Role of AI capabilities in sustainable firm performance: mediating role of innovative work behavior and the moderating effect of environmental dynamism

Purpose This study assesses the role of organizational AI capabilities (AIC) in framing employees' innovative work behavior (IWB) and their subsequent effect on sustainable firm performance (SFP). In addition, the role of environmental dynamism (ED) was also assessed on the relationship between AIC and IWB pursuant to SFP. Design/methodology/approach We collected data from managerial-level employees working in the pharmaceutical industry across Pakistan. A validated survey questionnaire was circulated using snowball sampling technique, and partial least square structural equation modeling (PLS-SEM) was applied to the data collected from 366 respondents. After confirming the reliability and validity of the model, we assessed the robustness of the results through linearity, endogeneity and unobserved heterogeneity tests. Findings The results of the study indicate that AIC significantly influences IWB and SFP. The moderation-mediation analysis confirms the importance of both the direct and indirect effects of ED on the relationship between AIC and SFP, as well as the role of ED in enhancing IWB among employees in the pharmaceutical industry. Originality/value This study provides significant insights in advancing sustainable development through technological innovation, considering ED among the pharmaceutical industry within the developing economies having identical technological, sectoral and environmental concerns.