AI-Driven Organizational Capabilities and The Innovation Environment: Examining The Drivers of RD Transformation in Saudi Arabian Start-Ups

Artificial Intelligence is transforming how start-up companies conduct research and development (R&D) and generate value through innovation. This research investigates the impact of AI-based organizational capabilities on decision-making, problem-solving, productivity, customer satisfaction, and technology infrastructure. It also examines how these capabilities foster an innovative climate, enabling innovation in Saudi Arabian start-ups. Using a quantitative cross-sectional research approach that draws on the Technology–Organization–Environment (TOE) and Unified Theory of Acceptance and Use of Technology (UTAUT) frameworks, the present study analyzes survey data from 384 start-ups using Partial Least Squares structural equation modeling (PLS–SEM). As presented in the results section, all five AI-powered capabilities are positively and significantly related to the innovation ecosystem (R² = 0.685); further, technology infrastructure and decision-making have the most significant effect on the innovation ecosystem, and these results underline the importance of AI-aided organizational capabilities in preparing Saudi start-ups to innovate and collaborate in an ecosystem. The research extends the body of theoretical knowledge on AI adoption and guides how entrepreneurs and policymakers can strengthen the Kingdom’s innovation ecosystem in line with Vision 2030.