Implementation of AI principles by commercial entities and its implications on the corporate governance

Abstract

Now that the AI principles have become widespread in the world, the focus has shifted to the implementation in practice. Obviously it is not enough that the companies just copy the AI principles and publish them as their own business policies. The private entities engaged in the development and use of AI must address the implementation of AI principles as an issue of corporate governance. Furthermore, they need to implement the principles within the framework of contractual governance, given that several entities are commonly involved in the development of AI products. In this context, it is useful to recognise that the straightforward shareholder primacy approach to corporate governance has recently been criticised. The AI governance to ensure that the use of AI does not undermine the fundamental values of the society is in line with the emerging focus on the social and environmental issues in the practice of corporate governance (ESG focus). Viewed from the society, the commitment to the AI governance by private entities enables dialogues between the commercial developers and/or uses of AI and the members of the civil society on the use of AI products. By borrowing the well-known framework, it constitutes the “voice” approach on collective decision over the use of AI in the society, as opposed to the “exit” approach relying on the market mechanism to have the better AI products to survive or the “loyalty” approach through the enforcement of the regulation to exclude such AI products as the regulator finds inappropriate. As concerns the use of AI products in the society, on which people’s views can be divided, the “voice” approach seems to be the most efficient.