The impact of artificial intelligence capabilities on organisational performance: an empirical study in the South African retail context

Abstract

Developing the ability to undergo digital transformation with Artificial Intelligence (AI) is increasingly crucial for retail organisations, given the rising occurrence of AI-driven activities within their organisations. This underscores the need to understand how retail organisations should structure themselves to leverage AI effectively and in what ways value can be attained. Within this context, this thesis investigates how AI capabilities can enhance organisational performance by prompting changes in critical organisational activities. Through a survey-based research approach, data was gathered from individuals within retail organisations in South Africa to explore the indirect impact of AI capabilities on organisational performance. A total of 145 participants from South Africa's retail sector were surveyed, and their responses were analysed using structural equation modelling with AMOS/ SPSS. The results indicate that AI capabilities positively influence process automation, cognitive insight generation, cognitive engagement, and innovativeness. While both process automation and innovativeness positively correlate with organisational performance, it was observed that cognitive insights and cognitive engagement do not significantly affect organisational performance. These findings explain the essential resources comprising an AI capability and highlight the consequences of nurturing such capabilities on critical organisational activities, thereby influencing organisational performance