The AI Productivity Paradox: When Readiness and Knowledge Sharing Meet Anxiety

Abstract

As artificial intelligence (AI) becomes increasingly embedded in banking sector; a critical challenge is understanding how organizations can translate employee-oriented investments into productive human-AI collaboration. This study examines how internal marketing turns organizational investment into AI-enabled employee capabilities and productive knowledge, and when this conversion is constrained. A quantitative, cross-sectional survey (N = 341) was conducted among employees across operational, supervisory and managerial roles in Pakistan’s banking sector who had experience using or interacting with AI-enabled technologies at work. The findings show that internal marketing positively enhances AI readiness, which subsequently strengthens AI-augmented knowledge sharing. This knowledge sharing positively contributes to self-perceived productivity, while AI readiness and AI-augmented knowledge sharing sequentially mediate the relationship between internal marketing and productivity. AI anxiety negatively moderates the relationship between AI-augmented knowledge sharing and self-perceived productivity, weakening this positive association at higher levels of anxiety. The study extends social exchange theory to AI-enabled work by theorizing that AI does not create productivity automatically; rather, its value emerges through an employee-level conversion process that goes beyond AI adoption alone. Importantly, this conversion is psychologically conditioned by AI anxiety, which determines the extent to which AI-enabled knowledge can be translated into productivity gains. The findings can help managers maximize the productive value of AI by embedding role-specific AI development and enabling AI-augmented knowledge-sharing mechanisms within broader reskilling and career-support practices that build employee readiness while reducing anxiety about AI-driven change.