THE ROLE OF LEADERS' AI LITERACY WHEN APPROPRIATING AI

As organizations increasingly embed AI systems into work routines, leaders play a crucial role in supporting meaningful appropriation. Yet little is known about how leaders’ AI literacy shapes this appropriation process and how it relates to established leadership behaviors. Drawing on a multiple–case study of a Colombian financial cooperative and a German insurance company, this study contributes to an understanding of how leaders’ AI literacy extends far beyond technical proficiency. Leaders who understand, contextualize, and ethically evaluate algorithmic outputs are better able to translate AI insights into meaningful guidance and shared sensemaking. In all of the cases, AI literacy was a key factor in being able to lead AI appropriation well and in increasing transformational leadership behaviors. AI-literate leaders systematically reduced complexity, fostered trust, and encouraged experimentation, resulting in AI appropriation within their teams. The study contributes empirical evidence on the pivotal role of AI literacy in enabling leaders to guide successful AI appropriation.