Are Korean AI Firms Really Growing Sustainably? Operational Efficiency by Period, Firm Age, Firm Size, and Region

Abstract

The sustainable growth of the AI industry depends not only on market expansion and technological advancement but also on whether AI supplier firms can efficiently transform their resource investments into stable economic outcomes. This study examines the operational efficiency of Korean AI supplier firms from the perspective of resource-efficient and sustainable growth and investigates differences across periods, firm age, firm size, and region. Using financial data from 95 firms over 2017–2025, we constructed 855 firm-year decision-making units and applied input-oriented data envelopment analysis under CRS and VRS. Nonparametric tests were subsequently used to compare efficiency across firm groups. The results show that both CRS and VRS efficiency declined over time, with the lowest efficiency observed during 2023–2025 despite the rapid diffusion of generative AI. Firms aged 19–25 years exhibited relatively higher efficiency than younger and older firms. Firm-size comparisons revealed contrasting patterns: SMEs showed higher CRS efficiency, whereas mid-sized enterprises exhibited higher VRS efficiency. Regional differences were significant for CRS efficiency but not for VRS efficiency, with firms outside Seoul and Gyeonggi showing relatively higher CRS efficiency. From a sustainability perspective, these findings indicate that rapid industry expansion based on increasing investments does not automatically lead to efficient or sustainable firm-level growth. The study therefore highlights the importance of resource-efficient operations, appropriate scale, and sustainable revenue structures in promoting the long-term economic sustainability of AI supplier firms and the AI industry.