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

A study of 2,505 suppliers to U.S.-listed firms across 41 countries from 2020 to 2024 found that suppliers' exposure to buyers' AI-enabled environmental governance is negatively associated with supplier environmental controversies in the following year, according to an arXiv paper (arXiv:2609.11391v1). The negative relationship is stronger in supplier countries with higher AI readiness and regulatory quality, the authors report, drawing on organizational information processing theory and signaling theory with multidimensional fixed-effects models. The paper concludes it contributes to research on AI-enabled sustainability governance and sustainable supply chain risk management.

arXiv:2609.11391v1 Announce Type: cross Abstract: Environmental controversies in global supply chains pose significant risks for global buyers. This study examines whether overseas suppliers' exposure to buyers' artificial intelligence AI -enabled environmental governance reduces supplier environmental controversies. Drawing on organizational information processing theory and signaling theory, we investigate how suppliers' exposure to AI-enabled governance influences their environmental controversies and the institutional contingencies under which this effect varies. Using text analysis to measure buyer AI-enabled environmental governance, we analyze panel data on 2,505 suppliers of U.S.-listed firms across 41 countries from 2020 to 2024 with multidimensional fixed-effects models. We find that suppliers' exposure to buyer AI-enabled environmental governance is negatively associated with supplier environmental controversies in the following year. This negative relationship is stronger in supplier countries with higher AI readiness and regulatory quality. The study contributes to research on AI-enabled sustainability governance and sustainable supply chain risk management.