AI risky as corporate governance tool, USask-led team finds

That’s the finding of a paper recently published in the prestigious journal Harvard Business Review (HBR) by a team of interdisciplinary researchers from the University of Saskatchewan’s (USask) Edwards School of Business and the University of Calgary’s Haskayne School of Business.

“We identified a new risk to AI we call encroachment risk—the novel idea that AI can encroach on the power and influence of strategic roles and pose an organizational risk,” said co-author Dr. Vince Bruni-Bossio (PhD), associate professor at Edwards and USask’s acting provost and vice-president academic.

The team conducted extensive interviews over 2 ½ years with chairs of 27 large companies listed on the Toronto Stock Exchange, delving into how board processes work, how these experienced leaders exercise their power, and how AI affects that process.

“We never predicted what the final article would be, from the beginning. It kind of moulded itself through these discussions,” said Bruni-Bossio. “We’re very excited because of where it landed.”

The team focused on board chairs as a case study, but the findings broadly apply to any strategic corporate role, said Edwards professor and co-author Dr. Devan Mescall (PhD).

“When we got down to the details, we realized that the chairs’ tasks are multifaceted,” he said. Other team members and co-authors are Edwards professor Dr. Regan Schmidt (PhD), and Haskayne professor Dr. Anup Srivastava (PhD).

“One of the really fascinating things is tasks like setting meeting agendas, establishing committees and summarizing board discussions at first seem pretty mundane, and something AI can do easily,” Mescall said. “But then you realize that in the hands of a human, those are used as judgments, and there’s thought put into it that influences others around the table. That’s the epiphany.”

For instance, a chair can manage the board meeting agenda to shape the flow of conversation, exercise behind-the-scenes influence to guide how information is presented, and set the tone for a meeting. The role also involves ensuring that board members have the right mix of experience to be effective, and the skillset to read the room, synthesize discussions, and reframe issues to shape how directors understand issues and reach conclusions.

These are considerations beyond the capabilities of an automated AI application, the authors suggest. Keeping these power-conduit tasks in mind, corporate leaders should establish clear policies for where AI can be used, and where human oversight must be maintained, according to the paper.

“By identifying key strategic roles and power-conduit tasks, as well as fencing AI involvement, board chairs can strike a balance between technological advancement and effective governance. The goal should not be to resist AI but to integrate it in a way that preserves leadership influence and strengthens the board chair’s strategic objectives,” the team wrote.

They chose to pitch to paper to the Harvard Business Review, where it’s tough to get published, because the journal focuses on what’s most important to busy C-suite executives who have little time, said Mescall.

“We thought ours was a novel and practical look at AI, and how organizations are using AI to replace tasks. It seems a new idea that there’s something more to tasks than can we replace them with AI, to should we do that. It’s a big enough question, so we took a shot at HBR and they agreed.”

“It’s great for USask to be at the front edge of the topic in a leading journal,” said Bruni-Bossio. “Our interdisciplinary work is fun and very exciting, and important for the mission of being the university the world needs.”