Disclosing the role of intention to adopt AI and market-sensing capabilities between entrepreneurial leadership and process innovation

Purpose This study aims to examine the entrepreneurial leadership role on process innovation in the manufacturing industry and investigates the mediating effects of intention to adopt artificial intelligence (AI) and market-sensing capability. In addition, drawing on the dynamic capability theory and self-efficacy theory, this research examines the moderating role of creative self-efficacy in the relationships between intention to adopt AI, market-sensing capability and process innovation. Design/methodology/approach The data for this study were obtained from 383 employees and 175 managers from 169 manufacturing firms in Pakistan. The data collected was analyzed using SEM in SPSS Amos 26. Findings The study results demonstrate a significant positive relationship between entrepreneurial leadership and process innovation, with mediating effects via both market-sensing capability and intention to adopt AI. Moreover, results also show that creative self-efficacy moderates the relationship between market-sensing capability, intention to adopt AI and process innovation. Research limitations/implications In addition, the research is confined to the Pakistani small and medium-sized enterprises (SMEs); the findings provide valuable implications to develop the innovation-based leadership culture and also add value to the literature of entrepreneurial leadership. Practical implications The results of this research provide practical implications for manufacturing firms to nurture entrepreneurial leadership that facilitates knowledge acquisition by offering training and development sessions on new process innovations (i.e. intention to adopt AI and market-sensing capability) to ensure the successful implementation of new processes. Social implications It contributes to Sustainable Development Goal 9 to build resilient infrastructure, promote sustainable industry and enhance innovation. Originality/value This research adds value to entrepreneurial leadership research in the SME context by identifying mediated and moderated mechanisms that nurture entrepreneurial leadership in the process of innovation in manufacturing firms.