Artificial intelligence readiness and perceived e-invoicing regulatory compliance: The mediating role of e-invoicing capability in Malaysian SMEs

Artificial intelligence (AI) readiness has become increasingly salient for organisations operating in digitally administered regulatory environments. Nevertheless, scant research has examined how organisational readiness for AI translates into capabilities that support digital compliance activities. This study aimed to empirically test the effects of Artificial Intelligence Readiness (AIR) on Perceived e-Invoicing Regulatory Compliance (PEIRC) of small and medium enterprises (SMEs) operating in Malaysia and examine the mediating role of e-Invoicing Capability (EIC). Conceptually bridging the Resource-Based View and Dynamic Capability Theory, the authors develop a resource–capability–compliance framework that explains how technological, human, data, and managerial resources are translated into perceived regulatory compliance. A quantitative cross-sectional survey was administered to collect primary data from SMEs across Malaysia’s major economic hubs. Partial least squares structural equation modelling (PLS-SEM) was employed to test the hypothesised relationships. The results reveal that AIR is positively associated with EIC (β = 0.609; p < 0.001) and PEIRC (β = 0.712; p < 0.001). EIC is also positively associated with PEIRC (β = 0.187; p = 0.001). EIC partially mediates the relationship between AIR and PEIRC (β = 0.114; p = 0.005). This study contributes to digital transformation literature by providing evidence that perceived regulatory compliance is associated with both AI readiness and domain-specific organisational capability. The study also reinforces the importance of coupling technological preparedness with organisational capability-building efforts amongst firms operating in digitally regulated environments.