ARTIFICIAL INTELLIGENCE ADOPTION IN PAKISTANI BUSINESSES: THE INFLUENCE OF TRANSFORMATIONAL LEADERSHIP ON ORGANIZATIONAL READINESS

Abstract

To successfully implement AI, efforts must go beyond technology investments to foster leadership that can rally organizational resources, deepen employee engagement, and ensure ongoing digital transformation. This study was conducted based on T-O model, having studied the impact of transformational leadership and organizational readiness on the adoption of artificial intelligence in Pakistani organizations, and the mediation role of organizational readiness. A quantitative cross sectional survey was conducted on 450 employees / managers of Engro Corporation, Foodpanda Pakistan and TCS Pakistan. Partial Least Squares Structural Equation Modeling (PLS-SEM) was used for analyzing the data and 5,000 bootstrap resamples were applied. Transformational leadership had significant positive effects on the organizational readiness (β = 0.963, t = 275.701, p < .001) and direct effect on the adoption of AI (β = 0.371, t = 6.278, p < .001). Organizational readiness also was a significant predictor of adoption (β = 0.588, t = 10.106, p < .001). Moreover, the indirect effect of transformational leadership via organizational readiness was significant (β = 0.566, t = 10.101, p < .001), indicating partial mediation. For organizational readiness, the model explained 92.7% of the variance, and for artificial intelligence adoption, the model explained 90.4% of the variance, with high predictive relevance values for both endogenous constructs. The results of this study suggest that transformational leadership is not only directly influencing the technology change toward AI adoption, but also cultivating the strategic alignment, employee readiness, managerial support, infrastructure, and organizational skills needed for the deployment. However, the extensive overlap in measurement of constructs and the co-linearity of constructs must be interpreted with caution. The study is important for the evolving body of literature on artificial intelligence within the context of the emerging economies because it introduces organizational readiness as a key instrument for the successful conversion of leadership vision to significant AI adoption.