The Mediating Roles of Leadership Styles Between Artificial Intelligence Capability and Organizational Performance in the UAE

Abstract

The increasing adoption of Artificial Intelligence (AI) has transformed organizational operations, positioning AI capability as a strategic resource for enhancing organizational performance. However, evidence from the United Arab Emirates (UAE) Ministry of Education suggests that investments in AI have not consistently translated into improved organizational outcomes, highlighting the importance of complementary organizational capabilities. This study examines the effect of AI capability on organizational performance and investigates the mediating roles of transformational and transactional leadership. A quantitative research design was employed using survey data collected from 281 managers, heads of departments, and supervisors within the UAE Ministry of Education. The data were analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM). The results indicate that AI capability has a significant negative direct effect on organizational performance. However, both transformational and transactional leadership significantly mediate this relationship, with transformational leadership exhibiting the stronger mediating effect. These findings suggest that the organizational value of AI capability is realized through effective leadership rather than technological capability alone. The study extends Resource-Based Theory by demonstrating that complementary leadership capabilities are essential for translating AI resources into organizational value. Furthermore, it contributes empirical evidence from the UAE public education sector, where research on AI capability and leadership remains limited. The findings provide practical insights for policymakers and educational leaders by emphasizing the importance of integrating AI investments with leadership development, employee digital readiness, and changing management to achieve sustainable organizational performance.