AI Adoption and Sustainable Competitive Advantage in SMEs: the Roles of Marketing Analytics and Innovation

PurposesThis study aims to investigate how artificial intelligence (AI) adoption contributes to sustainable competitive advantage (SCA) in small and medium-sized enterprises (SMEs), focusing particularly on the mediating roles of marketing analytics capabilities (MAC) and marketing innovation (MI). The research responds to a growing need for empirical insight into how AI enables competitive outcomes for SMEs in digitally evolving economies.Design/methodology/approachGuided by the resource-based view and technological capabilities framework, the study develops and tests a structural model using partial least squares structural equation modeling. Data were collected by surveying 384 SMEs in the United Arab Emirates.FindingsThe results confirm that AI adoption positively influences both MAC and MI. MI fully mediates the relationship between AI adoption and SCA, while MAC do not demonstrate a direct effect. However, a significant serial mediation path is observed from AI adoption through analytics to innovation and ultimately SCA.Research limitations/implicationsThe study is based on cross-sectional data from one country, limiting generalizability. Future research may explore longitudinal, cross-country comparisons.Practical implications SME managers should prioritize building innovation-enabling capabilities and not assume that analytics alone will drive sustained advantage.Originality/valueThis study contributes to the literature by clarifying the indirect mechanisms through which AI generates SCA in resource-constrained firms. It emphasizes the pivotal role of MI as an enabler and highlights why MAC alone may not deliver strategic impact. The study also provides contextual insights from a digitally ambitious emerging economy.