Employer and Employee Responses to Generative AI: Early Evidence

Abstract

We examine the early responses of employers and employees to Generative AI through the lens of classic management accounting theories. Our framework uses three dimensions of organizational architecture: organizational orientation, technological capacity, and occupational autonomy. On the employer side, we find evidence of both displacement and augmentation effects: firms with greater GenAI exposure reduce hiring while increasingly emphasizing GenAI-related skills in job postings. On the employee side, workers show a decline in their long-term outlook for the firm. Cross-sectional analyses further show that hiring declines are larger in firms with more coercive control systems, that GenAI skill demand increases more in jobs with higher innovation and independence, and that negative employee sentiment is more pronounced in firms with coercive orientations and greater technological capacity. Our results reveal a mismatch between adaptive employer responses and employees’ more negative reactions, and thus have implications for management control design in an era of intelligent automation.

Keywords: GenAI, Employer and Employee, Management Accounting, Organizational Control