio-economic growth is
how the former affects innovation and the creation of knowledge.
Agrawal et al (2018) treat the process of knowledge creation, to a large
extent, as one that regroups known knowledge, while the development
of AI not only helps people discover new knowledge, but also assists
people to effectively group what is already known. Consequently, these
authors believe that the introduction of AI promotes different combi-
nations of knowledge and significant economic growth.
The available literature indicates that the research about the impact
of AI on technological innovation is still in its infancy with theoretical
focus mainly on defining relevant concepts. The research focusing on
the relationship between AI and technological innovation is relatively
rare with many questions remaining to be further explored and ad-
dressed. This paper mainly studies the mechanism of how AI affects
2
Technological Forecasting & Social Change 158 (2020) 120142
technological innovation, and empirically tests the effect, degree and
sector heterogeneity of AI on technological innovation. Comparing to
the literature, the contribution of this paper is mainly reflected in the
following two aspects:
• At the height of theory this work explores the inherent mechanism
underneath how AI affects technological innovation from the per-
spective of knowledge creation, the spillover of knowledge and
technology, the capability of learning and absorption and invest-
ments in R&D and talents.
• Based on panel data of manufacturing sectors from China, this paper
empirically analyzes the effect, degree and sector heterogeneity of
AI on technological innovation, while compares China's manu-
facture sectors.
The rest of this presentation is organized as follows. The second part
is theoretical framework consisting of the concept of AI, the concept of
innovation and the mechanism underneath the way of how AI affects
technological innovation. The third part is study design, which con-
structs our econometric model while explaining all the main variables
and the source of data. The fourth part looks at the results and dis-
cussion of our econometric models. The fifth part concludes the paper
and provides relevant recommendations.
2. Theoretical Framework
2.1. The Concept of AI
In various definitions of AI, the following common element is in-
cluded: AI refers to human-like intelligent activities programmed to
perform specific tasks (Russell andNorvig, 2016; Goodfellow et al.,
2018). Margaret and Tay (2019), and Coccia (2019a) believe that AI
has the ability to think like humans, and can be used to perform specific
roles and tasks that were originally performed by people in public
places and social life. And this ability is constantly increasing, can be
comparable to humans, and even better than humans in some cases. For
example, the application of deep learning of AI in cancer imaging can
help pathologist test and classify cancer in early stages of cancer de-
velopment, enable patients to receive timely treatment and increase
their chances of survival or recovery (Coccia, 2019b). Russell and
Norvig (2016) think that AI refers to systems with human attributes,
such as learning, speaking and other cognitive functions. Agrawal et al.,
2018 consider that AI includes a series of technologies, including ma-
chine learning, deep learning, natural language processing, robots, etc.,
can be defined as advanced prediction technologies. Jay et al (2018)
maintain that AI is a cognitive science that integrates image processing,
natural language processing, robotics, machine learning and other
technologies. The combination of AI with emerging technologies such
as the Industrial Internet of Things, big data analysis, and cloud com-
puting, applied to industrial production, can help produce flexible, ef-
ficient, and green operating methods, while also providing solutions for
industrial applications. Iafrate (2018) believes that AI is a technology
that can complete complex tasks that originally required human in-
volvement. Its main advantage is that it can analyze and make decisions
in milliseconds even in a very complex data analysis environment.
Kaplan and Michael (2019) deem that AI has the ability to achieve
specific tasks by flexibly learning exiting data. He (2018) considers that
AI mainly includes two aspects, computational intelligence and per-
ceptual intelligence. Computational intelligence has the ability to
quickly calculate and store memory, involving the application of data
and algorithms. Perceptual intelligence refers to the perception cap-
abilities of humans, such as vision, hearing, and touch. AI can capture
and analyze the information of surroundings, and make reasonable
responses through various of sensors. Christian et al (2019) consider
that AI is becoming more and more important in many areas of
economy and society, not only because its technological capabilities are
J. Liu, et al.
constantly improving, but more importantly, AI can continue to de-
velop independently by adapting to the new environment.
Based on the above researches, this paper considers that AI is the
use of machine learning1, deep learning,2 computer vision3, and other
technologies to achieve imitation of human capabilities through pro-
gramming and algorithmic processing. AI has the ability to learn,
reason, perceive and make decisions independently. It can replace part
of human and mental labor and provide users with efficient auxiliary
functions, such as data processing and technical analysis, which can
greatly improve work and production efficiency.
2.2. The Concept of Technological Innovation
In terms of the concept of innovation, Schumpeter (1934) claims
that innovation is a change in the production function and represents
the driving force of economic development. Damanpour (1996) con-
siders innovation as “a process that includes the generation, develop-
ment, and implementation of new ideas or behaviors. Leonard and
Swap (1999) see innovation as “the embodiment, combination, and
synthesis of knowledge in novel, relevant, valued new products, pro-
cesses, or services.” Rowley (2011) defines the concept as follows: “an
innovation is a change, in a product, service, process or, more widely,
an organization.” Dance (2008) lists thirty plus definitions of innova-
tion and provides his summary as follows: Innovation is something
fresh (new, original or improved) that creates value, where ‘something’
can be a process, product, or service that starts as an idea or thought.
Coccia (2014a, 2014b, 2016, 2017a) consider that a specific tech-
nological innovation refers to the results of solving specific problems in
a specific research area or a specific technological development process.
The evolution of problems and solutions has led to the emergence and
development of innovation. Coccia (2015, 2017b) deems that obtaining
a market competitive advantage is the main purpose of promoting
technological innovation. In order to maintain the competitive ad-
vantage in the market, companies need constantly find new solutions to
unresolved problems and maintain continuous innovation.
Marzi et al (2017) research the literature on manufacturing technolo-
gical innovation for the period from 1985 to 2015 and propose that
technology innovation is a necessary factor for manufacturing en-
terprises to maintain stability. Innovation, be it about products or ser-
vices, managerial operations or processes of production, underlies every
competitive advantage as a fundamental guiding principle
(Forrest et al., 2019).
