AI-driven digital transformation in SMEs: pathways to resilience, value co-creation, and sustainable performance

Abstract

Purpose – This study examines the interrelationships among AI-enabled digital ecosystems, digital maturity, organizational resilience, sustainable value co-creation, and sustainable performance within Small and Medium-Sized Enterprises (SMEs) in Pakistan's manufacturing sector. By doing so, it addresses critical gaps in the literature on how these constructs collectively shape resilience and long-term sustainability in information-intensive business environments.

Design/methodology/approach – A quantitative research design was employed, with data collected from 476 SMEs using structured questionnaires. Structural Equation Modeling using SmartPLS was applied to test the hypothesized relationships and assess the mediating and moderating roles of organizational resilience, sustainable value co-creation, and digital maturity.

Findings – The results show that AI-driven digital ecosystems have a significant positive effect on both organizational resilience and sustainable value co-creation, which in turn drives sustainable performance. Digital maturity acts as both an enabler and a moderator, amplifying the benefits of AI ecosystems. Among the predictors, sustainable value co-creation emerges as the strongest driver of sustainable performance, while the reciprocal relationship between resilience and co-creation highlights their self-reinforcing nature.

Practical implications –The study extends the Resource-Based View, Dynamic Capability Theory, and Stakeholder Theory by integrating AI-driven ecosystems and sustainability into a unified framework. Digital maturity is reconceptualized as a multi-dimensional construct encompassing technological, behavioral, and strategic readiness, offering a more nuanced understanding of its role in enabling resilience and Value Co-Creation. Practically, the findings provide guidance for SMEs to pursue phased digital transformation, build collaborative stakeholder networks, and embed sustainability-oriented practices. Policy recommendations include targeted programs to enhance SMEs' digital readiness and resilience.

Originality/value –This research advances knowledge by redefining SME performance to include economic, social, and environmental dimensions. It offers a holistic pathway for how AI ecosystems and digital maturity can foster resilience and sustainability, enabling SMEs in resource-constrained contexts to remain competitive while contributing to global sustainability goals such as the SDGs and ESG metrics.