Artificial Intelligence in Accounting Practices in the Industry 5.0 Era from a Dynamic Capabilities Perspective: Role of Strategic Foresight, Agility, and Flexibility

The adoption of digitalization that is driven by artificial intelligence (AI) is an integral part of the industry 5.0 phenomenon, where humans and machines complement each other. Despite the global traction drawn by AI, there appears to be a lack of comprehensive consensus among scholars on factors that drive organizations toward the adoption of such technology. Particularly in the realm of usage of AI in accounting practices, there appears to be a dearth of sufficient frameworks that explain what organizational factors are likely to drive organizations towards such adoption. This is because most of the reported antecedents are rooted in resource-based theories that however suffer from several limitations. Hence, this paper aims to present an alternative conceptual framework that is based on the capability’s perspective. This study leans on the Dynamic Capabilities View (DCV), which is based on three micro-foundations: the ability to sense, seize, and transform. Based on these micro-foundations, a theoretically justified conceptual framework is presented with a set of propositions showing that strategic foresight, strategic agility, and strategic flexibility drive the process of AI-driven digitalization of accounting practices. This study contributes to the fragmented literature on antecedents of digitalization of accounting practices (DAP). Moreover, the study points out the overwhelming emphasis on resource-based perspectives in trying to explain antecedents of DAP and presents an alternative framework that addresses the under-researched stream of studies related to dynamic capabilities and digitalization in organizations. The theoretical arguments presented in this paper offer an alternate lens to explore the possibility that DAP may be driven more significantly by developing capabilities rather than acquiring and controlling resources. The conceptual framework paves the path for further empirical research in this area.