Driving Financial Success with AI Supply Chains: The Crucial Role of Sustainable Development in Emerging Economies

Abstract

This research is directed at examining the effect of the Artificial Intelligence (AI) based Supply Chain Management (SCM) on the financial performance of companies in emerging economies. Specifically, it investigates the role of sustainable development practices (environmental, social and economic aspects) as a mediator in the process of transforming the technological potential of the supply chain into real profit.

A quantitative research design is used, and survey data from a cross-sectional sample of supply chain managers, sustainability officers and financial executives in a sample of key emerging markets were disseminated and subsequently analysed, resulting in 276 valid responses. Using PLS-SEM technique, the study aims to test the hypothesized relationships empirically between AI-SCM adoption, SD initiatives, and firm profitability.

The empirical results showed that AI-SCM has a positive and significant direct effect on financial performance. More important, the analysis shows that sustainable development is an important mediating factor between the two. In turn, the efficiency of the resources used, waste reduction, and ethical sourcing (sustainable development) are improved, leading to cost savings, premium pricing, and an increase in market share (financial success). While existing literature has been extensive on the role of AI and sustainability in developed contexts, this study delves into the distinctive challenges of institutions and resources faced in emerging economies. It provides a new model integrated approach that shows that technological advancement (AI) and ecological/social responsibility (sustainability) do not necessarily contradict, but are complementary, and is the force that drives competitive advantage in emerging markets.

Investments in emerging economies that are directly linked to a specific sustainable development goal (SDG) have the highest economic payback and should be the priorities for executives. The study highlights the need for creating policies and regulations to support the adoption of green AI, fostering economic growth and environmental sustainability.

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