The Role of Ethical Principles in AI Startups

54 Pages Posted: 8 Mar 2023 Last revised: 31 Jul 2023

See all articles by James E. Bessen

James E. Bessen

Technology & Policy Research Initiative, BU School of Law

Stephen Michael Impink

HEC Paris

Robert Seamans

New York University (NYU) - Leonard N. Stern School of Business

Date Written: July 20, 2023

Abstract

Do high-tech startups benefit from adopting more ethical AI? Even without AI regulations, startups implement ethical AI policies, consult expert guidance, train employees about bias, and hire minority programmers to manage ethical issues associated with data collection, storage, and usage. This paper describes these startups' ethics-related actions and tests whether suppliers, customers, or investors influence these actions. We find that supplier relationships with technology firms relate to increased ethical AI policy adoption and pro-ethics actions. There is evidence that investors reward startups that take more costly preventative pro-ethics actions; however, merely adopting an ethical AI policy does not relate to increased performance. We use signaling theory to interpret these results, where investment in ethical AI policies is too low cost to serve as an effective signal but investment in ethical actions is costly enough to separate higher quality from lower quality startups.

Keywords: data, ai startups, ethical ai policies, algorithmic bias, ethics, fairness, startups, entrepreneurship

JEL Classification: M13, O32, D82

Suggested Citation

Bessen, James E. and Impink, Stephen Michael and Seamans, Robert, The Role of Ethical Principles in AI Startups (July 20, 2023). Available at SSRN: https://ssrn.com/abstract=4378280 or http://dx.doi.org/10.2139/ssrn.4378280

James E. Bessen

Technology & Policy Research Initiative, BU School of Law ( email )

765 Commonwealth Avenue
Boston, MA 02215
United States

Stephen Michael Impink (Contact Author)

HEC Paris ( email )

1 rue de la Liberation
Jouy-en-Josas Cedex, 78351
France

Robert Seamans

New York University (NYU) - Leonard N. Stern School of Business ( email )

44 West 4th Street
Suite 9-160
New York, NY NY 10012
United States

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
157
Abstract Views
800
Rank
341,980
PlumX Metrics