Role of artificial intelligence towards employee retention via mediation of employee loyalty: A company governance study

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Abstract

This study examines the impact of artificial intelligence (AI) on employee retention, with a specific focus on the mediating role of employee loyalty. AI contributes to employee retention by personalizing engagement strategies, improving workplace efficiency, and reducing stress (Chowdhury et al., 2023; Adigwe et al., 2024). Utilizing a cross-sectional design, data was collected from 324 managerial-level employees within the manufacturing sector in Saudi Arabia through a convenience sampling technique. Structural equation modeling (SEM) was conducted using SmartPLS v. 4 software to analyze the relationships among variables. The findings indicate that AI significantly enhances employee loyalty, which in turn plays a crucial mediating role in improving employee retention. These results suggest that while AI directly influences retention, its most significant effect is mediated through increased employee loyalty. The study provides valuable insights for organizations seeking to leverage AI to foster a loyal workforce and enhance retention strategies. By highlighting the importance of integrating AI with practices that build employee loyalty, the study offers practical recommendations for organizations aiming to optimize their human resource management (HRM) and improve overall employee engagement and retention.

Keywords: Artificial Intelligence, Retention, Loyalty, Manufacturing

Authors’ individual contribution: The Author is responsible for all the contributions to the paper according to CRediT (Contributor Roles Taxonomy) standards.

Declaration of conflicting interests: The Author declares that there is no conflict of interest.

JEL Classification: M12, M15, M20

Received: 09.09.2024
Revised: 30.11.2024; 26.05.2025
Accepted: 09.06.2025
Published online: 12.06.2025

How to cite this paper: Al-Ayed, S. (2025). Role of artificial intelligence towards employee retention via mediation of employee loyalty: A company governance study [Special issue]. Journal of Governance & Regulation, 14(2), 363–370. https://doi.org/10.22495/jgrv14i2siart15