Elaine Pak, PhD Candidate in Management, The Wharton School
Abstract: The increasing adoption of artificial intelligence (AI) presents firms with an important choice between using these new technologies for short-term optimization (monitoring) or long-term adaptation (innovation). This study examines how corporate ownership structures influence AI implementation patterns. We argue that governance systems that emphasize optimization and rigorous performance metrics may inadvertently trigger the “exploitation trap,” where AI-driven changes undermine the exploratory activities essential for long-term adaptation and competitive advantage. By comparing owners with short-term horizons (e.g., private equity and hedge funds) against long-term-oriented owners (e.g., dedicated institutional investors), we analyze how varying levels of owner commitment and monitoring capacity shape AI adoption patterns, as well as the resulting trade-offs between exploitation and exploration. The findings contribute to the literature on strategy, corporate governance, and technological adoption, suggesting that ownership structure is an important factor in whether and how firms adopt new technologies.