How does facial recognition as an urban safety technology affect firm performance? The moderating role of the home country's government subsidies

Abstract

The rapid progress of facial recognition technology (FRT), aided by technological advancements in artificial intelligence, is transforming urban life. However, FRT also presents challenges and imposes urban safety risks, such as cybersecurity threats and privacy concerns. Considering the importance of FRT as smart urban safety technology, this study utilises the rent-seeking theory to analyse the relationship between a firm’s level of FRT capability and its international and domestic sales performances. We explored the effect of the home country’s government subsidies as a contextual factor. We analysed 33 listed firms from nine countries – firms that are involved in artificial intelligence, based on secondary data from 2014 to 2019. Our regression analyses revealed mixed empirical results in that while the firm’s FRT capability negatively influenced its international sales performance, its positive effect on domestic sales performance was partially supported. Further, we found that the home country's government subsidies negatively moderated the relationship between a firm’s FRT capability and its domestic sales performance.