The Effect of AI Adoption and Green Leadership on Organizational Environmental Performance in SMEs

Abstract

This study delves into the potential synergy between Artificial Intelligence (AI) adoption and green leadership within SMEs, responding to the growing environmental concerns and the imperative for technological advancement in the business landscape and assessing their combined impact on environmental performance. We conducted a survey involving 266 respondents in Bangladesh, employing Smart PLS-SEM for data analysis. The empirical results indicate a positive association between AI adoption and green investment, as well as environmental performance within SMEs. Furthermore, the research establishes that green leadership substantially influences an organization's green investment and environmental performance. Our study also demonstrated that green investment significantly improves environmental performance in SMEs. These findings help manufacturing managers integrate technology and human capital, mitigating environmental issues. Our study also provides SME managers and policymakers with a model for AI and green leadership implementation, enhancing green investment and overall performance.