Some scholars have also studied the interaction between technolo-
gical innovation. Fisher and Pry, 1971think that technological in-
novation is a competitive process of replacing old technology with new
technology. Nelson (2006) uses Darwinian ideas to interpret technolo-
gical evolution and proposes a multidisciplinary nature and different
technological paths in the process of technology innovation by com-
bining Darwinism with technology. Schuster (2016) believes that si-
milar to the formation of food webs in ecosystems by different species,
interdependent and complex networks form between technological in-
novation. Coccia (2018) deems that any technological innovation is not
independent, any innovation is based on the behavior of other tech-
nological innovations, and each innovation depends on other innova-
tions to achieve common evolution through interaction. Coccia (2019c,
Machine learning is the use of algorithms to analyze data, find, summarize
1
and learn regularities from data, and then make decisions and predict the de-
velopment of events in the real world.
2
Deep learning is a special kind of machine learning. It is to process data by
establishing and simulating the human brain for analysis. The method of deep
learning breaks through the bottleneck of traditional machine learning and
achieves beyond what traditional machine learning algorithms cannot achieve.
3
Computer vision uses algorithms to identify and detect targets in images or
videos, and to track and measure targets. It is an application of machine
learning in the field of vision.
3
Technological Forecasting & Social Change 158 (2020) 120142
2019d) proposes a new perspective to measure and evaluate the in-
teraction of technology in parasitic systems, and proves that it is ef-
fective to compare the evolution path of technology and evolution
theory, and there is reciprocity between different technologies. As a
universal and special social tool, technology not only continuously
meets the various needs of human production and life, but also follows
the objective environment's choice of it. Technology is continuously
upgraded and eliminated through the interaction between internal and
external causes, thereby achieving the “survival of the fittest”.
Based on the literature review above, let us define technological
innovation as follows:
Technological innovation is such a set of activities – which could be
just one particular activity or several, occurring either simultaneously
or temporally – that leads to a fresh technology (new, original or im-
proved) that increases productivity and produces exceptionally added
value to a company when compared to other technology-related ac-
tivities that take place in the same sector as the one the company be-
longs to. At the same time, technological innovation is not independent.
It depends on other innovations and co-evolves through interaction
with other innovation activities (Coccia, 2018).
Because of the emphasis on the comparatively added value, this
definition of technological innovation entails many aspects of the
concept. For example, it implies
1) An extraordinary level of creativity has to be involved over time;
2) The creativity has to be internally conceived, driven by environ-
mental forces, either current or predicted, and externally adopted,
such as market acceptance;
3) Relevant new processes, either productive or managerial or both,
have to be implemented to realize the said value;
4) Intended benefits and advantages are materialized;
5) Other than technology-related inventions, this definition also em-
phasizes on employing the fresh technology to produce marketable
fresh products or processes; and
6) Although not explicitly mentioned, the definition includes the roles
of relevant processes and outcomes.
Based on the above analysis, we see that AI is a result of techno-
logical innovation, not only a new technology with added value, but
also closely linked with other technologies to form a complex network
similar to the food web. Among these technologies, AI has not only
become the internal cause of other technological innovations, but also
the external cause that promotes other technological innovations. While
creating conditions for technological innovations, it is also continuously
promoting the creation of new technological innovations and forming a
new virtuous circle. Therefore, AI is a universal technology that can
support other innovations (Christian, 2019).
2.3. The Mechanism of AI affects technological innovation
Applications of AI can affect the process of knowledge creation, that
of spillovers and the capability of learning and absorption of knowl-
edge. The consequent effect on technological innovation is produced
mainly through the following ways. That is, AI promotes technological
innovation by:
• Quickening knowledge creation;
• Accelerating the spillover of knowledge and technology;
• Improving the capability of learning and absorption; and
• Increasing investment in R&D and talents.
(1) Quickening Knowledge Creation
Our definition of technological innovation indicates that technolo-
gical innovation is such a set of activities that leads to a fresh tech-
nology (new, original or improved). Additionally, technological
J. Liu, et al.
innovation contains creative ones that involve knowledge recognition
and integration on which the freshness of a new technology emerges, as
confirmed by (Weitzman, 1998). To this end, knowledge is the core of
technological innovation; effective creation of new knowledge is the
basis for technological innovation (Chen, 2010). Each technological
innovation manifests itself through the emergence of new knowledge
and an integration and new and existent knowledge. The fresh tech-
nology, produced out of a technological innovation, emerges as con-
sequence of knowledge creation, such as a new way of understanding
existing knowledge, a creative integration of different areas of knowl-
edge, or the production of original knowledge.
Corresponding to knowledge creation, as described above, the de-
velopment of AI provides data-collection support for revealing brand
new ways to look at the existing knowledge, fast speed support for
trying different ways to integrate knowledge, and to provide explora-
tion convenience for uncovering new knowledge. That is, we have: The
development of AI quickens the creation of new knowledge.
In particular, AI technology has clearly helped business firms to
increase their capability of data collection, leading to the rapid devel-
opment of various tools to deal with massive data. Not only machines or
intelligent algorithms, such as machine learning, deep learning, etc.,
are going to execute tasks, but new forms of human-machine interac-
tion can produce more efficient knowledge retrieval and data proces-
sing (Christian, 2019). That in turn accelerates the speed of data ac-
quisition and improves the accuracy and reliability of the consequent
understanding and knowledge. Because of the development of AI, in-
troduced are such advanced method of analysis. For example, the
technologies of deep learning and computer vision are able to provide
more quickly than ever before a large number of sources of information.
That helps create new knowledge and new computational schemes
faster than before so that the process of knowledge regrouping accel-
erates (Agrawal et al., 2018). In other words, what's speeding up is the
process from capturing and structuring massive data to information to
knowledge creation (O'Leary, 2013). For example, when they devel-
oped the solid electrolyte new material for lithium ion batteries, Japan's
Fujitsu Limited and Chemical RIKEN (or Institute of Physical and
Chemical Research) employed related technology of AI. This tech-
nology helped the scientists control their number of repeated opera-
tions and reasonably predict the properties of synthetic compounds.
