article_17_20260521153026 1779377426 Journal System noreply@positive-science.com Journal System Positive Science - Economics 10.65957/journal.1 https://positive-science.com/journal/human_economics_B1057f9a86 05 21 2026 Hansini Pramudika Blue Ocean Insights Pvt Ltd Publication Information Madhura Fernando Blue Ocean Insights Pvt Ltd Publication Information 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. 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