Artificial Intelligence-Driven Supply Chain Management and Financial Performance in Emerging Economy Firms: The Mediating Role of Sustainable Development

Abstract

This study examines the impact of AI-driven supply chain management on financial performance in emerging economy firms, with sustainable development acting as a mediating variable. The study explains how AI-enabled supply chain practices contribute to both sustainability and organizational financial outcomes. A quantitative cross-sectional research design was adopted using data collected from 356 supply chain and operations professionals from emerging economy firms. Partial Least Squares Structural Equation Modeling (PLS-SEM) through Smart PLS 4 was employed to test the proposed conceptual framework and mediation relationships. The findings indicate that AI-driven supply chain management positively influences financial performance and sustainable development. Sustainable development practices, including waste reduction, energy efficiency, green logistics, and ESG-oriented operations, partially mediate this relationship. The study concludes that AI integration in supply chain management functions not only as a technological capability but also as a strategic mechanism for enhancing sustainability and financial resilience. Sustainable development plays a significant role in transforming AI-enabled operational improvements into long-term financial benefits. The study contributes to the literature by integrating AI, sustainable development, and financial performance within the context of emerging economy supply chains. The findings provide practical insights for managers and policymakers regarding digital transformation, sustainable supply chain strategies, employee training, ESG alignment, and responsible AI adoption.