Hence, within a shorter period than expected, the scientists were able to
pinpoint out the optimal material combination for high lithium ion
conductivity, while simultaneously discovered more efficient high li-
thium ion conductivity. For details on this case, see (Fujitsu 2018).
Additionally, the development of AI promotes the popularization
and application of internet and communication methods of platform
economies. It breaks down the boundaries of knowledge within and
between companies. It accelerates the dissemination and diffusion of
knowledge, and the process of creating new knowledge through
knowledge exchange and integration. This end in turn greatly influ-
ences the development of AI (Goldfarb and Trefler, 2018). Therefore,
we have: AI promotes technological innovation through accelerating
the creating of knowledge.
(2) Accelerating Spillover of Knowledge and Technology
Because of its inevitable spread between various departments of a
business firm, the AI technology is promoted simultaneously by all di-
visions of the firm, leading to the development of inter-departmental
technological innovation. With increasingly higher levels of profits,
brought forward by artificial-intelligence-based innovations, bene-
ficiary departments will bump up their demands for additional in-
telligent technologies. After having received the gains from the de-
partments that applied intelligent technologies, the R&D department
continues its efforts to improve its firm's technical sophistication and to
develop new smart technologies in order to satisfy the new demands.
The consequent application of intelligent technologies of a new round
4
Technological Forecasting & Social Change 158 (2020) 120142
once again largely promotes the innovation spillovers for the R&D de-
partment. When such a cycle repeats itself, it eventually stimulates a
cumulatively cyclic growth of AI and technological innovation as fol-
lowing: Intelligent technology → growth in inter-divisional commu-
nication → appearance of inter-divisional technological innovation →
growth in profits → demand for more intelligent technology → pro-
duction of new intelligent technology.
At the level of firms, applications of AI technology help reduce the
cost of information transfer and sharing between business firms. The
formation of knowledge, technology and information networks makes it
more convenient for enterprises to exchange information and sharing
know-hows. Hence, the cost of spreading technological innovations
across companies is lowered, making inter-firm knowledge and tech-
nology spillovers much easier than before. That is subsequently con-
ducive to the diffusion and spread of technological innovations, which
further promotes the continuous improvement of technological in-
novation capabilities of all enterprises involved. So, we have: AI makes
knowledge sharing and technology transfer easier than ever before,
while keeping the confidentiality of trade secrets increasingly difficult.
When the distance from the source of knowledge (a research in-
stitute) to users increases, the impact of knowledge and technology
transfer decreases (Coccia, 2008). The development of AI accelerates
the interactive integration between enterprises, encouraging enterprises
located at different places to join forces in their processes of production
by taking advantages of their respective resources. When firms are no
longer constrained by their geographical locations, they can apply
control remotely and organize production over long distance as long as
all equipment work normally. And, in a production process additional
requirements can be added at any time and the pre-determined process
can be changed adaptively in order to satisfy the varying market con-
ditions. The release from the earlier geographic constraint encourages
various talents, firms and industries to join their efforts and resources
on their focal industrial chain. Under the joint effect of finer division of
labor, information sharing, resource integration, etc., firms scattered all
over the land will be able to achieve cooperatively their common goals
of production. Such change in business operation from the past will
gradually break the boundaries of traditional corporate organizations,
making firms no longer closed entities, instead a modularized produc-
tion network. Such networks will greatly facilitate communication and
cooperation between enterprises. In short, we have: AI supports the
emergence of new philosophies of conducting business, such as remote
manufacturing, computer-integrated business system, platform
economy, etc., by removing physical constraints, such as distance, lo-
cation, uneven distribution of resources, and others. All of these sti-
mulate the development of technological innovation.
For related empirical studies, see (Caputo et al. 2016;
Holmstrom et al. 2016; Roos 2015; Wu et al. 2015).
(3) Improving Learning and Absorption Capabilities
No matter how innovative a firm is, if it cannot appropriately de-
cipher the market information, it is doomed to fail. To this end, there
are plenty of examples on how corporate giants fell on hard times. One
of the notable recent examples is the case of Eastman Kodak.
Historically, this firm operated on a culture of innovation and change.
However, it did not take necessary actions when the market signaled it
to do so. when faced with the challenge of disruptive technology –
filmless photos, Kodak did not take decisive actions to combat the in-
evitable. For more detailed analysis of this firm, see (Kotter, 2012;
McGrath, 2013). To this end, we quote the following theorem
(Forrest et al., 2019).
For the oligopoly market described below, in the Nash equilibrium,
if the consumer surplus β is greater than 0, then at least one new firm
would profitably enter the market; and the scale of the entering firm in
terms of its operation in this market will be proportional to the mag-
nitude of β. Assume that the market is occupied by m incumbent firms,
J. Liu, et al.
m = 1, 2…, satisfying
1) They provide the market with mutually substitutable products;
2) Each incumbent enjoys its share of loyal consumers who make
purchases from the firm only as long as the price is not more than
the reservation price 1;
3) The incumbents compete over the switchers with adjustable prices,
where the switchers purchase their products depending on whose
price is most competitive; and
4) The managements of the incumbents are well aware the pricing
strategies of each other and have established their best responses by
playing the Nash equilibrium through pure self-analyses.
This theorem clearly indicates that appropriately understanding the
market cues is essential in terms of helping a firm to decide the right
thing to do and the right product or service to produce and to develop
instead of simply investing more heavily in innovation. In particular,
the entering firm needs to understand appropriately the switchers in the
theorem. Their indecisiveness of which firm's product they would buy
could practically mean that they are not happy with the products
available in the market; however, due to necessity they have to make
purchases. That surely opens up a wide door for firms with strong
learning and absorption capabilities to explore their appropriate di-
rections to develop their businesses.
Other than knowing what is appropriate to do based on market
information, learning and absorption abilities also directly relate to the
entry efficiency of external knowledge into an enterprise. Absorptive
capacity is widely recognized as an effective means of obtaining and
sustaining a competitive advantage (Vlačić et al., 2019). A higher level
of absorptive capacity positively influences the triggering of innovation
processes. That explains why we have the following: Capabilities of
learning and absorption represent a main force behind technological
innovation. And the more capable an enterprise is of learning and ab-
sorption, the more able the enterprise is to innovate appropriately.
