AI Integration in Digital Transformation Influencing Service Sector Strategic Performance

Abstract

This study aims to analyze the impact of integrating Artificial Intelligence (AI) into digital transformation on strategic performance in the service sector. The background of this study is based on the increasing adoption of AI technology, which has not yet fully yielded optimal results for organizational performance without proper integration into digital transformation. This study employs a quantitative approach with an explanatory design and a survey method. Data were collected via a Likert-scale questionnaire administered to respondents from service sector organizations that have implemented digital technologies. The research sample was determined using purposive sampling. Data analysis was conducted using Structural Equation Modeling (SEM) based on Partial Least Squares (PLS). The results indicate that AI integration has a positive and significant effect on digital transformation and strategic performance. Furthermore, digital transformation was also found to have a significant effect on strategic performance and acts as a partial mediator in the relationship between AI and organizational performance. These findings indicate that the implementation of AI will yield more optimal results if strategically integrated into the digital transformation process. This study contributes to theoretical development by reinforcing the role of digital transformation as a mediating variable, and offers practical implications for organizations in designing AI-based digital strategies to enhance competitiveness.