Do AI-Enabled HR Practices Enhance Customer Experience? The Mediating Role of Employee Engagement: Evidence from Indian Organizations

Abstract

The rapid adoption of Artificial Intelligence (AI) across various organizational functions has led to transformation of value creation through Human Resource Management (HRM) practices for both employees and customers. Various AI-powered recruitment systems, performance management applications, workforce analytics, employee learning and development solutions and employee experience platforms are increasingly being implemented by organizations. However, there are very limited studies on how these technologies affect customer experience, particularly in developing nations. The current research aims to explore the impact of HRM practices enabled by AI on the customer experience from the point of view of the mediating role of employee engagement from the standpoint of the Service-Profit Chain framework and the Social Exchange Theory. The survey was conducted among organizations functioning in India and working in the domains of information technology, banking, telecommunications, e-commerce, health care and manufacturing industries. Data were collected via a structured questionnaire filled by 512 respondents with the help of validated measurement instruments. Hypothesized relations were analyzed with Structural Equation Modeling (SEM). It was established that AI-enabled HR practices have a positive impact on employee engagement and customer experience. Besides, employee engagement plays a partial mediating role in the relationship between AI-based HR practices and customer experience.