Artificial intelligence technology and firms’ OFDI: Evidence from China

Artificial intelligence (AI) technology, widely regarded as a general-purpose technology (GPT), has important implications for firms’ international expansion, yet evidence on its relationship with outward foreign direct investment (OFDI) remains limited. Based on a panel dataset of Chinese listed firms from 2012 to 2023, this study investigates whether AI technology enhances firms’ OFDI in emerging markets using panel Probit and panel Tobit models. The results demonstrate that firms’ AI technology has a significant positive impact on their OFDI, as reflected in the OFDI decision, OFDI breadth, and OFDI depth. This relationship is mediated by the firms’ total factor productivity (TFP) and dynamic capabilities. Furthermore, the impact of AI technology on OFDI is moderated by industry competition. This study deepens the understanding of the effects of AI technology on firms’ OFDI and complements the issue of the relationship between GPT and firm internationalization.