Transformational entrepreneurship education in the AI era: Reframing entrepreneurial readiness through AI literacy and digital entrepreneurial capability

Artificial intelligence integration is reshaping entrepreneurship education and increasing the need for pedagogical approaches that prepare students to act under digital uncertainty. Drawing on Transformational Learning Theory, Growth Mindset Theory, and Dynamic Capabilities Theory, this study examines how Transformational Entrepreneurship Education and AI Literacy contribute to Entrepreneurial Readiness directly and through Digital Innovation Skills and Digital Growth Mindset, the complementary dimensions through which Digital Entrepreneurial Capability is conceptually expressed. A sequential explanatory mixed-methods design was employed. Survey data from 698 Indonesian university students were analyzed using partial least squares structural equation modeling, followed by semi-structured interviews with 24 students. The findings show that Transformational Entrepreneurship Education was positively related to AI Literacy, Digital Innovation Skills, Digital Growth Mindset, and Entrepreneurial Readiness. AI Literacy was also positively related to both capability dimensions and Entrepreneurial Readiness. Both dimensions significantly mediated the relationships of Transformational Entrepreneurship Education and AI Literacy with Entrepreneurial Readiness, while the corresponding direct effects remained significant. Qualitative findings showed that reflective AI engagement, iterative experimentation, feedback, and persistence supported capability development, whereas passive AI reliance and limited scaffolding constrained capability translation. The study advances entrepreneurship education and AI Literacy research by reframing Entrepreneurial Readiness as an action-oriented outcome.