AI-enabled ESG consultancy capability building in small audit firms: a strategic transformation pathway analysis

This study investigates how small audit firms develop artificial intelligence-enabled environmental, social, and governance (ESG) consulting capabilities through strategic transformation pathways. Drawing upon dynamic capabilities theory and employing a mixed-methods research design, the research integrates qualitative interviews with 28 practitioners across 18 small audit firms and quantitative surveys from 156 respondents representing 87 organizations, supplemented by six in-depth case studies. The empirical analysis reveals substantial capability heterogeneity, with only 12.2% of firms deploying advanced AI applications and merely 11.5% achieving established ESG service maturity levels. A significant positive correlation between AI Intensity Index and Capability Maturity Index (r=0.68, p