BUILDING A SUSTAINABLE DIGITAL TRANSFORMATIONFOUNDATION THROUGH AI INNOVATION ADOPTION:AN INFORMATION TECHNOLOGY PERSPECTIVE

Abstract

This study aims to propose and empirically test an integrated model that clarifies how strategic AI adoption, organizational readiness, knowledge sharing, and supportive policy frameworks collectively build a foundation for innovative performance and sustainable growth within Indonesian technology startups and SMEs. This research utilizes a quantitative, explanatory survey design, theoretically grounded in the Technology-Organization-Environment (TOE) and Resource-Based View (RBV)
frameworks. Data was gathered via an online questionnaire with a 7-point Likert scale from 268 technology and digital leaders in Indonesia, selected through purposive sampling. The data was analyzed using Structural Equation Modeling (SEM) with IBM SPSS Statistics 29 and IBM AMOS 29. The methodology included Confirmatory Factor Analysis (CFA), assessment of Cronbach's Alpha, Composite Reliability (CR), Average Variance Extracted (AVE), Fornell-Larcker criterion, HTMT ratio, bootstrapping for mediation, and variable interaction analysis for moderation. The results confirm all
hypotheses. AI adoption positively impacts both innovative performance and organizational readiness. Organizational readiness is a key driver of innovative performance, and this relationship is partially mediated by knowledge sharing. Innovative performance was found to be a strong predictor of sustainable growth. Finally, a supportive policy framework was confirmed to positively moderate the relationship between AI adoption and innovative performance. A primary limitation is the study's cross-sectional
design, capturing a single point in time, and its focus on the Indonesian context, which may limit the generalizability of the findings. This study is useful for the disciplines of Information Technology Management, Strategic Management, Innovation Studies, Technology Policy, and Sustainability research, offering a practical framework for business leaders, IT managers, and policymakers.