DOES AI INTEGRATION MODERATE THE RELATIONSHIP BETWEEN FIRM GROWTH AND PERFORMANCE IN SMES: THE INFLUENCE OF DECISION-MAKING AND OPERATIONAL PERFORMANCE

Abstract

Today’s dynamic business environment requires small and medium-sized enterprises (SMEs) to keep up with technological advancements in order to remain competitive. Business growth creates more challenges for SMEs since they possess fewer available resources than big organizations. Since the introduction of artificial intelligence (AI), several SMEs have been able to compete more effectively and deliver better performance. As part of this research, I examine the possibility that AI integration (AII) will moderate the relationship between firm growth and both decision-making and operational performance, ultimately affecting the performance of SMEs. The aim of this research is to provide practical implications for AI as a strategic resource for improving decision-making capabilities, performance and growth by utilizing the resource-based view (RBV) and information processing theory (IPT). A partial least squares structural equation model (PLS-SEM) was used to analyze data from 338 SME business strategy decision-makers in the United States. In order to verify the measurement model’s reliability and validity, a Confirmatory Composite Analysis (CCA) was performed, followed by the evaluation of the structural model in order to test the hypotheses. In contrast to initial hypotheses, this study found that firm growth is positively related to both decision-making and operational performance. Nevertheless, the study results support the original hypothesis that both decision-making performance (DMP) and operational performance (OPP) positively affect a firm’s performance. Furthermore, AII significantly moderated the relationship between FG and OPP, while it did not significantly moderate the relationship between FG and DMP. This indicates the complexity of the role AI integration plays in SMEs. The paper concludes with recommendations for future research, as well as guidance for practitioners regarding how SMEs can improve their decision-making capabilities and performance using AI.