Imam Hossein University Strategic Management of Organizational Knowledge 2645-4262 Articles in Press 2026 06 17 The impact of artificial intelligence capability on organizational performance in knowledge-based firms in Iran: The mediating role of organizational knowledge management mechanisms The impact of artificial intelligence capability on organizational performance in knowledge-based firms in Iran: The mediating role of organizational knowledge management mechanisms 210825 10.47176/SMOK.2026.1979 FA Soheila Khoddami Associate Professor, Department of Business Management, Faculty of management, University of Kharazmi, Tehran, Iran, s.khoddami@khu.ac.ir 0000-0001-6461-1351 Mahsa Afsharpour PhD Student of Business Management, Faculty of management, University of Kharazmi, Tehran, Iran, std_Mahsaafsharpour@alumni.khu.ac.ir 0009-0001-5582-9081 Journal Article 2025 11 13 <strong>Purpose:</strong> Despite significant investments in artificial intelligence, only a limited number of organizations achieve desired returns. This reality positions AI not merely as raw technology, but as a knowledge capability requiring the activation of internal mechanisms for tangible performance. Therefore, this study aims to investigate the impact of AI ability on firm performance in Iranian knowledge-based firms, mediated by knowledge management mechanisms.<br /><strong>Methodology:</strong> This applied, descriptive-survey study was conducted on Iranian knowledge-based firms. A representative sample of 100 senior managers was selected via convenience sampling based on statistical power. Data were collected using a 34-item standard questionnaire and analyzed using structural equation modeling in SmartPLS 4.<br /><strong>Results: </strong>Results indicate AI ability indirectly influences firm performance through four mechanisms: firm creativity, AI management, organizational learning, and organizational agility. Among these, organizational agility demonstrated the strongest effect, while AI management had the weakest. The proposed structural model exhibited desirable fit and predictive power.<br /><strong>Discussion: </strong>The value of AI is realized only through its absorption into the knowledge cycle. This research clearly demonstrates that without activating internal mechanisms like agility and learning, technological investments fail to translate into tangible performance, thereby perpetuating the well-known AI productivity paradox<br /><strong>Conclusion: </strong>Ultimately, the long-term success of knowledge-based firms in converting technological investments into sustainable competitive advantage requires the strategic integration of AI into the knowledge management cycle. Organizational agility was identified as the primary engine converting capabilities into tangible performance, highlighting the critical necessity of developing highly responsive organizational structures and dynamic and continuous learning processes. <strong>Purpose:</strong> Despite significant investments in artificial intelligence, only a limited number of organizations achieve desired returns. This reality positions AI not merely as raw technology, but as a knowledge capability requiring the activation of internal mechanisms for tangible performance. Therefore, this study aims to investigate the impact of AI ability on firm performance in Iranian knowledge-based firms, mediated by knowledge management mechanisms.<br /><strong>Methodology:</strong> This applied, descriptive-survey study was conducted on Iranian knowledge-based firms. A representative sample of 100 senior managers was selected via convenience sampling based on statistical power. Data were collected using a 34-item standard questionnaire and analyzed using structural equation modeling in SmartPLS 4.<br /><strong>Results: </strong>Results indicate AI ability indirectly influences firm performance through four mechanisms: firm creativity, AI management, organizational learning, and organizational agility. Among these, organizational agility demonstrated the strongest effect, while AI management had the weakest. The proposed structural model exhibited desirable fit and predictive power.<br /><strong>Discussion: </strong>The value of AI is realized only through its absorption into the knowledge cycle. This research clearly demonstrates that without activating internal mechanisms like agility and learning, technological investments fail to translate into tangible performance, thereby perpetuating the well-known AI productivity paradox<br /><strong>Conclusion: </strong>Ultimately, the long-term success of knowledge-based firms in converting technological investments into sustainable competitive advantage requires the strategic integration of AI into the knowledge management cycle. Organizational agility was identified as the primary engine converting capabilities into tangible performance, highlighting the critical necessity of developing highly responsive organizational structures and dynamic and continuous learning processes. https://jkm.ihu.ac.ir/article_210825_9062a2fbbeac48478a819db2160ce038.pdf