Unlocking AI capabilities: exploring strategic fit, innovation ambidexterity and digital entrepreneurial intent in driving digital transformation

Purpose The insurgence of the COVID-19 pandemic insinuated that family-owned small hotels (F-OSH) should adopt AI capabilities and innovation activities and digitize their operations to survive. This study examines the potential of AI capabilities to digitally transform F-OSHs by leveraging innovation ambidexterity, preparing them for future disasters proactively. Additionally, it sheds light on how the impact of AI capabilities on innovation ambidexterity varies based on strategic fit. In addition, this research explores the influence of digital entrepreneurial intention on fostering innovation ambidexterity, essential for digital transformation in F-OSHs. Design/methodology/approach The study collected primary data from 318 descendant entrepreneurs designated as chairpersons or managing directors in F-OSH and analyzed the data using the partial least structural equation modeling technique. Findings This study found a positive association of AI capabilities, and digital entrepreneurial intention with the digital transformation of F-OSHs, while strategic fit does not have an association with innovation ambidexterity. Innovation ambidexterity mediates the relationship between AI capabilities and digital transformation in F-OSHs. Moreover, a strong strategic fit increases the effect of AI capabilities on innovation ambidexterity. Furthermore, a high intention for digital entrepreneurship reduces the impact of innovation ambidexterity on the digital transformation of F-OSHs. Practical implications The combination of AI capabilities and innovation ambidexterity has transformed F-OSHs' digital transformation. This proactive approach to dealing with economic recessions such as COVID-19 is also influenced by digital entrepreneurial intention and strategic fit. Originality/value Anchored on the dynamic capability theory, this study provides valuable insights and novel empirical evidence by investigating the mediating mechanism of innovation ambidexterity and boundary condition of strategic fit and digital entrepreneurial intention between AI capabilities and digital transformation in F-OSHs.