Ethical governance, not GenAI alone, predicts long-term competitiveness in Portuguese B2B firms; GenAI helps, but mainly when embedded in governance and innovation routines.

Generative AI Adoption in B2B Firms: Ethical Governance, Innovation Capabilities, and Long-Term Competitive Performance

Michele Alves, Domingos Santos Martinho, Ricardo Marcão, Pedro Sobreiro · April 08, 2026 · Systems

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In a survey of 104 Portuguese B2B managers, ethical governance shows the strongest positive association with long-term competitive performance, while GenAI adoption is positively associated but acts complementarily through organizational innovation routines rather than as a dominant driver.

The rapid diffusion of generative artificial intelligence (GenAI) is reshaping organisational systems and digital transformation strategies, yet it remains unclear which organisational conditions are associated with long-term competitive performance in business-to-business (B2B) contexts. This study adopts a systems-informed perspective and examines how ethical governance, environmental dynamism, exploratory and exploitative innovation, and GenAI adoption are associated with long-term competitive performance in B2B firms. Using survey data from 104 Portuguese B2B managers and Partial Least Squares Structural Equation Modelling (PLS-SEM), the findings show that ethical governance is the strongest organisational correlate of long-term competitive performance, underscoring the central role of governance structures in responsible GenAI use. GenAI adoption is positively associated with performance, but its role is complementary rather than dominant. Exploratory innovation does not show a significant direct association with performance; instead, its association with performance operates through GenAI adoption in the estimated model, suggesting that experimentation becomes more performance-relevant when translated into digitally enabled routines. In contrast, exploitative innovation is directly associated with performance through incremental efficiency mechanisms. These findings challenge technology-deterministic assumptions and suggest that long-term competitive performance in B2B firms is more closely associated with the organisational alignment of governance structures, innovation capabilities, and GenAI adoption than with technology adoption alone.

Summary

Main Finding

Ethical governance of GenAI and the organisational alignment of innovation capabilities with GenAI adoption are stronger correlates of long-term competitive performance in B2B firms than GenAI adoption alone. Ethical governance is the single strongest organisational correlate; GenAI adoption helps performance but acts complementarily, while exploitative innovation drives performance directly and exploratory innovation influences performance mainly via GenAI adoption.

Key Points

Ethical governance (rules, oversight, responsible-use structures) is the strongest positive correlate of long-term competitive performance in B2B firms.
GenAI adoption is positively associated with performance but is not a dominant standalone driver — its benefits depend on organisational context.
Exploratory innovation (experimentation, new routines) has no significant direct association with performance in the model; its influence operates through increased GenAI adoption.
Exploitative innovation (incremental improvements, efficiency gains) is directly associated with performance, suggesting immediate efficiency returns.
The results challenge technology-deterministic views: performance is driven more by governance, capabilities, and alignment than by mere technology uptake.
Environmental dynamism was part of the conceptual model but is not highlighted as a principal driver in the reported findings.

Data & Methods

Sample: Survey responses from 104 Portuguese B2B managers.
Analytical method: Partial Least Squares Structural Equation Modelling (PLS-SEM) to estimate relationships among ethical governance, environmental dynamism, exploratory/exploitative innovation, GenAI adoption, and long-term competitive performance.
Measurement: Self-reported organizational measures and perceived long-term competitive performance (cross-sectional survey).
Limitations to note:
- Modest sample size and single-country (Portugal) B2B focus limit generalisability.
- Cross-sectional, observational design precludes strong causal claims.
- Self-reported measures risk common-method bias; PLS-SEM is appropriate for exploratory modelling but results should be validated with larger, longitudinal datasets.

Implications for AI Economics

Firms: Investing in governance and aligning innovation processes with GenAI deployment yields higher long-term competitive returns than prioritising rapid adoption alone. Focus on translating exploratory experimentation into digitally enabled routines to capture value.
Strategy: Complementarity matters — GenAI is an amplifier of organisational capabilities, not a substitute. Balance investments between exploitative efficiency gains and mechanisms that convert exploratory work into adoptable AI-enabled routines.
Policy and regulation: Policies that encourage or mandate robust governance frameworks (transparency, accountability, ethical oversight) can improve firm-level outcomes and reduce negative externalities of rapid GenAI diffusion.
Research agenda:
- Quantify the economic returns to governance investments relative to pure adoption spending.
- Use longitudinal and causal designs to unpack timing and causal pathways (e.g., mediation of exploratory innovation through GenAI adoption).
- Broaden samples across industries and countries to test external validity and heterogeneity (size, sector, competitive intensity).
- Model interaction effects (e.g., environmental dynamism × governance) to understand when governance or technology investments matter most.

Assessment

Paper Typecorrelational Evidence Strengthlow — Findings are based on a small (N=104) cross-sectional self-report survey from a single country and rely on PLS-SEM associations; there is no causal identification strategy, raising concerns about reverse causality, omitted confounders, and common-method bias. Methods Rigormedium — The authors use an appropriate multivariate technique (PLS-SEM) for modeling latent constructs and mediation, but the modest sample size, reliance on single-respondent measures, and lack of exogenous variation or robustness checks limit internal validity and the strength of inference. SampleCross-sectional survey of 104 managers from Portuguese business-to-business (B2B) firms; measures are manager-reported constructs for ethical governance, environmental dynamism, exploratory/exploitative innovation, GenAI adoption, and long-term competitive performance. Themesgovernance adoption innovation org_design productivity IdentificationCross-sectional manager survey analyzed with Partial Least Squares Structural Equation Modelling (PLS-SEM) to estimate associations and mediation paths; no experimental or quasi-experimental source of exogenous variation, instrumentation, or longitudinal causal leverage. GeneralizabilitySmall sample size (N=104) limits statistical power and representativeness, Single-country context (Portugal) may not generalize to other institutional or market settings, B2B-only sample excludes B2C firms and larger sectoral heterogeneity, Manager self-reports introduce common-method bias and perceptual measurement error, Cross-sectional design limits inference about long-term causal dynamics amid rapidly changing GenAI adoption, Possible industry concentration or unobserved firm heterogeneity not addressed

Claims (8)

Claim	Direction	Confidence	Outcome	Details
Ethical governance is the strongest organisational correlate of long-term competitive performance. Firm Productivity	positive	high	long-term competitive performance	n=104 0.3
GenAI adoption is positively associated with long-term competitive performance. Firm Productivity	positive	high	long-term competitive performance	n=104 0.3
The role of GenAI adoption is complementary rather than dominant for long-term competitive performance. Firm Productivity	mixed	medium	long-term competitive performance	n=104 0.18
Exploratory innovation does not show a significant direct association with long-term competitive performance. Firm Productivity	null_result	high	long-term competitive performance	n=104 0.3
Exploratory innovation's association with long-term competitive performance operates indirectly through GenAI adoption (mediation). Firm Productivity	positive	high	long-term competitive performance	n=104 0.3
Exploitative innovation is directly associated with long-term competitive performance. Firm Productivity	positive	high	long-term competitive performance	n=104 0.3
Exploitative innovation is associated with performance through incremental efficiency mechanisms. Firm Productivity	positive	medium	long-term competitive performance	n=104 0.03
Long-term competitive performance in B2B firms is more closely associated with the organisational alignment of governance structures, innovation capabilities, and GenAI adoption than with technology adoption alone, challenging technology-deterministic assumptions. Firm Productivity	mixed	medium	long-term competitive performance	n=104 0.18