Artificial Intelligence and Enterprises' Involutionary Competition

Although the amount of investment by companies in artificial intelligence has risen significantly in recent years, the speed at which these companies are adopting AI varies; therefore, many "intelligent" enterprises have appeared with considerable differences in performance. Chinese A-share listed companies will be taken as the subjects of the research, and in conjunction with text analysis, the intensity of AI application at all levels will be used to investigate changes in overall involutionary competition and specific types of firms. Therefore, AI has reduced the competition among the insiders to some extent. The three are to make better use of resources and reduce transaction costs; to spread knowledge spillovers and promote collaborative innovation in the supply chain; and to improve the efficiency of factor allocation and restore market-clearing mechanisms. Based on the analysis of heterogeneity, the inhibitory effect of AI on involutionary competition is mainly observed in non-heavy-polluting, technology-intensive enterprises, and it is not significant in heavy-polluting, asset-intensive and labour-intensive enterprises. Moving away from the simple model put forward in the previous studies that directly links AI to firm performance, this paper first applies AI to the study of inter-firm competition to offer new theoretical ideas on how technological change affects the competitive environment. It can also give the company a reason to consider the competitive effect of using AI in the digital economy more carefully and help the regulator formulate appropriate competition policies.