The Synergistic Consequence of Knowledge Management and Artificial Intelligence on Technological Innovation in Manufacturing Firms of Developing Country

Abstract

The study examines the synergistic effect of technology-based Knowledge Management (KM) and Artificial Intelligence (AI) on technological innovation in Pakistan’s manufacturing sector. It also investigates AI’s mediating role in enhancing the relationship between KM and technology innovation. This research fills a gap in the literature by exploring the combined influence of technology-based Knowledge Management and Artificial Intelligence on technology innovation within the context of a developing economy. It uniquely highlights AI’s mediating role in driving technological innovation, providing insights specific to the manufacturing sector in Pakistan. A deductive methodology was adopted, using data from 372 employees across four industries: pharmaceuticals, textiles, sports, and cement. Convenience sampling was employed, and data were analyzed using Structural Equation Modeling (SEM) with Smart PLS 4.0. Harman’s single-factor test was applied to address common method bias. The results demonstrate a positive and significant relationship between KM and technological innovation, with AI acting as an efficient mediator. The model exhibited strong explanatory power, with R-square values of 0.749 for AI and 0.836 for technological innovation, validating the hypotheses. Moreover, the statistically significant path coefficients support acceptance of all four hypotheses in the study. Manufacturing firms should leverage AI to enhance their KM processes and drive technological innovation. Investments in AI technologies and employee development programs are crucial for fostering innovation and maintaining competitiveness in the manufacturing sector.