Buyer Artificial Intelligence-Enabled Environmental Governance and Supplier Environmental Controversies: An Organizational Information Processing and Signaling

Research indicates that the implementation of Artificial Intelligence (AI)-enabled environmental governance by global buyers can effectively reduce environmental controversies among their overseas suppliers. This effect is analyzed through the lenses of organizational information processing theory and signaling theory, suggesting that such governance mechanisms help mitigate risks associated with supply chain environmental issues.

Why it matters

This research highlights the potential of AI as a tool for enhancing environmental performance and mitigating risk within complex global supply chains. For organizations operating internationally, leveraging AI in governance can lead to improved supplier accountability and reduced exposure to environmental disputes, thereby safeguarding reputation and operational continuity.

Key insights

• Environmental controversies within global supply chains represent significant risks for global buyers.
• Buyer-implemented AI-enabled environmental governance is found to reduce the incidence of environmental controversies among overseas suppliers.
• The study leverages organizational information processing theory and signaling theory to explain the influence of AI-enabled governance.
• The analysis utilized text analysis for measuring AI-enabled environmental governance and examined panel data from 2,505 suppliers of U.S.-listed firms across 41 countries between 2020 and 2024.

Source

arXiv — Computers and Society — https://arxiv.org/abs/2609.11391