AI-Driven Corporate Governance and Firm Performance: The Mediating Role of Decision Intelligence and Moderating Role of Digital Literacy

Abstract

Artificial Intelligence (AI) has revolutionized corporate governance practices, improving transparency, accountability, compliance monitoring, and strategic decision-making. This study analyzes the influence of AI-Driven Corporate Governance (AICG) on the performance of the companies, examining also the mediation effect of Decision Intelligence and the moderation effect of Digital Literacy. The study integrates the views of the Resource Based View (RBV) and Dynamic Capability theory to explore the link between AI's governance mechanisms and organizational performance. The research adopts an integrated moderated mediation approach, grounded in the Resource Based View (RBV) and Dynamic Capability Theory, to explain the role AI’s governance mechanisms play in enhancing organizational performance. The data which have been collected were analyzed on correlation, reliability, regression on 235 employees that work in organizations that in the process of digital transformation. The results clearly indicate that there is a positive effect of AI Corporate Governance on firm performance. Additionally, AI governance is a key lever for employing Decision Intelligence to boost organizational performance by maximizing the efficiency, agility and quality of managerial decision-making. The findings also illustrate that the influence of AI governance on firm performance is significantly moderated by Digital Literacy, underscoring the influence of employees' digital skills in unlocking the value of AI-enabled governance system. By bringing together technological capabilities and human competencies under one umbrella, the study adds to the increasing amount of literature on AI governance. It builds on existing work, by bringing the experiences of a developing economy context, where AI adoption and digital transformation is not yet mature. The results are of practical relevance for managers, policymakers, and organizations aiming to enhance governance efficiency, decision-making and the performance of their organizations by means of responsible use of AI and digital competences. The study builds that there is a need to not only invest in technology but also nurture intelligent decision making and a digitally empowered workforce to enable AI governance in the right path.