Methodological Approaches, AI-Driven Market Leadership, and Nigerian SMEs: A PLS-SEM Validation of the Contextualized AI-Capability-to-Market Leadership Framework.

Abstract Purpose: Existing strategic management literature frequently exhibits technological determinism, assuming a direct link between artificial intelligence acquisition and firm performance while ignoring the infrastructural realities of emerging markets. This study addresses this gap by empirically validating the Contextualized AI Capability to Market Leadership Framework. Grounded in the Resource-Based View and Dynamic Capability Theory, the research investigates how technology adoption translates into sustained competitive advantage through internal capability building and external environmental boundary conditions. Design/Methodology/Approach: The study adopted a quantitative, cross-sectional survey design. Primary data were gathered from 167 owners and senior managers of small and medium enterprises operating across diverse sectors in Nigeria. The conceptual model was rigorously evaluated using Partial Least Squares Structural Equation Modeling (PLS SEM). The analysis included specific indirect effect calculations for mediation, the orthogonal two-stage approach for moderation, and a Multi-Group Analysis to test for sectoral equivalence. Findings: The empirical results confirm that AI-enabled dynamic capabilities significantly and complementarily mediate the relationship between AI use intensity and market leadership outcomes. Crucially, the moderation analysis revealed a significant negative buffering effect regarding institutional support. This demonstrates that severe infrastructural deficits compel enterprises to engage in necessity-driven innovation, utilizing AI tools to aggressively build internal capabilities that compensate for external systemic failures. Furthermore, ethical risk perception did not significantly moderate, indicating that pragmatic operational survival currently overrides algorithmic transparency concerns in early adopting markets. Originality/Value: This research shifts the analytical focus from simplistic technology performance models to complex, capability-driven pathways. It contributes a novel perspective to emerging market literature, providing empirical evidence that environmental hostility and infrastructure deficits can paradoxically accelerate, rather than merely stifle, internal digital maturity. Practical Implications: Enterprise leaders must abandon isolated IT software investments in favor of a deliberate redesign of organizational processes. For policymakers, the findings underscore the need to prioritize foundational digital infrastructure alongside proactive data governance frameworks, ensuring that current necessity-driven digital advancements evolve into sustainable global competitiveness.