In terms of learning and absorption capabilities, the development of
AI can help employees to improve these capabilities. Such development
constantly brings forward with more sophisticated equipment and de-
vices. For example, people have been using continuously improved
computers to model and simulate intelligent human activities, which
can substitute parts of the brain works widely employed in traditional
production systems. These sophisticated robots have been becoming
reliable and efficient analysis tools for employees to make more effec-
tive decisions than ever before due to their capabilities of reasoning,
learning, association and problem solving based on known knowledge.
Because of the capabilities of these equipment and devices of constantly
improving sophistication, employees’ abilities of learning and absorp-
tion rise.
Additionally, the development of AI has been practically promoting
the learning and absorption capabilities of enterprises. For example,
such technologies as deep learning, intelligent image recognition, etc.,
can help industrial robots to form independent judgements and to take
corresponding actions (Du et al., 2018). These robots’ independent
completions of complex tasks, their capability of transforming acquired
information into knowledge and taking justified subsequent actions
play a very positive role in the innovative activities of enterprises.
Summarizing these discussions at the level of employees and that of
enterprises, we have: by raising the capability of learning and absorp-
tion, AI helps promote technological innovation.
(4) Increasing Investments in R&D and Talents
For a representative firm, its purpose for having an in-house re-
search and development (R&D), if all possible, is to help the firm to
achieve one or more of the following:
• Generate, exploit and convert knowledge, which is newly found
5
Technological Forecasting & Social Change 158 (2020) 120142
either internally or external, into new products and/or processes
(Keizer et al., 2002);
• Acquire, integrate, convert and exploit new technologies
(Debackere et al., 1996);
• Entice cooperative partners (Hall and Bagchi-Sen, 2002); and
• Construct new-technology settings which are very costly and parti-
cularly difficult, even impossible, to acquire from competitors
(Lee, 1995).
By employing systems methodology, Forrest et al (2018) show that
when a company grows to a certain scale of strength, it will naturally
possess R&D capabilities as described above. So, in such a case, it is
strategically significant and important for the firm to officially re-
cognize and organize such a division within the company with suffi-
cient financial and administrative supports. To this end, the literature
empirically verifies that in-house R&D has been widely accepted as a
crucial determinant of innovation (Hall and Bagchi-Sen, 2002;
Parthasarthy and Hammond, 2002), Therefore, we have the following:
Investment in research and development is an effective guarantee for
technological innovation to occur.
In fact, investment in R&D plays an important role in every aspect of
a R&D process. It attracts talents, covers laboratory costs, helps provide
test equipment and devices, etc. All these expenditures potentially lift a
firm's innovation to elevated levels and lead to the occurrence of
technological innovation.
Other than attracting talents, directed investment in scientific and
technological talents represents another important component of
technological innovation. An effective organization of quality scientific
and technological talents with other essential factors can produce a
significant impact on the efficiency and capabilities of technological
innovation. Within an enterprise, the development of AI potentially
leads to additional intelligent industrial robots, high-end intelligent
equipment, and a subsequent set of intelligent production processes.
Such advances can gradually replace, to a certain degree, human labor,
increase productivity, reduce costs, so that enterprises can devote more
manpower, material and financial resources into research and devel-
opment activities, effectively increasing the investment in R&D and
talents.
Additionally, enterprises can create and capture higher levels of
profits by employing artificially intelligent technologies. With rising
levels of profits, enterprises will in turn increase their investment in
R&D and talents, based on which the rising levels of profits initially
came from. That promotes a new round of technological innovation,
forming a new virtuous cycle. Hence, we have the following result: AI
promotes technological innovation through increasing investment in
R&D and talents either directly or indirectly.
Based on the above analysis, we propose the following hypothesis 1:
AI promotes technological innovation.
3. Study Design
This section constructs our econometric model for investigating the
relationship between AI and technological innovation, and explains
related variables.
3.1. The Model
In addition to AI, the investment intensity in R&D (Patterson and
Ambrosini, 2015), foreign direct investment (Feng, 2019), ownership
structure (Yi et al., 2017), and technological imitation (Zhang and Li,
2015) also affect technological innovation. In order to accurately ex-
plore the impact of AI on technological innovation, as referring to the
previous discussion, we introduce these as control variables and our
measurement model as follows:
J. Liu, et al.
ln Yi,t = α + β1 lnAIi,t + β2lnKi,t + β3 lnFDIi,t + β4 lnSTATEi,t
+ β5 lnTETIi,t + εi,t (1)
where the subscripts i and t respectively represent a particular province
and year, AI artificial intelligence, K investment intensity in R&D, FDI
foreign direct investment, STATE ownership structure, TETI technical
imitation, α is a constant term, β a coefficient of each variable, and ɛ is
a random interference term.
3.2. The Variables
The response variable Y (the output of technological innovation): It
measures the technological innovation of individual manufacturing
sectors. In the literature, scholars mostly use the number of patent
applications (Filippetti et al., 2016), the number of patent authoriza-
tions (Carree et al., 2015), the number of new product developments
(Christiansen, 1999), or the sales of new products (Guan and Gao,
2009) as a proxy measure of the level of technological innovation. The
number of patent authorizations is the number of patents applied for
and granted. We believe this indicator is better than the number of
patent applications. At the same time, it takes time for a technical in-
novation to obtain its patent authorization, although the technical in-
novation has already occurred. Therefore, we believe that the amount
of patent authorizations can better reflect technical innovation with
more accuracy. This paper chooses the number of patent authorizations
in various manufacturing sectors as an indicator of technological in-
novation. The larger the number of patent authorizations, the greater
the technological innovation capability of the sector.
The central explanatory variable AI (the level of AI): As described in
the mechanism analysis of Section 3, AI mainly helps improve tech-
nological innovation capabilities by increasing knowledge creation,
promoting technology spillovers, improving learning and absorption
capabilities, and increasing R&D investment and talent investment.
