Follow the Leader? When and How Peer Investment Shapes Focal Establishment Investment in AI Human Capital

Abstract

We study the relationship between peer and focal establishment investment in AI-related human capital and examine how this relationship is shaped by access to human capital external and internal to the firm. Using establishment-level data on publicly-listed U.S. firms from 2009 to 2021, we find that peer investment in AI human capital positively predicts focal establishment investment. Importantly, this relationship is moderated by local labor market conditions, which may shape the cost of investment following inter-establishment learning, and even more so by the presence of complementary skills within an establishment, which amplify learning effects by increasing returns to investment. Our findings highlight when and how peer effects may contribute to the clustered diffusion of AI-related human capital, offering insights into technology adoption and workforce development.

Keywords: technology, diffusion, human capital, artificial intelligence