Will a fire at the gate bring disaster to the fish: The role of external corporate social responsibility in aggravating the risk of AI-induced downsizing on job seekers

The rise of artificial intelligence (AI) has hit the traditional industry globally, resulting in an increasing number of employees has been replaced by AI. However, how AI-induced downsizing affects job seekers is unclear. Drawing upon signaling theory, this study aims to examine how and when AI-induced downsizing influences job seekers’ job pursuit intention. Using one scenario experiment (N = 240) and one laboratory experiment with FaceReader™ (N = 64), we find that AI-induced downsizing increases job seekers’ expected job insecurity and moral outrage, which leads to decreased job pursuit intention. External corporate social responsibility (CSR) strengthens the effect of AI-induced downsizing on job seekers’ expected job insecurity. Notably, the effect of AI-induced downsizing on job seekers’ moral outrage increases when organizations exhibit high external CSR. Additionally, we conduct a supplementary experiment study (N = 192) and verify that AI-induced downsizing triggers stronger psychological responses of employees compared to traditional downsizing. This study provides important implications for organizations to mitigate the negative effect of AI-induced downsizing on job seekers.