Chapter 6: The Impact of Augmented Reality Adoption on Firm Performance, Efficiency, and Turnover

The advent of augmented reality (AR) technology is transforming business, enhancing firm performance, operational efficiency, and inventory management. The research aims to fill the empirical gap in understanding the relationship between AR adoption and firm efficiency across different industries. We classify firms as AR adopters or non-adopters based on mentions of AR-related keywords in annual 10-K filings. Our regression analysis reveals that AR adoption has no significant positive effect on overall firm efficiency at a conventional level. However, industry-specific analyses show modest but statistically significant negative impacts on firm efficiency in manufacturing and retail sectors, likely due to integration challenges and disruptions to established workflows. We also explore the effects of AR on various operational metrics, including asset turnover, inventory turnover, and selling, general, and administrative (SGA) expenses, finding generally negative impacts. This study challenges overly optimistic expectations about the immediate benefits of AR technology, emphasizing the need to consider firm-specific and industry-specific factors for a more accurate assessment of its potential to enhance business operations and drive innovation. The findings highlight the need for a strategic approach to AR implementation, considering industry-specific factors and aligning technology integration with business objectives. This research contributes to the discourse on digital innovation, offering insights into how AR adoption impacts firm efficiency and its complex interplay with operational and financial metrics.