Strategic AI Emphasis: Measurement and Consequences
(A2025-126101)

AUTHORS

Ali Obaidan, University Of Leeds; Sourindra Banerjee, Leeds University Business School, University of Leeds; Martin Heinberg, Leeds University Business School, University of Leeds; Constantine Katsikeas, Leeds University Business School

ABSTRACT

Artificial Intelligence (AI) has drawn substantial investments in recent years. These investments can only be justified if the technology enhances firm performance by increasing revenue or reducing cost. However, it remains unclear which of the two strategic objectives managers should emphasise. To address this gap, we conducted text analysis of more than 2 million contextual windows from annual reports to investigate how managers emphasise AI’s role in revenue generation and cost reduction. Our findings reveal that a stronger emphasis on cost reduction through AI leads to improved firm performance. Surprisingly, placing emphasis on revenue growth with AI negatively impacts financial returns. Moreover, we found that operational capabilities moderate the positive effect of cost AI emphasis while marketing capabilities mitigate the negative effect of revenue AI emphasis. Our research highlights how the impact of AI varies depending on the strategic emphasis managers decide to prioritise.