Artificial Intelligence Adoption Boosts Business Performance Through Digital Capabilities

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FORMOSA NEWS

The adoption of artificial intelligence (AI) has proven capable of significantly enhancing business performance, yet its success heavily relies on an organization's mastery of digital capabilities. This was revealed by Agung Muliaman Anas and Muh. Irshan Sachrir from the Entrepreneurship Study Program, Faculty of Economics and Business, Universitas Negeri Makassar, in a study published in September 2026. This research provides a strategic benchmark for the development of Small and Medium Enterprises (SMEs) and entrepreneurship development programs in emerging economies.

The business world currently faces major challenges as AI technology penetrates various lines such as customer analytics, service automation, demand prediction, and content generation. Nevertheless, merely purchasing technology does not automatically boost corporate performance if it is not supported by data readiness, staff digital literacy, and well-established workflow integration. Business actors frequently adopt digital tools faster than their ability to build consistent complementary skills.

To dissect this phenomenon, the study employed a quantitative explanatory design via a survey of 300 entrepreneurs and business managers in Indonesia who actively utilize digital technology. Data collection was carried out using an online questionnaire with a Likert scale, while data analysis applied Partial Least Squares Structural Equation Modeling (PLS-SEM) using SmartPLS 4 software.

Statistical analysis results established several key findings:

• Direct Impact of AI Adoption: AI adoption exerts a positive and statistically significant direct effect on entrepreneurial performance with a path coefficient of 0.138 ($t = 2.324$, $p = 0.020$).
• Mediating Role of Digital Capabilities: Digital capability significantly mediates the relationship between AI adoption and business performance, accounting for an indirect share of 61.8% of the total overall effect.
• Absence of Moderating Effect from Entrepreneurial Orientation: Entrepreneurial orientation (such as innovativeness and risk-taking propensity) does not significantly moderate the relationship between digital capability and business performance.

These findings confirm that the primary focus of entrepreneurship support programs must not stop merely at providing technology access or subsidies. According to Agung Muliaman Anas and Muh. Irshan Sachrir, strengthening core competencies such as digital literacy, IT infrastructure readiness, and business process integration is the key to ensuring that AI adoption truly converts into sustainable economic value added for companies.

Author Profiles

• Agung Muliaman Anas – Researcher and academic at the Entrepreneurship Study Program, Faculty of Economics and Business, Universitas Negeri Makassar.
• Muh. Irshan Sachrir – Researcher and academic at the Entrepreneurship Study Program, Faculty of Economics and Business, Universitas Negeri Makassar.

Research Sources

• Journal Article Title: Artificial Intelligence Adoption and Entrepreneurial Performance: Digital Capability as a Conversion Mechanism
• Journal Name: International Journal of Integrated Science and Technology (IJIST)
• Publication Year: 2026
• DOI: https://doi.org/10.59890/ijist.v4i9.56
• Official URL: https://ntlmultitechpublisher.my.id/index.php/ijist