AI-driven innovation in emerging markets: extending the technology acceptance model-technology-organization-environment framework in small- and medium-sized enterprises

This study examined the impact of artificial intelligence (AI) adoption on innovation outcomes in Pakistani manufacturing small- and medium-sized enterprises (SMEs), addressing a critical gap in the understanding of how AI drives product and process innovation in resource-constrained settings. While AI adoption (AIA) has been well-studied in larger enterprises and developed markets, its implications for SMEs in emerging economies remain poorly explored. This study investigates the moderating role of leadership support in AIA and AI-driven marketing (AIM) in amplifying innovation outcomes. A quantitative survey of 500 senior and middle management executives from manufacturing SMEs was conducted, and data were analyzed using partial least squares structural equation modeling. Their findings show that technological readiness, organizational preparedness, and strong leadership significantly enhance AIA, resulting in notable improvements in both product and process innovation. Additionally, AIM amplifies the impact of AIA on innovation, thereby maximizing SMEs’ innovative capacity. This study’s theoretical contribution extends the technology acceptance model-technology-organization-environment framework by incorporating leadership support as a moderator for AIA and AIM for innovation outcomes, providing insights into the role of AI in emerging markets. From a managerial standpoint, this study highlights the need for robust leadership, technological infrastructure, and AIM strategies to fully leverage the potential of AI. Policymakers are urged to create supportive environments with strong technological and leadership infrastructures to enable SMEs to achieve sustained growth through AI-driven innovation.