/When Governance Lags Behind Adoption: A Dynamic Misfit Theory of AI Governance Deficit and Organizational Innovation Performance
Abstract

Artificial intelligence is diffusing through organizations faster than many firms can redesign the structures that direct, monitor, coordinate, and learn from its use. This formal theory-building article develops \emph{AI governance deficit} as an organizational-level, directional misfit between governance demand generated by AI deployment and effective governance capacity. The construct is positioned explicitly against dynamic capabilities, absorptive capacity, institutional pressure, responsible-AI maturity, and prior uses of ``governance deficit'' at the global-regime level. Rather than treating deficit as a difference score or as a desirable absence of rules, we locate it on a response surface that preserves the independent levels and joint configuration of demand and capacity. We distinguish passive discretion created by governance lag from authorized autonomy deliberately produced by enabling governance. A semi-formal model derives the conditions under which a conditional inverted-U can arise, when it collapses into a monotonic negative relation, and why persistent misfit is more damaging than transitory misfit of the same instantaneous magnitude. Unresolved governance obligations accumulate as control debt with cognitive--epistemic, structural--coordination, and institutional--relational manifestations. The framework integrates governance architecture into the core function and specifies falsifiable response-surface, longitudinal, and ecosystem-level tests.

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