Governing the algorithm and related legal issues: the impact of internal GenAI accountability structures on sustainable organizational resilience in Tech-SMEs

Ali Ghafary, Juraj Cug, Zahid Hussain and Sheshadri Chatterjee

International Journal of Law and Management, 2026, 1-27

Abstract: PurposeThis paper aims to evaluate whether the impact of internal Generative AI Accountability Structures (IGAS), specifically those designed to promote sustainable organizational resilience in tech-oriented Small and Medium Enterprises (Tech-SMEs), is mediated by Generative Artificial Intelligence (GenAI) risk culture and moderated by Digital Governance Capabilities (DGC).Design/methodology/approachBuilding on theoretical frameworks grounded in neo-institutional theory and dynamic capabilities theory, this study used a predictive quantitative methodology. A total of 208 CEOs/CTOs/IT managers representing formal knowledge-based Tech-SMEs located in Science and Technology parks throughout the Middle East region provided survey data. Using partial least squares structural equation modeling (PLS-SEM), the proposed model was tested and estimated.FindingsResults indicated that IGAS positively affects GenAI risk culture and sustainable organizational resilience; however, GenAI risk culture acts as a complementary partial mediator in this relationship. In addition, digital governance capability has a significant moderating influence on the relationship between IGAS and GenAI risk culture, with a strong multiplicative positive effect when there are high levels of governance competence.Practical implicationsAs such, establishing AI oversight (e.g. ethics committees and auditing processes) is critical to survival for resource-constrained Tech-SMEs. Developing DGCs will ensure that oversight mechanisms are institutionalized as part of organizational routines which enable organizations to proactively develop and sustain organizational resilience through the development of proactive and adaptive responses to technological turbulence.Originality/valueMoving the discussion about AI governance away from the regulatory environment toward developing an organization’s ability to govern its own AI connects the areas of digital governance with strategic management. The empirical evidence in this research has shown that algorithmic accountability can be thought of as more than just a compliance burden. It should instead be considered as a high-level, dynamic capability needed for organizations to successfully navigate technological uncertainty and changes over time.

Keywords: Generative AI governance; Organizational resilience; Risk culture; Dynamic capabilities; Neo-Institutional theory; Tech-SMEs (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:eme:ijlmap:ijlma-06-2026-0349

DOI: 10.1108/IJLMA-06-2026-0349

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