The effect of corporate governance in driving organizational performance to AI-driven decision making

Abstract

This paper explores the linkages between corporate governance, AI-sponsored decision-making, ESG (Environmental, Social, and Governance) practices, and organizational performance. In particular, it examines the mediating influence of ESG practices and the moderating effect of AI-based decision-making regarding implementing the corporate governance and performance relationship. The study employed a quantitative research design by collecting primary data through structured surveys distributed to executives, managers, and board members of various industry Jordanian firms. A stratified random sampling approach is used to select a representative sample. Structural Equation Modeling was used to test the hypotheses. The findings indicate that corporate governance positively impacts ESG practices and organizational performance. It suggests that ESG practices partially mediate between governance and performance. Moreover, AI-based decision-making moderates the governance-performance relationship, whereby governance effectiveness is augmented by improved risk assessment, compliance monitoring, and strategic planning. The findings of this study strengthen the belief that corporate governance should go beyond traditional compliance models and adopt AI-backed and ESG-influenced strategies to maintain an expertise edge. The results highlight the practical implications for corporate heads, policymakers, and investors, underscoring the need for governance systems that align artificial intelligence-based decisions with ESG sustainability standards. Enterprises must be responsible for AI adoption, with adequate human oversight and ethical safeguards to minimize risks.