A Study on the Impact of Artificial Intelligence on Business Performance, Strategic Decision-Making and Organizational Transformation

Author

Dr. R. Pradeep Kumar Patnaik, Ms. Kasturi Lasya

Abstract

 Artificial Intelligence (AI) is reshaping how organizations operate, decide and compete, yet empirical evidence that links AI adoption simultaneously with business performance, strategic decision-making and organizational transformation remains limited. This study examines the impact of AI adoption and application on (i) business performance, (ii) strategic decision-making and organizational transformation, and (iii) the mediating roles of operational efficiency, decision-making quality, customer experience and innovation capability. It also identifies the main challenges of AI adoption. A descriptive and causal research design was followed, and primary data were collected from 150 respondents through a structured questionnaire measured on a five-point Likert scale. The data were analysed in Microsoft Excel using descriptive statistics, Cronbach's alpha, Pearson correlation, chi-square tests of independence, one-way ANOVA with Bonferroni post-hoc tests, simple and multiple linear regression, and Sobel tests for mediation. All constructs were reliable (α = .76–.87). AI adoption had a significant positive effect on business performance (β = .518, R² = .269, p < .001) and on strategic decision-making and organizational transformation (β = .528, R² = .278, p < .001). Organization size was significantly associated with the level of AI adoption (χ² = 31.12, p < .001), and performance rose significantly with the level of adoption (F = 13.14, p < .001). The relationship between AI and business performance was partially mediated, 1 of the four indirect paths being individually significant. Data privacy and security emerged as the most serious challenge. The study concludes that AI creates value when it is embedded in efficient processes, high-quality decisions and responsible governance rather than treated as a stand-alone technology.

Keywords

Artificial Intelligence; Business Performance; Strategic Decision-Making; Organizational Transformation; Mediation Analysis; Responsible AI.

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References

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