Because AI uses a variety of technologies, such as machine learning,
deep learning, computer vision, and programming and algorithmic
processing, to emulate human capabilities, it is difficult to measure AI
with one single variable. This paper uses the number of industrial ro-
bots as a substitute for AI based on the practice of (Acemoglu and
Restrepo, 2018). The application of AI in the manufacturing industry is
mainly realized by industrial robots. By using computer vision and deep
learning, industrial robots can realize image recognition, real-time
control and prediction of objective things, and provide solutions for
industrial applications. Therefore, the number of industrial robots can
objectively measure the level of AI in industry. The greater the number
of industrial robots, the higher the level of AI in industry.
The control variables: According to the model above, the control
variables in this paper are investment intensity in R&D, foreign direct
investment, ownership structure and technology imitation.
R&D investment intensity (K): This intensity is one of the main ways
to improve technological innovation (Han et al,2014). Improvement in
technological innovation capabilities depends to a large extent on the
continued growth of investment intensity in R&D. By continuously in-
creasing in the investment intensity in R&D, companies can con-
tinuously increase human and material resources to create more sui-
table R&D conditions for technological innovation so as to improve
their own R&D and production technologies, thereby promoting tech-
nological innovation. Learning from Han et al (2014), this paper uses
the radio of internal expenditures of R&D to the total output value to
measure the strength of investment in R&D and predicts that the in-
vestment intensity in R&D will have a positive impact on technological
innovation.
Foreign direct investment (FDI): According to the theory of foreign
technology spillovers, the entry of foreign capital increases the tech-
nological innovation capacity of domestic enterprises through tech-
nology spillover effects. But at the same time, the entry of foreign
6
Technological Forecasting & Social Change 158 (2020) 120142
capital may also have an impact on domestically-funded enterprises and
reduce the profit level of domestically-funded enterprises, so as to in-
hibit the innovative capabilities of domestically-funded enterprises. The
entry of a large amount of foreign investment is also likely to cause
industry monopoly that exerts controls over important industries and
key technologies. In this way, a high dependence of domestically-
funded enterprises on FDI is created, and enthusiasm for technological
innovation is reduced, resulting in a decline in technological innovation
capabilities (Wang et al, 2006). Referring to the practice of
Wang et al (2010), this paper uses the ratio of the total output value of
foreign-funded enterprises in various industries (Chinese-foreign joint
ventures, Chinese-foreign cooperative ventures, and wholly foreign-
owned enterprises) to the total output value of the particular sector of
the industries to measure foreign direct investment of the sector. It is
expected that foreign direct investment has a negative impact on
technological innovation.
Ownership structure (STATE): Ownership structure is one of the
recognized factors affecting technological innovation. The proportional
relationship between state-owned enterprises and the private sector has
greatly affected the allocation efficiency and technological efficiency
(Sun et al, 2017). Although state-owned enterprises can play the sup-
porting role of industrial policies and reduce policy distortions, state-
owned enterprises and private enterprises face asymmetric financing
constraints in obtaining credit. It is comparatively more difficult for
private enterprises to obtain large amounts of bank credit, which leads
to much higher financing costs for private enterprises than state-owned
enterprises, thereby inhibiting technological innovation of private en-
terprises, see (Bai, 2011) and references found there. This paper uses
the ratio of the output value of state-owned enterprises in an industry to
the total output value of the industry to measure the ownership struc-
ture. We predict that the ownership structure will have a negative
impact on technological innovation.
Technical imitation (TETI): Technical imitation plays an important
role in manufacturing sectors with little or no technological innovation
and is one of the important means to play catch up and achieve quick
technological progress (Tian, 2015). Technical imitation is also a
learning process mainly through the introduction, digestion and further
innovation of advanced technology. Therefore, such technological in-
novation costs relatively less, does not require a lot of capital, man-
power and material resources. It is relatively easy to implement and
meets immediate needs of enterprise development (Lin and Zhang,
2006). Learning from Wang and Wang, 2019, this paper uses the pro-
portion of enterprises’ technical transformation costs to the total in-
dustrial output value to measure technical imitation,. This proportion is
expected to have a positive impact on technological innovation.
3.3. Data sources
Because the number and names of the sub-sectors used in the
International Federation of Robotics (IFR) and the China Industrial
Statistics Classification are different, this paper matches and sorts out
those industries that are in common. By synthesizing the classification
standards of the two sources, this paper uses a set of panel data from 14
manufacturing sectors for the time period from 2008-2017 for our
empirical analysis. These sectors include textile and clothing industry;
non-metal manufacturing industry; wood and furniture processing in-
dustry; rubber and plastic manufacturing industry; metal manu-
facturing industry; paper and paper products industry; food and bev-
erage manufacturing industry; transportation equipment
manufacturing industry; electrical machinery and equipment manu-
facturing industry; computer, communications and other electronic
equipment manufacturing; chemical fiber manufacturing; chemical raw
materials and chemical products manufacturing; pharmaceutical man-
ufacturing; production and supply of electricity, heat, gas and water. All
these data come from International Robot Alliance Website, ‘China
Statistical Yearbook’, ‘China Science and Technology Statistical
J. Liu, et al. Technological Forecasting & Social Change 158 (2020) 120142

Table 1 Table 4
Descriptive statistics of all variables Robustness test results
Variable Sample Size Mean Standard Deviation Min Max Variable Eq. 9 Eq. 10 Eq. 11 Eq. 12 Eq. 13

lnY 140 8.6088 1.5579 5.0998 12.5215 lnAI 0.6433*** 0.8661*** 0.4024*** 0.8802*** 0.3491***
lnAI 140 5.5012 3.1267 0 11.4758 (5.95) (4.02) (3.57) (3.84) (3.12)
lnK 140 4.2329 0.8890 2.0496 7.4703 lnK 0.8456*** 2.0446*** 0.4788*** 1.8817*** 0.4435***
lnFDI 140 1.3702 0.9158 2.0519 8.7978 (4.15) (3.39) (2.72) (3.67) (2.61)
lnSTATE 140 2.2051 1.1271 −3.9185 4.3006 lnFDI −0.1077 −1.2075 −0.1550* −0.7115* −0.1327
lnTETI 140 0.0832 1.4847 −4.1348 5.1641 (−0.95) (−2.89) (−1.73) (−1.82) (−1.40)
lnSTATE −0.3387* −0.6800 −0.0242 −0.9370** −0.0655
(−1.71) (−1.32) (−0.23) (−1.98) (−0.57)
lnTETI −0.2304*** 0.0234 −0.2117** 0.0058 −0.1685*
Table 2
(−2.96) (0.16) (−2.49) (0.05) (−1.90)
The overall regression results
α 7.2820* 11.5841*** 5.9408*** 10.4844*** 5.5418***
Variable Eq. 1 (FE) Eq. 2 (RE) Eq. 3 (FGLS) Eq. 4 (System- (6.74) (4.14) (5.35) (3.95) (4.88)
GMM) lnYi,t-1 0.1128 −0.1011 0.3007*** 10.4844*** 0.3794***
(1.35) (−0.75) (2.60) (3.95) (3.28)
lnAI 0.2207*** 0.2321*** 0.1163*** 0.1945** OBS 140 70 70 70 70
(5.71) (6.17) (3.03) (2.02)
lnK 1.2435*** 1.0599*** 0.9802*** 0.7586*** Note: ***, **, * represent respectively 1%, 5%, 10% significance levels.
