Artificial Intelligence Adoption and Sustainable Business Performance among Indian Msmes: An Empirical Investigation

Abstract

Artificial Intelligence (AI) has emerged as a transformative technology that enables organizations to enhance operational efficiency, optimize resource utilization, improve customer engagement, and support sustainable business practices. For Micro, Small, and Medium Enterprises (MSMEs), AI adoption presents significant opportunities to overcome resource constraints, improve competitiveness, and achieve long-term sustainability. Despite increasing government initiatives promoting digital transformation in India, empirical evidence regarding the relationship between AI adoption and sustainable business performance among Indian MSMEs remains limited. This study aims to examine the impact of Artificial Intelligence adoption on the economic, environmental, and social dimensions of sustainable business performance among Indian MSMEs. The study adopts a quantitative research approach using a structured questionnaire administered to MSME owners, managers, and entrepreneurs across selected industrial clusters in India. Primary data are collected from 400 respondents through convenience and purposive sampling techniques. Statistical tools such as Descriptive Statistics, Reliability Analysis, Exploratory Factor Analysis (EFA), Confirmatory Factor Analysis (CFA), Structural Equation Modeling (SEM), and Multiple Regression Analysis are employed to test the proposed hypotheses. The study considers AI adoption as the independent construct comprising intelligent automation, predictive analytics, customer relationship management, decision support systems, and process optimization, while sustainable business performance is measured through economic sustainability, environmental sustainability, and social sustainability indicators. The findings are expected to demonstrate that AI adoption significantly improves operational efficiency, innovation capability, environmental responsibility, and financial performance among MSMEs. The study also highlights the role of organizational readiness and digital capabilities in facilitating successful AI implementation. The research contributes to the growing literature on AI-enabled sustainability by providing empirical evidence from the Indian MSME sector and offers practical recommendations for policymakers, entrepreneurs, technology providers, and researchers. The outcomes of this study are expected to support India's vision of digital transformation, sustainable industrial development, and enhanced global competitiveness of MSMEs