AI-Driven Personalization and Customer Engagement in Digital Markets: Evidence from a Five-Year Panel Dataset (2021–2025)

Abstract

This study investigates the impact of artificial intelligence (AI)-driven personalization capabilities on customer engagement in digital markets using a balanced panel dataset of 28 countries spanning 2021–2025 (N = 140). Drawing on secondary data from the Stanford AI Index, ITU ICT Development Index, UNCTAD e-commerce statistics, DataReportal, and the World Bank, we operationalize AI capability, digital development, e-commerce intensity, and customer engagement through transparent multi-indicator proxies. Fixed-effects estimations with country and year effects reveal that AI capability exerts a positive and statistically significant effect on customer engagement (β = 0.284, p < 0.01). Digital development emerges as the strongest predictor, while e-commerce development also contributes positively. GDP per capita loses significance once unobserved country heterogeneity is controlled. Robustness checks, including lagged independent variables and clustered standard errors, support the main findings. The results highlight the strategic value of AI investment for enhancing customer engagement, particularly in emerging digital markets such as Vietnam and Southeast Asia. Implications for theory, managerial practice, and digital policy are discussed.