The Role of External and Internal Human Capital in Shaping Contagion Effects in AI-Related Human Capital

61 Pages Posted: 13 Feb 2024 Last revised: 14 Jun 2024

See all articles by Manav Raj

Manav Raj

University of Pennsylvania - Management Department

Robert Seamans

New York University (NYU) - Leonard N. Stern School of Business

Date Written: February 27, 2024

Abstract

In this project, we explore how novel technologies diffuse across organizations and geographies by examining the relationship between peer investment in AI-related human capital and focal establishment investment in AI-related human capital. In a study of publicly-listed firms in the United States from 2009 through 2021, we find evidence of positive contagion effects – peer investment in AI-related human capital has a positive relationship with focal establishment investment in the same. Importantly, this relationship is moderated by factors related to access to human capital both external to an establishment as well as internal to an establishment. Considering access to external human capital, contagion effects are positively moderated by the size of the local labor market and local educational attainment, both of which reduce the costs of investing in technology-related human capital, and are negatively moderated by local labor market concentration, which limits labor mobility. Considering access to internal human capital, contagion effects are positively moderated by the presence of complementary skills within an organization, such as data analysis, IT, or software skills, which increases returns from technology-related human capital investments. Through this work, we generate insight into the path dependencies inherent in the diffusion of novel technologies across organizations and geographies.

Keywords: technology, diffusion, human capital, artificial intelligence

Suggested Citation

Raj, Manav and Seamans, Robert, The Role of External and Internal Human Capital in Shaping Contagion Effects in AI-Related Human Capital (February 27, 2024). The Wharton School Research Paper, Available at SSRN: https://ssrn.com/abstract=4690434 or http://dx.doi.org/10.2139/ssrn.4690434

Manav Raj (Contact Author)

University of Pennsylvania - Management Department ( email )

The Wharton School
Philadelphia, PA 19104-6370
United States

Robert Seamans

New York University (NYU) - Leonard N. Stern School of Business ( email )

44 West 4th Street
Suite 9-160
New York, NY NY 10012
United States

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