Generative AI Adoption and Organizational Performance: The Mediating Role of HR Digital Transformation

Abstract

This study explored the correlation between the adoption of Generative Artificial Intelligence (GenAI) and organizational performance, with HR digital transformation proposed as a mediating variable. The quantitative cross-sectional survey design was based on positivist paradigm with an explanatory approach, and data were gathered from 175 employees and middle level managers of organizations from five industry sectors (information technology, banking, telecommunication, healthcare, higher education, consulting and manufacturing) that had implemented AI-based digital solutions. This was a purposive sampling technique, followed by analysing the data by Partial Least Squares Structural Equation Modeling (PLS-SEM) using SmartPLS 4 software, in line with the two stages of assessment recommended by Hair et al. (2022). All the items in the measurement model achieved the recommended values for the indicator loading, composite reliability and average variance extracted respectively, thereby establishing the reliability and validity of the model. The outcomes of the structural model showed that the use of Generative AI had a positive significant influence on HR digital transformation, which in turn significantly predicted organizational performance. Moreover, it was determined that HR digital transformation played a partial mediation between the adoption of Generative AI and organizational performance. By elucidating the pathway between GenAI capabilities and organizational outcomes, the findings contribute to technology adoption and HRM research by providing new insights into the process by which GenAI can drive tangible results in organizations. Theoretical and managerial implications are discussed, and limitations and directions for future research are discussed.