Artificial Intelligence Adoption and Organizational Performance: Examining the Mediating Role of Project Success

Abstract

Artificial Intelligence (AI) has become more and more integrated in the everyday experience of project managers across quickly changing industries like information technology, telecommunications, construction, and banking. Building on the Dynamic Capabilities Theory, a model is created and tested that links AI adoption with organizational performance via project success. Data were collected in two waves, separated by a time lag, from 244 employees and project managers working in AI-enabled project-based organizations in Pakistan. Hypothesis testing was conducted using the following methods: reliability analysis, correlation analysis, and PROCESS macro Model 4 with 5,000 bootstrap resamples. The results show that the adoption of AI is positively and significantly related to project success (β = .28, p < .001) but there is no significant direct relationship between AI adoption and organizational performance (β = .06, p = .080). Project success, in turn, is significantly and positively related to organizational performance (β = .43, p < .001). Importantly, project success fully mediates the relationship between AI adoption and organizational performance (indirect effect = .119, Boot 95% CI [.060, .182]; direct effect = .410, Boot 95% CI [.275, .564]). The findings enrich the concept of Dynamic Capabilities Theory by showing that the value of using AI in an organization is not delivered directly but rather achieved through successful projects. Real-world applications of how AI can be used for performance improvement within an organization are considered.