Examining Public Sector AI Adoption: Mechanisms for AI adoption in the absence of authoritative strategic direction

Artificial Intelligence (AI) is recognized to bring great benefits to the organizations that can successfully adopt this emerging technological domain into their operations. This paper examines the impact of governance and strategic direction on AI adoption and diffusion in a public sector setting. By presenting contextual conditions, mechanisms, and outcomes within a large government agency this work contributes to the understanding of how the absence of appropriate governance structures and strategies impact the development and adoption of AI. Findings show that balancing exploitation and exploration in the capillaries of the organization proved crucial to the adoption and diffusion of AI. This manifested itself through three mechanisms, Cross-domain learning, Legal priming, and Ecosystem growth, which enabled the organization to obtain both value creation and value capture.