Digital Leadership and AI Adoption Intention and Usage in SMEs: The Mediating Role of Employee Digital Readiness in an Urban Bangladeshi Context

This study examines the relationship between digital leadership and AI Adoption Intention and Usage (AAIU) in Small and Medium Enterprises (SMEs), with Employee Digital Readiness (EDR) as a hypothesized mediator. Drawing on the Technology, Organization, Environment (TOE) framework and the Technology Acceptance Model (TAM), a quantitative cross-sectional survey was administered to 210 employees and managers of SMEs in Uttara, Dhaka, Bangladesh. Measurement quality was established via Confirmatory Factor Analysis (CFA); mediation was tested using Hayes' (2022) PROCESS macro (Model 4) with 5,000 bootstrap iterations. Firm size, sector, and employee tenure were included as covariates throughout. All four hypotheses were supported. Digital leadership was positively associated with AAIU and with EDR. EDR, in turn, predicted AAIU and mediated the leadership–adoption relationship, accounting for 52.8% of the covariate-adjusted total effect. The findings extend TOE–TAM integration by modeling employee digital readiness as the mechanism linking organizational leadership to individual adoption behavior in a South Asian SME context underrepresented in this literature. Results are bounded to Uttara's commercial environment and should not be generalized to the broader Bangladeshi SME population without replication.