TRUST-DRIVEN AI ADOPTION AND ITS IMPACT ON ORGANIZATIONAL INNOVATION AND PERFORMANCE

Accelerated changes in the business environment require prompt managerial actions. The traditional approach to information systems is progressively being replaced by a dynamic adaptive framework that utilizes Artificial Intelligence (AI) technology. The application of AI fosters organizational growth across many industries, including Micro, Small, and Medium Enterprises (MSMEs). This research aims to fill a significant vacuum in the current literature about the determinants of AI adoption and its ensuing impacts. The study specifically investigates AI adoption among Indonesian MSMEs, which are vital to the country's GDP growth. Data was collected via a field survey, comprising 357 respondents from MSME business operators in Indonesia. The findings reveal that trust significantly influences AI adoption (p = 0.000), AI adoption significantly impacts innovation (p = 0.000), and innovation significantly enhances organizational performance (p = 0.000). Conversely, AI adoption does not have a significant direct effect on organizational performance (p = 0.944). This study highlights the necessity of cultivating trust and improving the business readiness of MSME stakeholders through investments in AI technology to promote innovation and integrate novel components into their enterprises.