When Do Organizational Capability Foster Sustainable Entrepreneurship? Evidence from Artificial Intelligence Effects Among Smes in an Emerging Economy

Purpose: The study examined the technology-contingent effects of organizational capability on Sustainable Entrepreneurship (SE) among small and medium-sized enterprises (SMEs). Specifically, it investigated how strategic agility and adaptive capability influence SE and how artificial intelligence (AI) adoption plays a mediating role in this relationship. Design/Methodology: The study adopted a cross-sectional survey research design and was grounded in the Resource-Based View (RBV) and Dynamic Capabilities Theory (DCT). Using Taro Yamane’s formula, a sample size of 382 was determined from a population of 8,395 registered SMEs in Lagos State, Nigeria; 311 valid responses were analyzed using a structured questionnaire. Structural Equation Modeling (SEM) with AMOS 23 was employed for data analysis. Four hypotheses were formulated and tested. Findings: The results revealed that both strategic agility and adaptive capability significantly influence SE, and their combined effect strengthens sustainable entrepreneurial outcomes. Notably, artificial intelligence adoption partially mediated the relationship between organizational capabilities and SE, indicating that AI serves as a technological enabler that enhances the translation of internal capabilities into sustainable outcomes. Originality/Value: This study advances sustainable entrepreneurship literature by introducing a technology-contingent capability perspective, demonstrating that artificial intelligence functions as a mediating mechanism linking organizational capabilities to sustainability outcomes. In response to recent calls for more process-oriented and digitally grounded explanations of sustainability in entrepreneurship, the study extends RBV and DCT by positioning AI not merely as a technological tool but as a strategic transformation mechanism in SMEs.