Artificial intelligence and corporate diversification: evidence from China

The development of artificial intelligence (AI) has brought significant transformations to corporate management practices and profoundly influenced various business activities. Accordingly, we investigate the impact of AI on corporate diversification strategies. Using data from Chinese listed companies as the research sample, this study finds that AI significantly promotes corporate diversification. This conclusion remains robust after conducting robustness checks and addressing endogeneity issues. Mechanism analysis reveals that AI promotes corporate diversification by enhancing firms’ diversified innovation levels and reducing management costs. Heterogeneity analysis shows that the promotive effect of AI on corporate diversification is more pronounced in non-state-owned enterprises, firms facing higher market competition intensity, and firms with higher customer concentration. Furthermore, we examine whether AI improves firms’ overall resource allocation efficiency and find that AI significantly enhances resource allocation efficiency, thereby offsetting the negative impact of diversification.