, Jaanus Mugu The rapid digitalisation of organisational management has brought artificial intelligence (AI) into core decision-making processes, shaping managerial and human resource functions. Since February 2025, the EU Artificial Intelligence Act has required providers and deployers of AI systems to ensure AI literacy among workers, transforming it from a strategic advantage into a regulatory necessity. Sustainable management in the digital era increasingly depends on leaders who can align technological innovation with organisational values such as environmental sustainability, social responsibility, inclusive growth, well-being, and long-term resilience.
This paper presents an exploratory pilot study examining AI literacy among organisational leaders in small and medium-sized enterprises (SMEs), with a focus on Estonia. Drawing on an original questionnaire and contextualising the pilot findings against results from previous studies (Eurostat, EY, OECD, OSKA), we explore leaders’ understanding of AI concepts, ethical and risk awareness, application in decision-making, and how these dimensions of AI literacy relate to leadership roles, sectoral context, and organisational size.
By linking AI literacy with principles of sustainable and ethical management, the paper contributes to the emerging field of AI-enabled leadership studies. It conceptualises AI literacy as a measurable and actionable leadership competency that supports responsible AI governance and aligns with the sustainability goals of the EU AI Act and OECD recommendations. Given the small sample size, the study serves primarily as an instrument validation and feasibility assessment, providing indicative patterns for future scaled research.
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