Revisiting Dynamic Capabilities in the AI Era
Description
This study investigates the role of Dynamic Capabilities in improving Sustainable Performance among Indonesian multi-sector SMEs by examining the mediating roles of AI Adoption Intensity and AI Acceptance Rate. Drawing upon Dynamic Capability Theory, this research highlights how organizational capabilities enable SMEs to effectively integrate artificial intelligence into business processes and achieve sustainable growth. A quantitative research approach was employed using primary data collected through a structured questionnaire. The study involved 188 SME owners and managers from various industrial sectors in Indonesia, selected through purposive sampling. Data analysis was conducted using Partial Least Squares Structural Equation Modeling (PLS-SEM) with SmartPLS software. The findings reveal that Dynamic Capabilities significantly influence both AI Adoption Intensity and AI Acceptance Rate. Furthermore, AI Adoption Intensity and AI Acceptance Rate positively contribute to Sustainable Performance. However, Dynamic Capabilities do not directly affect Sustainable Performance, indicating that AI-related mechanisms play an important role in transforming organizational capabilities into sustainability outcomes. This study contributes to the literature by extending the Dynamic Capability perspective in the context of AI-driven digital transformation and provides practical insights for SME managers and policymakers in developing strategies to enhance AI readiness, adoption, and sustainable business performance.