THE INFLUENCE OF ARTIFICIAL INTELLIGENCE (AI) INTEGRATION ON LEADERSHIP DECISION QUALITY THROUGH CAPABILITIES AMIDST POTENTIAL RISKS: A MODERATED MEDIATION STUDY

Abstract

In the context of Saudi Arabia’s Vision 2030, this paper seeks to investigate the effects of artificial intelligence (AI) adoption on leadership decision quality in Saudi public and private organizations, including higher education institutions. Grounding in socio-technical systems theory and digital leadership theory, it investigates the mediating effect of leadership capability and the moderating effect of perceived risk. The sample comprised 526 organizational leaders and the data were analyzed through structural equation modelling (SEM) in combination with Hayes’s PROCESS macro (Model 7).

AI integration is found to have positive, significant effects on leadership decision quality, directly and indirectly, through enhanced leadership capabilities; however, perceived risks—ethical, operational and technological—moderate this relationship and mitigate the direct effects of AI on decision quality. A difference by sector type is evident, with public organizations (74%) having higher AI implementation rates than those in the private sector, which have greater agility and innovative potential. This study’s theoretical contribution lies in its enrichment of theory by synthesizing sociotechnical and digital leadership perspectives in the emergent model of AI-enabled leadership. More practically, it suggests that ethical, human-centered and capability-focused AI policies may enhance leadership decision quality and assist in advancing Saudi Arabia’s Vision 2030 digital transformation.