Impact of AI Capability on Sustainable Performance: Mediating Roles of Green Absorptive Capacity, Green Knowledge Management, and Green Creativity in the Private Organizations in Pakistan

Abstract

Private companies in Pakistan face increasing pressure to adopt AI-driven sustainability strategies to enhance competitiveness and comply with environmental regulations. However, limited AI integration in sustainability efforts restricts firms' ability to optimize resource efficiency, foster green innovation, and meet regulatory standards. This study examines the impact of AI capability on sustainable performance, emphasizing the mediating roles of green absorptive capacity, green knowledge management, and green creativity. Using structural equation modeling (Smart PLS) on data from 425 respondents in private firms, results indicate that AI significantly enhances sustainability by improving knowledge-sharing, fostering eco-friendly innovation, and strengthening environmental adaptability. Findings suggest companies leveraging AI for sustainability can gain a competitive advantage through improved decision-making and resource optimization. The study shows that AI is a critical enabler of sustainable business practices, providing firms with data-driven insights to enhance eco-friendly operations. It recommends increased investment in AI-powered green strategies, workforce upskilling, and policy support to drive sustainable growth. By integrating AI into environmental decision-making, businesses can achieve long-term economic, social, and ecological benefits while reinforcing the role of AI in shaping the future of sustainability.