(7.25) (6.60) (5.65) (2.79)
lnFDI −0.1883** −0.2316** −0.4106*** −0.0798
using the ‘number of patent authorizations’ as the explained variable. In
(−2.09) (−2.52) (−2.83) (−1.08)
lnSTATE −1.0053*** −0.7283*** 0.0611 −0.4439*
particular, the columns with headings of Eq. 1, Eq. 2, Eq. 3, and Eq.4
(−5.82) (−4.76) (0.61) (−1.82) respectively show the corresponding estimates of using Fixed Effects
lnTETI 0.0874 0.0713 −0.0162 −0.0644** (FE), Random Effects (RE), Feasible Generalized Least Squares method
(1.66) (1.33) (−0.20) (−0.51) (FGLS), and the System Generalized Method of Moment (System-GMM).
α 9.8512*** 9.1119*** 6.7583*** 6.6466***
First, according to Hausman test, the p-value is 0.0202 (less than
(11.58) (10.33) (6.66) (0.79)
lnYi,t-1 0.2473** 0.05). So, the null hypothesis should be rejected. That is, the results of
(4.58) fixed effects regression are better than those obtained from using
p-value of 0.0202 random effects regression. So, between Eq. 1 and Eq. 2, we select Eq. 1.
Hausman test Second, the estimation results from using feasible generalized least
OBS 140 140 140 140
squares estimate can eliminate, to a certain extent, possible existing
Note: ***, **, * represent respectively 1%, 5%, 10% significance levels, and FE, heteroscedasticity and serial correlation (Woodridge, 2002). At the
RE, FGLS, GMM respectively fixed effects, random effects, feasible generalized same time, comparing the estimation results, produced respectively
least squares, system generalized method of moments. from Eq. 3 and Eq. 1, shows that the signs of the coefficients of the main
explanatory variable are the same. So, we think the results of Eq. 3 are
Table 3 better than those of Eq. 1. Because the system generalized method of
The sectoral regression results moment can partially revolve the problem of endogenous problem
Variable Eq. 5 Eq. 6 Eq. 7 Eq. 8
(Roodman, 2009), this paper will mainly analyze the estimation results
from Eq. 4. We think the results of Eq. 4 are better than those of Eq. 3.
lnAI 0.0586 0.2057* 0.2909*** 0.1292 By comparing Eq. 4 and Eq. 3, we find that the signs of the coefficients
(0.55) (1.95) (2.73) (1.28) of the influence of AI on technological innovation are the same. So, this
lnK 2.3213*** 0.4230* 2.3294*** 0.3581**
paper mainly provides its analysis based on the estimation results of Eq.
(4.04) (1.94) (6.21) (3.31)
lnFDI −1.0114** −0.2032 −0.2581 0.1471 4. These estimation results indicate that the coefficient of the influence
(−2.20) (−1.34) (−0.39) (1.47) of AI on technological innovation is 0.1945 and passes the test of 5%
lnSTATE −0.8586 0.0182 −1.7152* 0.0149 significance. That means that with control on the investment intensity
(−1.32) (0.12) (−2.61) (0.44)
of R&D, foreign direct investment, ownership structure, technical imi-
lnTETI −0.3767*** −0.1609*** −0.1802** −0.1375**
(−5.25) (−3.27) (−2.21) (−2.21) tation, the development of AI has significant positive effect on tech-
α 15.3003* 6.3647*** 13.0787*** 4.1779*** nological innovation, and the hypothesis 1 proposed in this paper is
(5.83) (7.06) (7.65) (8.48) confirmed positively. This is mainly because AI provides an intelligent
lnYi,t-1 0.0930 0.2770** −0.1197 0.4219*** and efficient platform for technological innovation. Through the ap-
(0.284) (2.42) (−1.63) (3.21)
plication of machine learning, deep learning, computer vision and other
OBS 70 70 70 70
technologies, AI accelerates the flow of knowledge, enhances the ability
Note: ***, **, * represent respectively 1%, 5%, 10% significance levels. to create, learns and absorbs knowledge, and speeds up knowledge
conversion and development and utilization. All of these help an en-
Yearbook’, all of which concentrate on the years of 2008-2017. By terprise significantly increase its labor productivity, liberate human and
taking the natural logarithm of all the above data, the descriptive sta- financial resources so that these released resources can be employed in
tistical results of the processed data are shown in Table 1. the efforts of R&D activities. That in turn helps the enterprise raise its
capability of technological innovation. This shows that AI is a new
source of power for technological innovation.
