HOW AI-DRIVEN DECISION SUPPORT SYSTEMS ENHANCE EMPLOYEE INNOVATIVE PERFORMANCE THROUGH DIGITAL EMPOWERMENT AND TRANSFORMATIONAL LEADERSHIP

Abstract

This study examines how AI-driven decision support systems translate technological capability into employee innovative performance within technology-intensive manufacturing firms. Although organizations increasingly invest in intelligent analytics and data-driven platforms, evidence remains mixed regarding how these systems influence employee-level outcomes. Drawing on transformational leadership theory, the study proposes that the effect of AI-enabled decision environments on innovation operates not only directly but also through the mediating roles of digital empowerment and transformational leadership. A quantitative, cross-sectional research design was employed, with data collected from managerial and professional employees working in electronics, automotive components, pharmaceutical, and industrial machinery manufacturing firms. Validated measurement scales were administered using a 7-point Likert scale. Data were analyzed using SPSS for preliminary screening and SmartPLS 4 for measurement and structural model assessment, including reliability, validity, path analysis, and mediation testing. The results indicate that AI-driven decision support systems significantly enhance employee innovative performance. More importantly, digital empowerment and transformational leadership were found to partially mediate this relationship, demonstrating that technological systems foster innovation when employees feel confident, autonomous, and supported by inspiring leadership. The findings highlight that intelligent technologies alone are insufficient to stimulate innovation unless complemented by empowerment practices and leadership behaviors that encourage experimentation and creative engagement.