Building an AI-ready workforce: the roles of ethical leadership, knowledge integration, and organizational adaptability

Abstract

Purpose: This study examines how human capital investment contributes to organizational adaptability through AI workforce readiness and knowledge integration while investigating the moderating role of ethical leadership in entrepreneurial and innovation-oriented organizations. Design/methodology/approach: A quantitative survey was conducted among employees working in AI-enabled organizations across Canada. Data were collected from 381 respondents employed in startups, small and medium-sized enterprises, and innovation-focused business units. The proposed model was analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM) with SmartPLS 4. Findings: The findings indicate that human capital investment positively influences AI workforce readiness, which subsequently enhances knowledge integration and organizational adaptability. Knowledge integration partially mediates the relationship between AI workforce readiness and organizational adaptability. Ethical leadership strengthens the relationship between AI workforce readiness and knowledge integration, although its moderating effect on the relationship between knowledge integration and organizational adaptability was not significant. The results suggest that organizational adaptability in AI-enabled environments depends on the interaction of workforce capabilities, knowledge-sharing processes, and ethical leadership practices. Originality/value: This study extends Human Capital Theory, Organizational Learning Theory, and Ethical Leadership Theory by introducing AI workforce readiness as a distinct organizational capability linking human capital investments to adaptive outcomes. The study also provides new insights into how ethical leadership supports responsible AI adoption and knowledge integration within entrepreneurial and innovation-oriented organizations.