Exploring the Influence of AI Adoption and Technological Readiness on Sustainable Performance in Pakistani Export Sector Manufacturing Small and Medium-Sized Enterprises

This study examines the impact of technological integration on sustainable performance in Pakistani manufacturing SMEs from the export sector, focusing on the mediating role of employee capacity building and the moderating role of organizational learning, drawing on dynamic capabilities theory. Data were collected from manufacturing SMEs in Pakistan via a structured questionnaire, and structural equation modeling (SEM) was employed using Smart-PLS (4.1) for analysis. The results reveal that both AI adoption and technological readiness significantly enhance employee capacity building, which, in turn, positively impacts sustainable performance. Employee capacity building significantly mediates the relationships between both AI adoption and sustainable performance as well as between technological readiness and sustainable performance. Notably, organizational learning shows a significant moderating effect between technological readiness and employee capacity building but an insignificant moderating effect between AI adoption and employee capacity building. These findings offer actionable insights for managers in optimizing AI and readiness strategies to enhance capacity building and sustainable outcomes. This study contributes to the literature by being one of the first to integrate AI adoption and technological readiness with employee capacity building as a mediator and organizational learning as a moderator in the context of SMEs. Unlike prior research, which typically examines these factors independently, our framework offers a holistic approach to understanding sustainable performance.