The Uneven Impact of Generative AI on Entrepreneurial Performance

136 Pages Posted: 17 Jan 2024 Last revised: 1 Jul 2024

See all articles by Nicholas Otis

Nicholas Otis

University of California, Berkeley

Rowan Clarke

Harvard University, Harvard Business School, Students

Solène Delecourt

University of California, Berkeley - Haas School of Business

David Holtz

University of California, Berkeley; Massachusetts Institute of Technology (MIT) - MIT Initiative on the Digital Economy

Rembrand Koning

Harvard University - Business School (HBS)

Date Written: February 27, 2024

Abstract

Scalable and low-cost AI assistance has the potential to improve firm decision-making and economic performance. However, running a business involves a myriad of open-ended problems, making it difficult to know whether recent AI advances can help business owners make better decisions in real-world markets. In a field experiment with Kenyan entrepreneurs, we assessed the impact of AI advice on small business revenues and profits by randomizing access to a GPT-4-powered AI business assistant via WhatsApp. While we are unable to reject the null hypothesis that there is no average treatment effect, we find the treatment effect for entrepreneurs who were high-performing at baseline to be 0.27 standard deviations greater than for low performers. Sub-sample analyses show high performers benefited by just over 15% from the AI assistant, whereas low performers did about 8% worse. This increase in performance inequality does not stem from differences in the questions posed to or advice received from the AI, but from how entrepreneurs selected from and implemented the AI advice they received. More broadly, our findings demonstrate that generative AI is already capable of impacting—though in uneven and unexpected ways—real, open-ended, and unstructured business decisions.

Keywords: artificial intelligence, generative AI, entrepreneurship, emerging markets, developing countries, microentrepreneurship

Suggested Citation

Otis, Nicholas and Clarke, Rowan and Delecourt, Solène and Holtz, David and Koning, Rembrand, The Uneven Impact of Generative AI on Entrepreneurial Performance (February 27, 2024). Available at SSRN: https://ssrn.com/abstract=4671369 or http://dx.doi.org/10.2139/ssrn.4671369

Nicholas Otis (Contact Author)

University of California, Berkeley ( email )

Rowan Clarke

Harvard University, Harvard Business School, Students ( email )

700 Soldiers Field Road
Harvard Business School
Cambridge, MA 02163
United States

HOME PAGE: http://www.rowanclarke.io/

Solène Delecourt

University of California, Berkeley - Haas School of Business ( email )

545 Student Services Building, #1900
2220 Piedmont Avenue
Berkeley, CA 94720
United States

David Holtz

University of California, Berkeley ( email )

310 Barrows Hall
Berkeley, CA 94720
United States

Massachusetts Institute of Technology (MIT) - MIT Initiative on the Digital Economy ( email )

77 Massachusetts Avenue
50 Memorial Drive
Cambridge, MA 02139-4307
United States

Rembrand Koning

Harvard University - Business School (HBS) ( email )

Soldiers Field Road
Boston, MA 02163
United States

HOME PAGE: http://www.remkoning.com

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