GENERATIVE AI ADOPTION AND EMPLOYEE PERFORMANCE: THE MEDIATING ROLE OF DIGITAL COMPETENCE

Abstract

Generative artificial intelligence (GenAI) has become common workplace infrastructure faster than almost any digital technology before it, moving from experimental novelty to everyday workplace infrastructure, yet a critical question remains underexplored in the Indian organisational context: do GenAI tools actually make employees perform better or does that depend on something else entirely – how digitally competent the employee already is? We examine whether digital competence is the missing link in explaining when and for whom the adoption of Generative AI translates into measurable performance gains.  Data were collected from 500 employees working in multinational companies located in major Indian business hubs of Bengaluru, Hyderabad, Pune, Gurugram/NCR, Mumbai and Chennai using a quantitative, cross-sectional survey design. The suggested model Generative AI Adoption → Digital Competence → Employee Performance was tested using a full analytical pipeline, including descriptive statistics, Cronbach’s Alpha, Composite Reliability (CR), Average Variance Extracted (AVE), Confirmatory Factor Analysis (CFA), correlation analysis, independent-samples t-tests, one-way ANOVA, multiple regression, Structural Equation Modeling (SEM), and bootstrapped mediation analysis. The Findings (reported here on an illustrative dataset, to be replaced by the primary data) suggest that the adoption of Generative AI is significantly and positively associated with digital competence, that digital competence is significantly and positively associated with employee performance, and that digital competence partially mediates the relationship between the adoption of GenAI and performance. The T-test and ANOVA results also suggest that the strength of this chain varies significantly by sex, organisational tenure and job role, indicating a more nuanced, skills-dependent adoption story rather than a homogenous productivity dividend.  The findings suggest that Indian subsidiaries of multinationals should focus on digital-competence development, rather than just tool deployment, as the strategic lever to convert GenAI investment into performance results, with a particular focus on tenure-based and role-based upskilling gaps.  The current study is among the first integrated SEM-based tests of digital competence as a mediating mechanism in the GenAI–performance relationship within India’s multinational corporate workforce, a fast-growing, strategically important, yet empirically under-examined segment of the global GenAI adoption story.