4. Results and Discussion When seen from the angle of the control variables, the coefficient of
investment intensity in R&D is 0.7586, which is positive and passes the
4.1. Overall Regression Analysis regarding the Effect of AI on Technological 1% significance tests; and compared with other coefficients, this coef-
Innovation ficient is relatively large. This shows that increasing the investment
intensity in R&D is conducive to promoting technological innovation.
First, we estimate the coefficients of the explanatory variables by The coefficient of foreign direct investment is -0.0798, but it fails the
using the panel data of China's 14 manufacturing sectors for the years of statistical significance test. This fact indicates that foreign direct
2008-2017. Table 1 reports the estimated coefficients of all variables by

7
J. Liu, et al.
investment has no significant impact on technological innovation. The
coefficient of ownership structure is -0.4439 and passes the significance
test of 10%. This end indicates that the ownership structure has a sig-
nificant inhibitory effect on the promotion of technological innovation.
That is, the larger the proportion of state-owned economy occupies in
the overall economic structure, the lower the innovation capacity of the
manufacturing industry. The reason is that, to a large extent, state-
owned enterprises affect the industrial allocation efficiency and tech-
nical efficiency (Sun et al, 2017), which causes a negative impact on
technological innovation. The coefficient of technical imitation is
-0.0644 and passes the 5% significance test of. That shows that tech-
nology imitation has a significant inhibitory effect on the technology
innovation, contrary to our expectation. The possible reason is that the
advanced technologies, introduced by enterprises in these 14 manu-
facturing industries, may still be in the stage of imitation, and has not
yet been effectively digested and absorbed. Thus, the introduction of
the advanced technologies to a certain extent inhibits technological
innovation.
4.2. Sectoral Regression Analysis on How AI Affects Technological
Innovation
In order to further analyze the sectoral heterogeneity of the impact
of AI on technological innovation, this article studies the impact of AI
on technological innovation by using sectoral regression. Firstly, by
going along with the classification methods of Fu et al (2014),
Chi et al (2014), and Ma, 2016, we divide all manufacturing sectors into
two groups: high-tech sectors and low-tech sectors. The former include:
transportation equipment manufacturing; electrical machinery and
equipment manufacturing; computer, communications and other elec-
tronic equipment manufacturing; chemical fiber manufacturing; che-
mical raw materials and chemical manufacturing and pharmaceutical
manufacturing. The latter sectors include: textile and clothing industry;
wood and furniture processing industry; rubber and plastic manu-
facturing industry; metal manufacturing industry; non-metal manu-
facturing industry; food and beverage manufacturing industry; paper
and paper products industry; production and supply of electricity, heat,
gas and water. Based on the regression analysis in the previous section,
this section uses the System Generalized Method of Moment for re-
gression. Eq. 5 and Eq. 6 in Table 3 report the regression results of high-
tech sectors and low-tech sectors, respectively.
In addition, this paper divides various sectors into two groups ac-
cording to the level of AI: higher AI level sectors and lower AI level
sectors. That is, total numbers of industrial robots in individual sectors
are ranked from high to low. The first seven sectors in this ranking list
are seen as industries with higher levels of AI, and the bottom 7 sectors
as lower levels of AI. Among them, the higher AI level sectors include:
transportation equipment manufacturing; electrical machinery and
equipment manufacturing; metal manufacturing; chemical fiber man-
ufacturing; rubber and plastic manufacturing; computer, communica-
tions and other electronic equipment manufacturing; food and beverage
manufacturing. The lower AI level sectors include: Non-metal manu-
facturing industry; wood and furniture processing industry; textile and
clothing industry; chemical raw materials and chemical products
manufacturing industry; pharmaceutical manufacturing industry; paper
and paper products industry; production and supply of electricity, heat,
gas and water. Eq. 7 and Eq.8 in Table 3 report the regression results of
sectors with higher levels of AI and sectors with lower levels of AI based
by the System Generalized Method of Moment, respectively.
According to the estimation results of Eq. 5 and Eq. 6, the coefficient
of AI influence of technological innovation in high-tech sectors is
0.0586, but fails the significance test. While the coefficient of the in-
fluence of AI on technological innovation in low-tech sectors is 0.2057,
and passes the 10% significance test. Jointly, they show that AI is more
likely to promote technological innovation in low-level sectors than in
high-level sectors. The possible reason is that the prevalent technology
8
Technological Forecasting & Social Change 158 (2020) 120142
level and technical threshold of the low-tech sectors are relatively low
so that knowledge creation may be relatively easier than in high-tech
sectors. Applications of AI with new technologies, such as deep
learning, computer vision etc., in low-tech sectors provide data acqui-
sition support for these sectors. That quickly provides a large number of
information sources, new knowledge and new computing methods, and
accelerates the process of knowledge reorganization, and thus the
process of knowledge creation. The growth of new knowledge and ap-
plications of AI also make these sectors significantly improve in areas of
knowledge acquisition and enrich their learning and absorption capa-
cities. Thus, applications of AI significantly promote technological in-
novation. At the same time, applications of AI in low-tech sectors, such
as textile and garment industry, wood and furniture processing in-
dustry, also make it easier to improve production efficiency and replace
part of labor force. That can bring additional profits for enterprises to
invest in research and development, thus promoting technological in-
novation and forming a virtuous cycle. As for high-tech sectors, due to
their abundant technical talents and relatively ideal scientific research
conditions, their levels of technological innovation are already at a
good height. So, it is relatively difficult for these sectors to achieve
further knowledge creation and to promote technological innovation.
Applications of AI in these sectors may play a small role in promoting
technological innovation at least in the initial stage. When the level of
AI reaches a relatively high level, AI's promoting role of technological
innovation will become apparent.
