From Responsible AI Governance to Competitive Performance: The Mediating Role of Knowledge Management Capabilities

Abstract

In a constantly changing environment, researchers and practitioners are concerned with the issue of whether responsible artificial intelligence (AI) governance can help build competitive advantage. Responsible AI governance should be viewed as a source of competitive edge rather than merely a quick fix for automating manual processes. Despite this, little empirical evidence is available to support this claim, and even less is understood about the dimensions and relationships that add business value. This paper develops a conceptual model to explain how responsible AI governance practices aligned with strategic goals lead to competitive performance gains. An investigation of 144 Nordic firms is conducted to verify our hypotheses using a PLS-SEM analysis. Findings reveal that deploying responsible AI governance will make a significant positive impact on an organizations’ knowledge management capabilities directly and on competitive performance indirectly. These findings also suggest that implementing responsible AI governance improves firms’ ability to acquire and distribute knowledge when there is strategic alignment with a firm’s goals.