Does AI Innovation Improve Competitive Advantage of SMEs Through Human Capital in Ethiopia?

Abstract

This study investigates the intricate relationship between AI innovations, human capital development, and competitive advantage within Ethiopian small and medium-sized enterprises (SMEs). Utilizing a mixed-methods approach, the research reveals that AI technologies significantly enhance competitive advantage by improving operational efficiencies and decision-making processes. Furthermore, the findings underscore the mediating role of human capital, indicating that organizations that invest in employee training and skills development can better leverage AI tools. This dual focus on technological advancement and workforce development is essential for SMEs striving to thrive in an increasingly competitive landscape. The study emphasizes the importance of fostering a culture of continuous learning and collaboration between technology and human resource departments.