Artificial Intelligence and Digital Transformation: Implications for Organizational Performance
DOI:
https://doi.org/10.69980/c8wkkd89Keywords:
Artificial Intelligence Adoption, Digital Transformation Capability, Organizational Performance, Digital Transformation, PLS-SEMAbstract
Artificial intelligence (AI) is increasingly in use by organizations to enhance operational efficiency, decision-making quality and strategic competitiveness. Although there has been growing investment in AI technologies, the way that AI adds value to organizational performance is not fully understood. This research explores the relationship between Artificial Intelligence Adoption (AIA), Digital Transformation Capability (DTC) and Organizational Performance (OP) with a special focus on the mediating role of DTC. The study is based on the Resource Based View (RBV) and Dynamic Capability Theory (DCT) and suggests that AI adoption takes a direct and indirect path to improving organizational performance via a boost in digital transformation capability. The design of the research is quantitative research design with cross sectional survey type. Data were collected through a cross-sectional survey of 245 professionals working in technology-based organizational environments and analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM) in ADANCO software. The results show that the use of artificial intelligence is related to the digital transformation capacity and to performance within an organisation. The ability to undertake digital transformation also has a strong positive impact on the performance of the organization. Mediation analysis revealed a significant partial mediating effect of DTC in the relationship between AIA and OP (β = 0.5358, p < 0.001). The study adds to the existing body of literature by offering a holistic understanding of how organizations realize performance outcomes from their AI investments by building capabilities. The results also provide actionable knowledge for companies aiming for sustainable growth and competitive advantage by leveraging artificial intelligence for transformation initiatives.
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