This study examines the impact of technological integration on sustainable performance in Pakistani manufacturing SMEs from the export sector, focusing on the mediating role of employee capacity building and the moderating role of organizational learning, drawing on dynamic capabilities theory. Data were collected from manufacturing SMEs in Pakistan via a structured questionnaire, and structural equation modeling (SEM) was employed using Smart-PLS (4.1) for analysis. The results reveal that both AI adoption and technological readiness significantly enhance employee capacity building, which, in turn, positively impacts sustainable performance. Employee capacity building significantly mediates the relationships between both AI adoption and sustainable performance as well as between technological readiness and sustainable performance. Notably, organizational learning shows a significant moderating effect between technological readiness and employee capacity building but an insignificant moderating effect between AI adoption and employee capacity building. These findings offer actionable insights for managers in optimizing AI and readiness strategies to enhance capacity building and sustainable outcomes. This study contributes to the literature by being one of the first to integrate AI adoption and technological readiness with employee capacity building as a mediator and organizational learning as a moderator in the context of SMEs. Unlike prior research, which typically examines these factors independently, our framework offers a holistic approach to understanding sustainable performance.

This study addresses the critical gap in understanding how internal green capabilities and practices drive environmental sustainability in small and medium-sized enterprises (SMEs), particularly within the context of a developing economy. While prior studies have explored green intellectual capital (GIC), green human resource management (GHRM), and green innovation separately, their combined effects and mechanisms have been underexplored. Grounded in the Resource-Based View (RBV), this research examines how GIC and GHRM influence environmental performance, considering green innovation as a mediating factor and green transformational leadership as a moderating factor. Data were collected through a structured questionnaire from 329 manufacturing SMEs in major industrial regions of Pakistan and analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM). The findings demonstrate that GIC and GHRM significantly enhance environmental performance both directly and indirectly via green innovation, while green transformational leadership strengthens the effect of GHRM on innovation. These results provide practical insights for managers and policymakers in developing countries to implement integrated green strategies and leadership development to achieve sustainability targets. Given its focus on Pakistani SMEs, the generalizability of the findings may be limited, suggesting directions for future research in other cultural and economic settings.