MUHAMMAD AMIR MALIK (MALIK, M. A.)
DOI: https://doi.org/Artificial Intelligence (AI) has moved organizations beyond conventional digital transformation by enabling new forms of organizational intelligence, adaptive capability, and innovation. Yet much of the existing literature continues to treat AI primarily as a technological tool rather than as an organizational capability in its own right, leaving the mechanisms through which AI translates into sustained competitive advantage insufficiently theorized and empirically tested. This study examines how AI capability influences organizational capability, innovation capability, and competitive advantage, and tests whether organizational agility strengthens the translation of AI capability into innovation outcomes. Drawing on the Resource-Based View (RBV) and Dynamic Capability Theory, the study develops and empirically tests a moderated-mediation model in which AI capability is theorized as a strategic, valuable, rare, and difficult-to-imitate organizational resource. A quantitative, cross-sectional research design was employed using survey data collected from 385 managers and senior professionals working in technology-intensive organizations. Data were analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM) following a two-step approach comprising measurement model assessment and structural model estimation. The measurement model demonstrated strong reliability, convergent validity, and discriminant validity, and the structural model exhibited good overall fit (χ²/df = 2.14; CFI = 0.947; RMSEA = 0.052). The results show that AI capability significantly and positively influences organizational capability (β = 0.62, p < .001) and innovation capability (β = 0.68, p < .001); organizational capability significantly predicts competitive advantage (β = 0.54, p < .001); innovation capability partially mediates the AI capability–competitive advantage relationship (indirect β = 0.31, p < .001); and organizational agility significantly moderates the AI capability–innovation capability relationship (β = 0.18, p < .01), such that the effect of AI capability on innovation is stronger among more agile organizations. All five hypotheses were supported. The findings demonstrate that AI functions as a dynamic organizational capability rather than a stand-alone technological investment, and that its strategic value is realized only when it is embedded within complementary organizational, innovation-related, and agility-enabling structures.
