Navigating AI Integration: The Role of Literacy and Anxiety in Shaping Employee Engagement Through Moderated Mediation Approach

Abstract

Despite extensive research in employee engagement, little is known about how AI literacy and AI anxiety interact with trust in AI to shape employee engagement in exponential technology environments. This study explores how trust in AI, perceived fairness, AI literacy, and AI anxiety influence employee engagement in AI-driven workplaces. Using a three-wave mixed-method design, data were gathered from 252 employees in Indian firms employing AI technologies. The results indicate that trust in AI significantly enhances employee engagement, where perceived fairness in AI is a mediator. Higher AI literacy amplifies the positive impact of trust and fairness in employee engagement, while AI anxiety weakens these relationships. The moderated mediation effect demonstrates that AI literacy and anxiety buffer the relationship between trust in AI and engagement. Our results highlight the importance of fostering trust and fairness in AI systems and enhancing AI literacy through targeted training while mitigating anxiety. Transparent and ethical AI strategies improve engagement by alleviating fears and creating supportive work environments. These approaches boost employee satisfaction and performance in AI-integrated settings. We suggest future research to examine these dynamics across diverse cultural contexts and longitudinal design to understand evolving human-AI interactions.