JOINT ECONS-BUSINESS: Professor Zhe Yuan (Zhejiang University)
AI as Business Infrastructure: Platform Provision and Firm Growth
Digital platforms increasingly provide AI as business infrastructure for the firms they serve, but whether this mode of provision widens or narrows performance gaps across firms remains unclear. We study the staggered adoption of an AI system centrally provided by a leading Chinese e-commerce platform, embedded in firms’ routine workflows, and made broadly available at low cost. Using records of AI adoption and use and a matched difference-in-differences design, we find that adoption raises monthly sales by 51.6%, primarily through a 47.0% increase in orders, with the largest proportional gains among initially smaller firms. Beyond increasing sales, AI strengthens the capabilities that underpin firm growth: improving firms' ability to reach consumers, adapt product offerings, and maintain quality as they scale. These capability gains are likewise concentrated among smaller firms. Instrumental-variable estimates corroborate these firm-level findings. Mechanism evidence is consistent with AI lowering the operating costs of recurring business tasks and reducing information frictions in market matching and operational coordination. At the market level, categories with greater pre-existing information frictions experience larger increases in incumbent growth, increased entry, and new-product expansion, consistent with market expansion rather than pure business stealing. This form of platform provision can therefore preserve the scale economies of AI upstream while broadly distributing the resulting capabilities downstream, generating larger proportional gains for initially smaller firms.
Date
Wednesday, 02 September 2026
Time
12.30pm to 3pm
Venue
In person Seminar
Biz01 06-01
Biz01 06-01