When Readiness Is Not Enough: Explaining the AI Adoption Paradox in Organisations from a Developing Economy

Artificial intelligence (AI) adoption is increasingly recognised as a strategic driver of productivity growth, innovation efficiency, resource optimisation, and sustainable economic competitiveness in knowledge-intensive organisations. Particularly in developing economies, firms invest in AI technologies to enhance operational performance, strengthen strategic decision-making, and create long-term economic value. However, organisational readiness does not always translate into successful implementation. This study examines the determinants of AI adoption and introduces the concept of the AI Adoption Paradox, where readiness conditions fail to produce corresponding adoption. Using survey data from 410 professionals across knowledge-intensive sectors in Sri Lanka, Partial Least Squares Structural Equation Modelling (PLS-SEM) was applied. The findings reveal that AI awareness, technological infrastructure, and top management support positively influence AI adoption, while digital skills readiness demonstrates a significant inverse relationship. Organisational culture significantly moderates the relationship between digital skills readiness and AI adoption. The findings suggest that sustainable AI adoption depends not only on readiness, but on an organisation’s ability to convert readiness into behavioural acceptance and strategic economic value.