A SEM–ANN analysis to examine impact of artificial intelligence technologies on sustainable performance of SMEs

Abstract

This study investigates the impact of Artificial Intelligence (AI) adoption on the sustainable performance of small and medium-sized enterprises (SMEs). Employing a hybrid quantitative approach, this research combines Partial Least Squares Structural Equation Modeling (PLS-SEM) and Artificial Neural Networks (ANN) to examine the influence of various organizational, technological, and external factors on AI adoption. Key factors considered include top management support, employee capability, customer pressure, complexity, vendor support, and relative advantage. Data collected from 305 SMEs across multiple sectors were analyzed. The results reveal that all the proposed factors significantly and positively affect AI adoption, with top management support, employee capability, and relative advantage being the most influential predictors. Additionally, the adoption of AI technologies substantially enhances the economic, social, and environmental performance of SMEs, reflecting improvements in operational efficiency, cost reduction, and social value creation. The ANN results confirm the robustness of the SEM findings, highlighting the critical role of AI in driving sustainability outcomes. Furthermore, the study emphasizes the positive mediation effects of AI adoption on organizational performance, indicating that AI adoption serves as a key enabler in achieving both short-term operational gains and long-term sustainability objectives. This research contributes to the understanding of AI’s transformative role in enhancing the sustainable performance of SMEs in developing economies, offering strategic insights for both policymakers and business leaders.