UNU-MERIT Working Papers Series

Artificial intelligence as a complement to other innovation activities and as a method of invention

Guillermo Arenas Díaz, Mariacristina Piva & Marco Vivarelli #2025-022

This study investigates the relationship between Artificial Intelligence (AI) and innovation inputs in Spanish manufacturing firms. While AI is increasingly recognized as a driver of productivity and economic growth, its role in shaping firms’ innovation strategies remains underexplored. Using firm-level data, our analysis focuses on whether AI complements innovation inputs - specifically R&D and Embodied Technological Change (ETC) - and whether AI can be considered as a Method of Invention, able to trigger subsequent innovation investments. Results show a positive association between AI adoption and both internal R&D and ETC, in a static and a dynamic framework. Furtheremore, empirical evidence also highlights heterogeneity, with important peculiarities affecting large vs small firms and high-tech vs low-tech companies. These findings suggest that AI may act as both a complement and a catalyst, depending on firm characteristics.

Keywords: Artificial Intelligence; Method of Invention; R&D; Innovation Inputs; Innovative Complementarities.

JEL Classification: O31, O32

DOI: https://doi.org/10.53330/AEJJ9309

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