Lending Legitimacy to Corporate Digital Responsibility: Trust in Firm versus Government Regulation of Artificial Intelligence Services

Abstract

Despite the expanding discourse on corporate digital responsibility (CDR), service firms are not perceived as using AI responsibly. Consequently, customers prefer governments more than firms to regulate AI, whereas AI service firms must strive to achieve legitimacy among customers. To address the dearth of relevant research, we conducted a multimethod investigation comprising four studies. The analysis of multinational survey data and a Facebook Ads experiment showed that customers’ concern about AI (“AI concern”) increases their preference for government regulation versus firms’ self-regulation of AI. In the nine countries sampled, the preference for government regulation was stronger in materialist (vs. post-materialist) cultures and where regulatory quality and technology use were high, but weaker where rule-of-law was high. Subsequently, we examined whether signaling CDR (as self-regulation) and compliance with government regulation mitigate the negative downstream impact of AI concern. When interacting with a custom-built service chatbot, participants’ AI concern reduced their willingness to share data. However, this effect was attenuated by signaling compliance with government regulation (EU AI Act), which also decreased customers’ perceived vulnerability. Hence, rather than positioning CDR efforts solely as self-regulation, AI service firms can build legitimacy by proactively, voluntarily, and explicitly incorporating government regulations into their CDR implementation.