Title page 1

Contents 1

Abstract 2

1. Introduction 3

2. Measuring Firm-Level AI Adoption 7

2.1. Firm-Level AI Adoption from Firm Websites 7

2.2. Validation of the AI Adoption Indicator 10

2.3. AI Exposure vs. Realized AI Adoption 11

3. Further Data Sources 12

3.1. Firm Characteristics from Orbis 12

3.2. Revelio Labs Data on Workforce Skills 13

3.3. Representativeness of the Linked Samples 14

4. The AI Landscape in Europe 16

4.1. Trends in AI Activity 16

4.2. Trends in AI Adoption by Sector 20

4.3. Spatial Distribution of AI Activity 21

5. Determinants of AI Adoption 23

5.1. Classification of skills 23

5.2. Empirical Specification 25

5.3. Results 26

6. Skill Foundations of AI Adoption 28

6.1. Empirical Strategy 28

6.2. Results 30

7. Conclusion 34

References 36

Appendix 40

A. Figures 40

B. Tables 47

C. Details on Data 49

D. Definitions 50

E. Prompts 54

Tables 15

Table 1. Balance Test: Representativeness of Firm Website Data 15

Table 2. Determinants of AI Adoption 27

Figures 12

Figure 1. Industry-Level AI Exposure vs Share of Firms Using AI 12

Figure 2. Share of AI-Involved Firms by Year and Country 17

Figure 3. Share of Firms Using AI by Role in the AI Ecosystem (2016-2024) 18

Figure 4. Share of AI-Involved Firms by Type of AI Technology (2016-2024) 19

Figure 5. Share of AI-Involved Firms by Sector (2016-2024) 20

Figure 6. Spatial Distribution of AI-Involved Firms by Role 22

Figure 7. Selected Skills by Category and Mean Coefficient Magnitude 31

Figure 8. Top 10 AI and Data Skills 33

Appendix Tables 47

Table B.1. Skill Taxonomy 47

Table B.2. Determinants of AI Adoption by Sector 48

Appendix Figures 40

Figure A.1. Confusion Matrix 40

Figure A.2. Industry-Level AI Adoption Shares: Web-Based Indicator vs. Eurostat 41

Figure A.3. Representativeness of Orbis-Istari at the 4-Digit Industry Level 42

Figure A.4. Other AI Roles 43

Figure A.5. Other AI Types 44

Figure A.6. Share of AI-Involved Firms by Industry (2016-2024) 45

Figure A.7. Top 10 Skills by Category 46