The Impact of Artificial Intelligence on Innovation

40 Pages Posted: 2 Apr 2018

See all articles by Iain M. Cockburn

Iain M. Cockburn

Boston University Questrom School of Business; National Bureau of Economic Research (NBER)

Rebecca M. Henderson

Harvard Business School; NBER

Scott Stern

Massachusetts Institute of Technology (MIT) - Sloan School of Management; National Bureau of Economic Research (NBER)

Date Written: March 2018

Abstract

Artificial intelligence may greatly increase the efficiency of the existing economy. But it may have an even larger impact by serving as a new general-purpose “method of invention” that can reshape the nature of the innovation process and the organization of R&D. We distinguish between automation-oriented applications such as robotics and the potential for recent developments in “deep learning” to serve as a general-purpose method of invention, finding strong evidence of a “shift” in the importance of application-oriented learning research since 2009. We suggest that this is likely to lead to a significant substitution away from more routinized labor-intensive research towards research that takes advantage of the interplay between passively generated large datasets and enhanced prediction algorithms. At the same time, the potential commercial rewards from mastering this mode of research are likely to usher in a period of racing, driven by powerful incentives for individual companies to acquire and control critical large datasets and application-specific algorithms. We suggest that policies which encourage transparency and sharing of core datasets across both public and private actors may be critical tools for stimulating research productivity and innovation-oriented competition going forward.

Suggested Citation

Cockburn, Iain M. and Henderson, Rebecca M. and Stern, Scott, The Impact of Artificial Intelligence on Innovation (March 2018). NBER Working Paper No. w24449. Available at SSRN: https://ssrn.com/abstract=3154213

Iain M. Cockburn (Contact Author)

Boston University Questrom School of Business ( email )

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Boston, MA MA 02215
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617-353-3775 (Phone)

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
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Rebecca M. Henderson

Harvard Business School ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States

NBER

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Scott Stern

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

Cambridge, MA 02142
United States
617-253-3053 (Phone)
617-253-2660 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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