EMOTIONAL INTELLIGENCE, AI LITERACY AND LEADERSHIP LEGITIMACY IN AI-SUPPORTED ORGANISATIONAL DECISION-MAKING: A PLS-SEM STUDY

Abstract

AI is transforming into a powerful decision support tool in organisations, but how AI recommendations are interpreted, communicated and governed by leaders is key to their value. This research aims to explore the mediating effect of leadership legitimacy on the relationship between the use of AI decision making, AI explainability, leader emotional intelligence and AI literacy on responsible decision quality. This study utilizes a quantitative research design with partial least squares structural equation modelling technique on a thesis model data that consists of 412 data pieces containing managers, supervisors and professional employees who are exposed to AI supported decision tools. The measurement model demonstrates a good level of reliability, convergent validity and discriminant validity. Based on the structural results, it is found that the variable of reliance on AI decision is positively influential for responsible decision quality, while the other variables of AI explainability, emotional intelligence of leaders and their legitimacy are found to have positive influence on the quality of responsible decisions but are not significant. The influence of each of these factors (AI explainability, emotional intelligence, and AI literacy) on decision quality is partially explained by leadership legitimacy. Leadership legitimacy partially mediated the relationships of AI explainability and emotional intelligence with decision quality; AI literacy strengthened the relationship between AI decision reliance and responsible decision quality. The results indicate that AI enhances organisational decisions if leaders incorporate it as an accountability-based analytical assistant but do not completely rely on it for judgment. This paper enriches the academic field of business and management with empirical research of how the use of AI in decision making is associated with emotional intelligence and legitimacy and responsible leadership. The takeaway for companies is to build leaders that are AI-literate and emotionally intelligent, especially in instances where AI is being applied in people decisions that impact employees, customers and other entities.