Enhancing Knowledge Management through AI adoption and Economic Freedom. A case study on European countries

This paper presents the nexus between Knowledge Management theory with New Institutional Economics concepts. The emergence of Artificial Intelligence is forcing managers to rethink the way knowledge is created, processed, and leveraged within the decision-making practices. The literature addresses on 2 different analytical plans the binomial Artificial Intelligence - organizations and the relationship between inclusive institutions, economic freedom, and Artificial Intelligence technologies. Starting from this disjunction, the paper’s scope is to achieve a blend between the two perspectives - micro and macro- through an empirical analysis of how economic freedom influences the adoption of Artificial Intelligence technologies within enterpises, with implications for the managerial decision-making mechanism. Using panel regression equations involving 32 countries and the period 2021-2025, we observed significant correlations between the degree of adoption of Artificial Intelligence technologies (segmented into size class enterprises) and five variables from the Economic Freedom Index (property rights, monetary freedom, trade freedom, tax burden, and judicial effectiveness). The models demonstrated the macroeconomic effects on decisions to adopt Artificial Intelligence technologies, which subsequently has implications in the decision making field. Furthermore, the Hausman test confirmed the appropriateness of fixed effects for all the models implied. Robustness tests also confirmed the models, highlighting a structural difference between the EU15 countries, nations that joined the EU after 2004 and non-EU countries. The study contributes by addressing a topic relevant to contemporary reality and presents an empirical analyses linking economic freedom to the adoption of artificial intelligence, with implications on the dynamics of managerial decision-making.