Open Innovation and Sustainable Technology Development: The Moderating Role of AI Capability

Abstract

Sustainable technology development has become a strategic priority for manufacturing firms undergoing digital transformation and facing increasing environmental pressures. Open innovation (OI), particularly inbound knowledge acquisition, plays a crucial role by enabling organizations to integrate diverse technological, scientific, market-based, and digitally mediated knowledge. However, the effectiveness of inbound OI depends on the firm's ability to absorb, analyse, and apply external information, a capability that is increasingly shaped by artificial intelligence (AI). This study investigates how four dimensions of inbound OI (external technology sourcing, university–industry collaboration, customer and market knowledge acquisition, and digital platform engagement) affect sustainable technology development in Saudi Arabian manufacturing firms, and whether AI capability strengthens these effects. Using data collected from 211 IT managers and IT experts and analysed through Smart PLS 4, the results show that all four inbound OI dimensions significantly enhance sustainable technology development. AI capability moderated the relationship between inbound OI and sustainability outcomes. These findings enrich OI theory by introducing a multidimensional conceptualization and highlight AI capability as a strategic enabler of environmental technological progress. The study offers actionable insights for managers and policymakers seeking to accelerate sustainable industrial transformation.