Directors in the Loop? Responsible Corporate Governance for the Era of AI
| Autor | Lynn Warneke |
| Cargo | The Australian National University |
| Páginas | 73-100 |
73
Revista Facultad de Jurisprudencia No.15
DIRECTORS IN THE LOOP? RESPONSIBLE CORPORATE
GOVERNANCE FOR THE ERA OF AI
Lynn Warneke The Australian National University
ABSTR ACT
This article examines how the relationship
between corporate success and technological
progress has become more evident in the era
of Artificial Intelligence (AI), highlighting
its disruptive impact on the economy, law,
and society. As AI becomes a key driver of
profitability and competitive differentiation,
it also generates socioeconomic externalities
that pose significant challenges for corporate
governance and the interplay between
private value and public interest. This paper
assesses the effectiveness of corporate law
and governance in the context of AI, arguing
that directors are not sufficiently prepared
to govern AI in a way that promotes long-
term corporate value. The article proposes
reforms for “responsible AI governance,”
indicating that substantial legal and
normative changes are necessary to address
the risks and benefits associated with AI. In
conclusion, it is suggested that directors must
adopt principles of “corporate techno-social
responsibility” to establish a new model
of responsible governance that redefines
corporate value in this disruptive era.
RESUMEN
Este artículo analiza cómo la relación
entre el éxito corporativo y el progreso
tecnológico se ha vuelto más evidente en
la era de la Inteligencia Artificial (IA),
destacando su impacto disruptivo en la
economía, el derecho y la sociedad. A
medida que la IA se convierte en un motor
clave de rentabilidad y diferenciación
competitiva, también genera externalidades
socioeconómicas que plantean importantes
desafíos para la gobernanza corporativa y la
interacción entre el valor privado y el interés
público. Este trabajo evalúa la efectividad
del derecho y la gobernanza corporativa
en el contexto de la IA, argumentando
que los directores no están suficientemente
preparados para gobernar la IA de manera
que promueva el valor corporativo a largo
plazo. El artículo sugiere reformas para
la “gobernanza responsable de la IA”,
indicando que son necesarios cambios
legales y normativos sustanciales para
enfrentar los riesgos y beneficios asociados
con la IA. En conclusión, se plantea que
los directores deben adoptar principios de
“responsabilidad tecno-social corporativa”
para establecer un nuevo modelo de
gobernanza responsable que redefina el
valor corporativo en esta era disruptiva.
KEYWORDS: Corporate Governance, Artificial Intelligence, Techno-Social
Responsibility, Corporate Value, Regulatory Reforms, Socioeconomic Risks
PALABRA S CLAVE: Gobernanza Corporat iva, Inteligencia Artificial, Responsabilidad
RECIBIDO: 25/03/2024
ACEPTADO: 04/09/2024
DOI: 10.26807/rfj.v1i15.507
Tecno-Social, Valor Corporativo, Reformas
Regulatorias, Riesgos Socioeconómicos.
JEL CODE: G34; K22
74
Directors in the loop?
INTRODUCTION
The relationship between corporate success and technological progress
has never been more overt, with digital businesses and products proliferating
at extraordinary pace and scale. Of the many innovations to have emerged,
Artificial Intelligence (AI) entails the greatest disruption to the corporation,
economy, law, and society, and thus represents a singular challenge for
the company director. AI is becoming pervasive, driving profitability and
competitive differentiation (Williams, 2022), (Commonwealth of Australia,
2022), yet its profound socioeconomic externalities are provoking attention
on corporate governance and the nexus between private value and public
interest (Cihon, Schuett, & Baum, 2021), (Dignam, 2020) (Ford, 2021),
(Land, 2020). At the same time, a lack of contextualization for AI in
contemporary regulatory frameworks creates ongoing legal uncertainties
for industry and society. This paper critically assesses the effectiveness of
corporate law and governance in this context and argues—primarily from
the Australian perspective—that directors are not adequately prepared
to govern AI for long-term corporate value. Part1 descriptively examines
the distinctive challenge of AI governance, contextualizing the subsequent
normative arguments. Part 2 critically analyses present-day board and
legal effectiveness in the governance of AI for shareholder and stakeholder
benefit. Part 3 explores “responsible AI” governance reforms, contending
substantial legal and normative changes are required in future. AI will effect
a momentous socioeconomic transformation, promising great benefits but
carrying equally profound risks; therefore, the paper concludes that while
an appropriate regulatory framework for AI is now essential, the director has
a critical role to pre-emptively adopt “corporate techno-social responsibility”
principles and establish a new model of responsible governance to redefine
corporate value for this most disruptive era.
Part 1 AI — A Distinctive Governance Challenge
If a precondition of effective governance is clarity on what is being
governed, AI can be challenging even at the definitional level. While
acknowledging that reductive characterizations can obscure governance
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