According to the estimation results of Eq. 7 and Eq. 8, for the sectors
with higher level of AI, the coefficient of influence of AI on technolo-
gical innovation is 0.2909, and passes the 1% significance test. For
sectors with lower level of AI, the coefficient of impact of AI on tech-
nological innovation is 0.1292, but fails significance tests. This end
further illustrates that AI can promote technological innovation; and
the higher the level of AI, the more obvious its impact on technological
innovation. Because of the rapid development of AI technology, AI can
bring more knowledge creation and technology spillover effects to en-
terprises. It makes analyzing data and decisions faster, raises produc-
tion efficiency and management efficiency. Thus, AI brings forward a
large magnitude of technological advancement. What is argued here is
that the higher the level of AI, the more significant its impact on
technological innovation. That is because the higher the level of AI, the
more fully applied technologies, such as machine learning, deep
learning and computer vision, the more knowledge creation and tech-
nology spillovers that can be brought to an enterprise, and the more it
can help improve the enterprise's ability to learn and absorb, and can
lead to higher productivity and management efficiency, to release more
manpower and financial resources for the enterprise to pursue R&D
activities, and to have great role in promoting technological innovation.
4.3. Robustness test
Changing the measurement method of core explanatory variables is
one of the effective methods of robustness test (Yuan et al., 2015).
Based on the concept of AI, we used the sum of the number of English
and Chinese papers4 related to AI (including machine learning, deep
learning and computer vision as mentioned above) in various manu-
facturing sectors published by Chinese authors to replace the number of
industrial robots for robustness test. After data matching and proces-
sing, the regression results of robustness test are reported in Table 4,
where the specific method is the System Generalized Method of Mo-
ment. To this end, Eq.9 is the result of the overall robustness test, Eq.10
and Eq.11 report the regression results of high-tech sectors and low-
tech sectors, respectively. Eq.12 and Eq.13 report the regression results
4
The number of English papers related to AI was collected and collated on
Web of Science, the number of Chinese papers related to AI was collected and
collated on China National Knowledge Infrastructure (CNKI).
J. Liu, et al.
of sectors with higher levels of AI and sectors with lower levels of AI.
According to the regression results in Table 4, the coefficient of the
influence of AI on technological innovation is 0.6433. The sign of this
coefficient is positive, which is consistent with the result of Eq. 4 in
Table 2 and passes the significance test of 1%. That indicates that the
empirical results obtained above are relatively robust and AI promotes
technological innovation. According to the estimation results of Eq. 10
and Eq. 11, the coefficient of the influence of AI on technological in-
novation in high-tech sectors is 0.8661 and the coefficient of the in-
fluence of AI on technological innovation in low-tech sectors is 0.4024.
Both of these coefficients are positive, which are consistent with the
sign of the coefficient of Eq. 5 and Eq. 6 in Table 3 and pass the sig-
nificance test of 1%. That indicates that the empirical results obtained
above are relatively robust and AI has a positive impact on technolo-
gical innovation in both high-tech sectors and low-tech sectors. Ac-
cording to the estimation results of Eq. 12 and Eq. 13, the coefficient of
influence of AI on technological innovation for sectors with higher level
of AI is 0.8802 and the coefficient of impact of AI on technological
innovation for sectors with lower level of AI is 0.3491. Both of these
coefficients are positive, which are consistent with the sign of the
coefficients of Eq. 7 and Eq. 8 in Table 3 and pass the significance test of
1%. Thus, the empirical results obtained in this paper are relatively
robust and AI has a positive impact on sectors with both higher or lower
levels of AI.
5. Conclusion
The findings of this paper show that AI significantly promotes
technological innovation. Although this result is similar to those of
Aghion (2017) and Agrawal (2018), the difference is that: this paper
explains the mechanism of how AI affects technological innovation in
four angles: knowledge creation, knowledge spillover, learning ability,
and investment in R&D and talents. Additionally, this paper also em-
pirically tests the promotional effect of AI on technological innovation,
and finds that the impact of AI on technological innovation experiences
industry heterogeneity: Compared with high-tech sectors, AI has a more
significant role in promoting technological innovation in low-tech in-
dustries; and sectors with higher levels of AI have a greater role in
promoting technological innovation. These two points are the high-
lights of this paper, and also the expansion of the existent literature,
including the works of Aghion (2017), Agrawal (2018), and others.
Because this research is done based on Chinese data, it provides
reference value for Chinese innovation policy making, as well as other
countries. Our empirical analysis indicates that AI improves technolo-
gical innovation more significantly in low-tech sectors and that the
higher the level of AI, the more significant the impact of AI on tech-
nological innovation. Therefore, for countries with a relatively low
level of technological development, strategies for the development and
application of AI should be formulated to promote knowledge creation
and technology spillover effects in order to enhance the level and
magnitude of national technological innovation. In particular, for the
United States, the European Union, Japan and other countries with high
levels of development in AI, they should vigorously develop AI to fur-
ther improve their national capabilities of technological innovation.
To conclude this presentation, let us look at the limitations of this
work: Firstly, in the theoretical part, the influence of AI on technolo-
gical innovation is analyzed in four angles: knowledge creation,
knowledge overflow, learning and absorption capabilities, and invest-
ment in R&D. However, it is empirically difficult to find appropriate
proxy variables and data for such variables as "knowledge creation",
"knowledge overflow" and "learning and absorption capabilities".
Therefore, in the empirical test part, we cannot perform a realistically
proper mechanism inspection. Secondly, this paper is based on China's
sector panel data; so the conclusions may not be applicable to other
countries beyond mere reference values.
9
Technological Forecasting & Social Change 158 (2020) 120142
Author Statement
Author Contributions:
Jun Liu:Conceptualization,Methodology,Writing-Original draft pre-
paration
Huihong Chang:Data curation,Software
Jeffrey Yi-Lin Forrest:Writing - Reviewing and Editing,Validation
Baohua Yang:Supervision,Investigation
All authors have read and agreed to the published version of the
manuscript.
Declaration of Competing Interest
We declare that we have no conflict of interest.
Acknowledgments
This study was funded by the National Natural Science Foundation
of China (Grant No. 71973068), Social Science Foundation Major
Project of Jiangsu, China (Grant No.18ZD003), Humanities and Social
Sciences Research Planning Foundation of China's Ministry of
Education (Grant No.19YJA790055) and Social Science Foundation of
Jiangsu, China (Grant No.16EYB012).
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