AI Driven Digital Transformation and Intelligent Information Systems: Assessing their Impact on Business Performance
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Abstract
Purpose: Artificial intelligence (AI)-driven digital transformation and intelligent information systems (IIS) are reshaping organizational strategy, decision-making, and competitiveness across emerging economies. Despite growing managerial interest, empirical evidence on how these capabilities jointly translate into measurable business performance gains in the Indian context remains limited and fragmented. This study examines the direct and indirect effects of AI-driven digital transformation (AIDT) and intelligent information systems (IIS) on business performance (BP), with organizational data-driven culture (ODC) and organizational agility (OA) modelled as parallel mediators, and firm size as a boundary condition.
Design/Methodology/Approach: A structured, validated questionnaire was administered to 384 managerial and functional respondents drawn from IT/ITES, BFSI, manufacturing, retail/e-commerce, and healthcare firms operating across four Indian regions. The measurement model was assessed using Cronbach's alpha, composite reliability, average variance extracted (AVE), and the Fornell–Larcker criterion. Structural relationships were tested using hierarchical multiple regression, the Baron–Kenny procedure with Sobel tests for mediation, and moderated regression with mean-centred interaction terms.
Findings: Both AIDT (β = 0.256, p < 0.001) and IIS (β = 0.160, p < 0.001) exert significant positive direct effects on business performance. ODC and OA each partially mediate these relationships, and the full model explains 36.6 percent of the variance in business performance (R² = 0.366). Firm size positively moderates the AIDT–performance relationship at a marginal significance threshold (p = 0.055), suggesting the effect strengthens somewhat in larger organizations.
Originality/Value: The study contributes one of the first integrated, dual-mediator models linking AI-driven digital transformation and intelligent information systems to business performance within the Indian organizational context, offering both theoretical extension of the resource-based and dynamic capabilities views and actionable guidance for managers and policymakers steering India's digital economy.
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