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Artificial Intelligence Adoption by SMEs to Achieve Sustainable Business Performance: Application of Technology–Organization–Environment Framework

Author

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  • Saeed Badghish

    (Faculty of Economics and Administration, King Abdulaziz University, Jeddah 21589, Saudi Arabia)

  • Yasir Ali Soomro

    (Faculty of Economics and Administration, King Abdulaziz University, Jeddah 21589, Saudi Arabia)

Abstract

The primary purpose of this study was to investigate and present a theoretical model that identifies the most influential factors affecting the adoption of artificial intelligence (AI) by SMEs to achieve sustainable business performance in Saudi Arabia by integrating the Technology–Organization–Environment (TOE) framework. The authors utilized a quantitative method, using a survey instrument for this research. Data for this research were collected from managers working in six different sectors. Subsequently, based on company size, firms were divided into two groups, allowing multi-group analysis of small and medium-sized businesses to explore group differences. Hence, firm size played a moderating role in the conceptualized model. Data analysis was performed on SmartPLS 3, and the results suggest that dimensions of the TOE framework, such as relative advantage, compatibility, sustainable human capital, market and customer demand, and government support, play a significant role in the adoption of AI. Moreover, this study found a significant influence of AI on SMEs’ operational and economic performance. The multi-group analysis (MGA) results reveal significant group differences, with a medium-sized firm strengthening the relationship between relative advantage and AI adoption compared to small-size firms. The findings lead to practical implications for companies on how to increase the adoption of AI to help SMEs embrace their technological challenges in KSA and obtain sustainable business performance to contribute to the economy.

Suggested Citation

  • Saeed Badghish & Yasir Ali Soomro, 2024. "Artificial Intelligence Adoption by SMEs to Achieve Sustainable Business Performance: Application of Technology–Organization–Environment Framework," Sustainability, MDPI, vol. 16(5), pages 1-24, February.
    • Handle: RePEc:gam:jsusta:v:16:y:2024:i:5:p:1864-:d:1345134
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    2. Ni Luh Putu Indiani & J. S. Keshminder & Nyoman Indra Wiratama & Genijayendra Sahya Amertha, 2025. "Unlocking e-commerce potential in SMEs: an integrative framework for adoption in emerging markets," Humanities and Social Sciences Communications, Palgrave Macmillan, vol. 12(1), pages 1-16, December.
    3. Xiulian Chen & Yanan Wu & Yangyang Long, 2025. "Does Artificial Intelligence Promote Sustainable Growth of Exporting Firms?," Sustainability, MDPI, vol. 17(16), pages 1-23, August.
    4. Chen Qu & Eunyoung Kim, 2025. "Investigating AI Adoption, Knowledge Absorptive Capacity, and Open Innovation in Chinese Apparel MSMEs: An Extended TAM-TOE Model with PLS-SEM Analysis," Sustainability, MDPI, vol. 17(5), pages 1-31, February.
    5. Jolanta Słoniec & Monika Kulisz & Marta Małecka-Dobrogowska & Zhadyra Konurbayeva & Łukasz Sobaszek, 2025. "Awareness of the Impact of IT/AI on Energy Consumption in Enterprises: A Machine Learning-Based Modelling Towards a Sustainable Digital Transformation," Energies, MDPI, vol. 18(21), pages 1-24, October.
    6. Arroyabe, Marta F. & Arranz, Carlos F.A. & Fernandez De Arroyabe, Ignacio & Fernandez de Arroyabe, Juan Carlos, 2024. "Analyzing AI adoption in European SMEs: A study of digital capabilities, innovation, and external environment," Technology in Society, Elsevier, vol. 79(C).
    7. Panteha Farmanesh & Niloofar Solati Dehkordi & Asim Vehbi & Kavita Chavali, 2025. "Artificial Intelligence and Green Innovation in Small and Medium-Sized Enterprises and Competitive-Advantage Drive Toward Achieving Sustainable Development Goals," Sustainability, MDPI, vol. 17(5), pages 1-20, March.
    8. Abdulaziz Alotaibi, 2024. "Artificial Intelligence in the Saudi Arabian Banking Sector: Role in Customer Satisfaction and Its Implementation Challenges," International Journal of Business and Management, Canadian Center of Science and Education, vol. 19(5), pages 172-172, September.
    9. Eman Ismail & Mohamed Hamed Elsharnouby & Hossam Ahmed Hanafy, 2025. "RAISA adoption and organizational performance in Egypt’s travel and hospitality sector: an integrated TOE–BOE perspective," Future Business Journal, Springer, vol. 11(1), pages 1-18, December.
    10. Aleksandar M. Damnjanović & Milan Rašković & Svetozar D. Janković & Boris Jevtić & Volodymyr N. Skoropad & Zoran D. Marković & Violeta Lukić-Vujadinović & Zoran Injac & Srđan Marinković, 2025. "AI-Enabled Strategic Transformation and Sustainable Outcomes in Serbian SMEs," Sustainability, MDPI, vol. 17(19), pages 1-33, September.

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