Many Firms Prefer Ready-Made AI Software, With a Few Tweaks

Artificial intelligence has fundamentally changed nearly every industry, from manufacturing and retail to construction and agriculture. And as AI becomes even more ubiquitous, firms are often opting for off-the-shelf technology that can be modified to meet their needs.

Chris Forman, the Peter and Stephanie Nolan Professor in the Dyson School of Applied Economics and Management, in the Cornell SC Johnson College of Business, was part of a research team that examined firms’ decisions to adopt AI technology, and how that adoption was sourced: by purchasing ready-made software; by developing their own; or with a hybrid strategy, which the researchers say may reflect “complementarity” among sourcing approaches.

In an analysis of more than 3,000 European firms, they found that many – particularly in science, retail trade, finance, real estate and manufacturing – are increasingly opting for ready-made technology that can be tailored to the specific needs of the firm. And while AI may seem to be threatening the human workforce, these findings indicate that workers with AI-related skills will still be needed.

“In the vast majority of industries, firms are doing both readymade and in-house development, and I think it’s an interesting question for future work to understand why that’s the case,” said Forman, co-author of “Make or Buy Your Artificial Intelligence? Complementarities in Technology Sourcing,” which published March 5 in the Journal of Economics and Management Strategy.

“Ready-made software is important,” he said, “but for the vast majority of firms, it does not appear to be a substitute for in-house software, which suggests that it’s not, at least in the short run, going to eliminate the need for AI-related skills.”

The corresponding author is Charles Hoffreumon, a doctoral student at the Solvay Brussels School of Economics and Management. The other co-author is Nicolas van Zeebroeck, a professor of digital economics and strategy at the Solvay Brussels School.

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