Experience Stern | Faculty & Research

Overview: In a new paper entitled, “Unlocking novel knowledge recombinations: The effect of artificial intelligence on inventive activity,” NYU Stern Professor J.P. Eggers and co-authors Xinying Qu (University of Hartford) and M. V. Shyam Kumar (Rensselaer Polytechnic Institute) explore how artificial intelligence (AI) fundamentally changes the landscape for innovation. Moving beyond the idea of AI as just an efficiency tool, the paper shows how building new inventions around AI makes it possible to connect and merge ideas that were once considered impossible. 

Why Study This Now: As organizations increasingly look to integrate AI into their core business practices not only to unlock efficiencies but to gain competitive advantage, this research highlights the role that AI can play by bridging disparate fields to unlock entirely new opportunities for innovation.

What the Researchers Found: By studying the patenting activity of U.S. firms during the period 2005–2023, the authors found that AI provides a shared layer of pattern detection and predictability that allows inventors to combine distant, technological domains that were once considered incompatible. Key takeaways from the paper include: 

• The Power of Recombination: AI makes previously-thought “impossible” combinations feasible, including across disconnected sectors (e.g., agriculture and robotics, or energy and transportation); An invention's likelihood of forming a novel recombination more than doubles if it cites a patent that builds on AI.
• The "AI Premium": Patents whose most novel citations leverage AI average 2.94% higher economic value than otherwise similar patents that do not build on AI.
• Collapsing Distance: AI acts as a universal translator, shrinking the "distance" between industries and allowing knowledge to flow across the entire technological landscape.

What Does This Change: This research has the potential to shift societal understanding of AI from an "efficiency booster" and “speed enhancer” to a fundamental architect of the technological landscape. The research outlines AI’s usefulness and effect on increasing inventive activity.

Key insight: “Our findings underscore the strategic value of embedding AI not just to enhance efficiency, but as a recombination platform,” note the authors. “Firms seeking breakthrough innovation should consider how AI can be used to integrate across product lines, R&D silos, or technology stacks. Additionally, our results suggest that investments in AI infrastructure and open AI tools may yield outsized returns—not only by improving existing tasks, but by unlocking latent innovation potential.”