Abstract
The recent progress in artificial intelligence algorithms has made firms to consider adoption of artificial intelligence tools within their systems for various purposes. These tools require certain knowledge and abilities to be adopted. Currently, there is limited research that seeks explanation to adoption of AI tools in firms. I try to assess the role of Absorptive Capacity – which is a firm's ability to acquire, assimilate, transform and exploit new external knowledge - in large Indian pharmaceutical firms adopting AI tools. For this, I use Natural Language Processing tools such as TextRank, for ranking the key phrases according to their importance within the context, and SBERT to assist in finding sentence similarity between texts. Our preliminary findings show that Absorptive Capacity does explain, to certain extent, firms’ AI adoption. Furthermore, I find that there is a strong correlation between the AI adoption and Absorptive capacity as well as number of female employees in the firm.