Generative AI Capability, Business Model Innovation, and Business Development Performance: A Moderated Mediation Framework for SMEs in an Emerging Market

Generative artificial intelligence (GenAI) is increasingly accessible to small and medium-sized enterprises in emerging economies, yet the organisational mechanisms that link GenAI capability to business development outcomes remain insufficiently understood. Drawing on Dynamic Capabilities Theory and the Resource-Based View, this study examines the association between GenAI capability and business development performance (BDP) in Jordanian SMEs through the mediating role of business model innovation (BMI) and the moderating role of market sensing agility (MSA). A cross-sectional survey of owner–managers and senior decision-makers was analysed using partial least squares structural equation modelling. The results indicate that GenAI capability is positively associated with BDP, with BMI accounting for a meaningful share of the link, while MSA strengthens the mediated pathway such that the association is substantially more pronounced among firms with higher levels of market sensing capacity. The findings suggest that returns to GenAI investment in resource-constrained markets depend less on technological access and more on the firm’s capacity to reconfigure its business model and interpret the external environment effectively. The study contributes to the dynamic capabilities literature in emerging-market contexts and provides direction for managers and policymakers concerned with digital transformation in the SME sector.