US Business Leaders Address Impact of AI and Regulation

Newswise — While the capabilities of artificial intelligence (AI) have become robust, it is still in its infancy. As governments formulate strategies for regulating AI, the responsibility falls on American companies to successfully adapt to AI policies as they emerge, says professor Kislaya Prasad of the Robert H. Smith School of Business at the University of Maryland.

As the academic director of the school’s Center for Global Business, Prasad surveyed 885 U.S. executives and mid-level managers at for-profit companies. The results, published as “AI Use and Regulation: A Survey of US Business Executives,” shed light on executive sentiment, revealing both concerns and support for AI adoption and governance.

The report begins with five key findings:

• There are serious concerns about job losses, especially in the financial services, insurance and telecommunications sectors.
• There is strong support for regulation of AI, including mandates for transparency around AI use, explaining autonomous decisions, and conducting external audits for algorithmic bias.
• There is strong support for restrictions on the export of key AI technologies.
• “Assisting chatbots” and “coding” were identified as the most important applications of generative AI, which was already widely used across sectors by November 2023.
• While “improving customer experience” and “streamlining operations” are key drivers of AI adoption, the top reasons for its lack of adoption are “lack of a clear use case or perceived need” and “limited technical resource expertise.”

Survey respondents were selected primarily based on their ability to provide a variety of responses and perspectives on AI adoption across industries. Respondents represented eight sectors, covering roughly half of the U.S. private-sector workforce: financial services and insurance, healthcare and biotechnology, hospitality and entertainment, information technology, manufacturing, retail, telecommunications, and transportation. A ninth category, “Other,” was included to represent those outside the eight major sectors.

Nearly 58% of respondents collectively said their companies have incorporated AI into their business practices to some extent, 35% said they have not, while the remaining 7% said they are unsure about the extent of AI integration in their company.

The report also addresses job losses, the level of support for AI regulation and export restrictions, sentiment regarding the patentability of AI-powered products and intellectual property infringements, the use of AI in specific sectors, and the factors driving and hindering the implementation of AI.

More on the key findings

Concerns about job losses weigh heavily on management staff. When it comes to the potential negative impact of AI on job prospects over the next five years, about 20% of respondents said they were very or extremely concerned. These concerns resonated with 47% of participants in the financial services and insurance sector and 32% in the telecommunications sector. Additionally, 27.5% of respondents with less than 15 years of work experience and 26% of respondents who identified as AI decision-makers at their companies shared these concerns. While there is some concern among those directly involved in AI in their jobs, “it is unclear whether this is due to more intimate knowledge of AI capabilities or more sensitive roles,” Prasad writes.

There is strong support for regulation of AI. The Biden administration’s 2023 AI executive order aimed to establish new AI safety standards, create privacy safeguards, and promote business innovation and competition. Over the past five years, 17 states have passed 29 AI regulation laws promoting similar principles. In terms of the extent of executive support for regulating AI systems, respondents were asked about three types of mandates—transparency in AI use and data collection, explainability of autonomous AI algorithm decisions, and third-party auditing of algorithmic bias in AI algorithms. About 75% of responses indicated strong or somewhat support for regulation mandating transparency, with regulation of algorithmic bias being viewed similarly. About 72% of respondents strongly or somewhat supported explainability provisions.

Strong support for restrictions on export of key AI technologies. In addition to the 2023 AI Executive Order, the U.S. Department of Commerce has strengthened export controls on AI technologies, targeting the sale of advanced integrated circuits and chip manufacturing equipment to China. According to Secretary Gina Raimondo, the goal was to limit “China’s access to advanced semiconductors that could power breakthroughs in AI.” Support for these policies was evident among survey respondents, with nearly 60% strongly or somewhat supporting restrictions. Companies with 10% or more international sales were more likely to support restrictions on AI technology exports. Manufacturing led all sectors by a significant margin, with 70% of its respondents strongly or somewhat supporting restrictions on the export of cutting-edge AI technology. Older respondents, those concerned about AI-related job losses, and those with high trust in government were also more likely to support export restrictions.

Generative artificial intelligence is one of the first areas of implementing artificial intelligence in business. When asked about the AI ​​technologies their companies had implemented, 39% said generative AI was in use, followed by computer vision (30%) and machine learning (27%). Companies with a significant global presence were found to be the heaviest users of AI for generative tasks. Of the respondents from these companies, 33% said they were using generative AI for chatbots, while 32% used it for marketing and 30% for text generation. When it comes to decision-making tasks that currently use autonomous decision-making systems, respondents regularly cited inventory management, logistics, personalization, and recruiting.

The basis for implementing artificial intelligence is to improve the quality of customer service and operational efficiency. Drivers and obstacles were broadly similar across sectors. However, in companies where AI is in use, these two factors appeared in 66% and 72% of responses, respectively. Obstacles cited by over 35% of companies with AI implementations included high upfront costs, difficulty recruiting skilled talent, and the challenge of integrating AI into existing IT infrastructure. For companies where AI has not been implemented, the two most common reasons cited were a lack of a clear use case or perceived need for the technology, and limited technical knowledge or resources to implement and manage the technology.

“There is a lot of similarity in AI usage patterns across sectors, although the levels vary widely. Information technology, telecommunications, financial services and insurance, and manufacturing all have much higher levels of AI usage than, say, retail and e-commerce,” Prasad says.

But AI is being used in similar ways everywhere, he adds. “What’s more, sentiments toward AI and its regulation are similar across sectors.”

This research was funded by the U.S. Department of Education through a Title VI grant through the CIBE program.

Read more: Use and Regulation of Artificial Intelligence: A Survey of American Business Executives