Abstract
Small and medium-sized enterprises (SMEs) in the advertising industry are increasingly adopting AI-based strategies to remain competitive amid rapid technological obsolescence. Yet we still know little about the exact organisational mechanisms that underpin this technological change, in particular beyond the mere acquisition of resources. In response to this gap, the present research examines "The Agile Bridge" by investigating how digital marketing agility mediates the effect of knowledge adaptation on employees’ adoption of AI capabilities. Drawing on dynamic capabilities theory and the knowledge management literature, the research analyses survey responses from 223 marketing personnel working in Pakistani advertising SMEs dedicated to serving luxury fashion businesses. Through empirical use of PLS-SEM (SmartPLS 4), the results show that knowledge adaptation is a key antecedent of strong improvement in AI ability adoption, both directly and indirectly via digital marketing agility. The study also indicates that a "demand-pull" knowledge culture, including a willingness to share and learning as proactivity's internal driver, enhances the influence of knowledge adaptation on agility. Surprisingly, market dynamism appears not to moderate these relationships significantly, suggesting that internal agility represents an important precondition for AI success independent of external turbulence. These contributions make an important contribution to the literature by conceptualizing agility as an identity outcome rather than simply a strategic choice and provide useful guideposts for managers seeking to build high-knowledge contributing teams capable of competing in an AI-enabled digital economy.