Impact of AI Integration on Innovation: The Mediating Role of Employee Empowerment and Development

Abstract

This study explores the impact of AI integration on innovation performance, focusing on the mediating role of employee empowerment. Using structural equation modeling (SEM) based on data from various organizations, the findings demonstrate that AI integration positively influences both innovation performance and employee empowerment. Additionally, the results reveal that employee empowerment significantly enhances innovation and mediates the relationship between AI and innovation performance, indicating that the full benefits of AI are realized when employees are empowered to use the technology effectively. The study contributes to the literature on AI-driven innovation by highlighting the importance of human-centered approaches in AI adoption and providing practical insights for organizations seeking to maximize innovation through technology and workforce development. Future research directions are proposed to examine the long-term effects of AI integration and explore other contextual factors influencing this relationship.

Keywords: AI Integration, Innovation Performance. Employee Empowerment, Software Houses Pakistan