Abstract

This study explores the influence of Artificial Intelligence Adoption (AIA) on organizational Diversity, Equity, and Inclusion (DEI), with a specific focus on the mediating role of ethical leadership. The leadership framework within which AI is implemented significantly shapes its impact on workplace equality and inclusion. AI possesses a dual capacity: while it can reduce human biases, it may also reinforce systemic inequalities if not applied responsibly. To investigate this, a quantitative approach was adopted, utilizing survey data collected from human resource professionals across pharmaceutical companies in Sialkot, Pakistan. Smart-PLS Structural Equation Modeling (SEM) was employed to analyze both direct and indirect effects, with a particular emphasis on ethical leadership as a mediator. Results reveal strong, statistically significant positive relationships among AI adoption, moral leadership, and DEI outcomes. The findings highlight ethical leadership as a crucial mediator, ensuring that AI supports fairness, transparency, and inclusivity in organizational practices.