A field experiment provides evidence that AI investment plans focus on the rivals next door.
We may be mistaking AI momentum for inevitability. AI capabilities seem to be advancing faster than ever, but technologies don’t diffuse automatically. They spread through thousands of individual decisions made by firms that often have an incomplete view of what is happening around them. That forms the starting point of the new working paper, “Innovation Without Borders? The Geography of Technological Diffusion,” co-written by 2026 HBS AI Institute Associate Zoë B. Cullen. Cullen and her co-authors conducted a massive field experiment involving 3,316 firms across twelve European Union countries. They measured how corporate leaders perceive rival AI investment choices, and their findings suggest that AI’s spread is more fragile, and far more geographically sticky, than the inevitability story assumes.
Why This Matters
This research highlights that good AI strategy involves choosing the right reference points. A benchmark drawn only from global leaders might reveal what is technically possible, but fail to indicate what is competitively urgent or operationally relevant for your firm. Executives and business leaders need peer sets that reflect the markets in which they compete, the customers they serve, the talent they hire, and the conditions under which implementation must work. That means assigning different jobs to different comparisons: global examples can expand the possibility frontier, while closely matched domestic or regional peers may provide the stronger signal for timing, investment intensity, and execution. Finally, keep in mind that this study measured intentions, not spend. Revising a belief is the cheap part, converting it into success is harder.
Link to the HBS AI Institute Insight Article
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