Sustainability Gets Smarter: Competitive Pressure and <scp>AI</scp> Leading the Way

ABSTRACT Growing environmental concerns and the digital transformation of businesses have intensified the need to understand how sustainability and technology interact within organizational decision‐making. This study examines how external market pressures, customer expectations, and competitive pressure shape internal innovation mechanisms (marketing, process, organizational) and artificial intelligence (AI) adoption, and how these factors influence decision‐making toward green innovation in companies. A quantitative approach was applied using a structured questionnaire administered to 394 consumers and professionals with work experience in companies that integrate sustainability and innovation. The research model was tested through Partial Least Squares Structural Equation Modeling. Results indicate that customer expectations positively affect marketing, process, and organizational innovation but do not significantly influence AI adoption, whereas competitive pressure strongly drives all innovation dimensions, including AI. All internal mechanisms positively impact green innovation decisions, with AI emerging as a strategic enabler. This study applies the stimulus–organism–response (S–O–R) framework to sustainability contexts by integrating AI as an organizational mechanism. It highlights the distinct roles of external pressures, showing that competitive pressure, not customer expectations, is the main driver for technological integration, offering actionable insights for advancing green innovation strategies.