Study of 280 Saudi enterprises finds only artificial intelligence and big data create technical capability
A new Saudi study found that adopting technology alone does not build institutional capability, and that artificial intelligence and big-data analytics are the only two drivers that statistically contributed to shaping comprehensive “technical capabilities” in small and medium enterprises, while the Internet of Things and blockchain showed no significant effect.
Methodology that goes beyond the question “Does digitisation help?”
The research team led by Wafaa Naif Al-Wakidi of Jouf University surveyed 280 decision-makers in Saudi small and medium enterprises, covering sectors such as manufacturing, logistics services, technology and retail, and used the SME classification of the Saudi Small and Medium Enterprise Authority. Data were collected between November 2025 and May 2026, and the results were published in the journal “Discover Artificial Intelligence”. The researchers employed structural equation modelling to test two parallel pathways: the first links four specific technological capabilities (Internet of Things, blockchain, artificial intelligence, big-data analytics) to what they call “technical capabilities”, the institutional ability to deploy, calibrate and re-shape multiple technologies across processes. The second pathway links three organisational capabilities (digital capabilities, innovation capabilities, managerial capabilities) to “environmental innovation”, meaning new or modified products, processes and practices that reduce environmental impact. Both were tested against “sustainable performance”, a composite metric covering economic, operational, environmental, social and competitiveness outcomes.
Unbalanced results
Artificial intelligence capabilities showed the strongest relationship with technical capabilities, with a standardized path coefficient of 0.609 and a large effect size. Enterprises that apply machine learning in forecasting, planning, risk assessment and decision support were much more likely to report a genuine, integrated technical capability. Big-data analytics contributed significantly, albeit with a smaller effect. Internet of Things capabilities displayed a slight, non-significant negative association, and blockchain showed a similarly non-significant relationship. In other words, possessing sensors and distributed ledgers did not translate into the broader institutional ability to integrate and adapt technology. The researchers caution that this does not mean IoT or blockchain are valueless, but rather that they require complementary conditions that many small enterprises lack: shareable infrastructure, cyber-security arrangements, technical skills, and for blockchain, participation of suppliers, customers and regulators across a full network. A small firm might add a blockchain application to a single workflow without ever developing the integration routines that define institutional technical capability. The authors emphasise that these technologies did not independently explain technical capabilities in the estimated model, not that their potential value is zero.
Environmental innovation: culture, not hardware
The second pathway tells a more collaborative story. Innovation capabilities, the readiness to experiment, generate new ideas and introduce new products and processes, were the strongest driver of environmental innovation, followed by managerial capabilities, which capture leadership support, coordination and resource allocation, and then digital capabilities, which reflect infrastructure, employee skills and integration routines. Thus, sustainability-oriented innovation is fundamentally a cultural issue, not a hardware problem. It emerges when an enterprise possesses an experimental culture, committed leadership, and sufficient digital readiness to monitor resources, improve processes and reduce waste.
What this means for enterprises in the region
When the two paths converged on the outcome, technical capabilities were the strongest route to sustainable performance (coefficient 0.517, large effect), while environmental innovation contributed a statistically significant but smaller effect. Analysis of indirect effects clarified the picture: AI capabilities were linked to sustainable performance primarily through their role in building technical capabilities, and large-scale analytics operated in the same channel. On the organizational side, innovation and management capabilities contributed to sustainable performance via environmental innovation. Notably, the indirect path from digital capabilities through environmental innovation approached the threshold of significance without reaching it, indicating that digital readiness alone, without an innovation culture or managerial commitment, may not be sufficient to generate measurable sustainability gains. The practical message for managers is a correction of the technology hype: rather than adopting every emerging tool, the study calls for aligning digital investments with the firm’s execution capacity, AI and analytics initiatives supported by employee training, data-quality procedures, and integration with existing processes; IoT investments require infrastructure planning and collaboration; blockchain efforts may only bear fruit through cooperation with supply-chain partners. Sustainability programs need more than software; they require experimentation, leadership commitment, and cross-functional coordination.