Artificial intelligence in enhancing entrepreneurial performance: The mediating role of innovation capability and sustainable entrepreneurship

Artificial Intelligence (AI) technology is now a transformative force, creating unparalleled opportunities for innovation, efficiency, and competitive advantage in sustainable entrepreneurship, thereby enhancing entrepreneurial performance. The objective of the study is to explore the direct effect of artificial intelligence usage (AIU) on entrepreneurial performance (EP) and the indirect effects through the mediating variables of innovation capability (IC) and sustainable entrepreneurship (SE). Based on the ‘positivism’ research philosophy, this study has used a quantitative methodology and utilized multi-level convenience sampling to collect data from 295 respondents. This research developed a conceptual framework and tested the hypothesized relationships by applying partial least squares structural equation modeling (PLS-SEM). The study’s results show that four hypotheses focusing on direct relationships are supported. The hypothesized relation between IC and EP is not supported by the empirical data, and IC does not mediate the relation between AIU and SE. From a theoretical perspective, the study extends the Resource-Based View theory and the Dynamic Capabilities Theory. In practice, this study’s results will guide policymakers, entrepreneurs, SME owners, and practitioners in designing strategies, providing the necessary information, and making capability investments to understand the consequences of developing AI capabilities within organizational practices, thereby magnifying innovation, sustainability, and competitiveness. As future research directions, this study has suggested a longitudinal study across different cultural, institutional, and economic contexts and geographical regions to examine the use and influence of AI on entrepreneurial performance.