This　study　examines　the　impact　of　technological　integration　on　sustainable　performance　in　Pakistani　manufacturing　SMEs　from　the　export　sector,　focusing　on　the　mediating　role　of　employee　capacity　building　and　the　moderating　role　of　organizational　learning,　drawing　on　dynamic　capabilities　theory.　Data　were　collected　from　manufacturing　SMEs　in　Pakistan　via　a　structured　questionnaire,　and　structural　equation　modeling　(SEM)　was　employed　using　Smart-PLS　(4.1)　for　analysis.　The　results　reveal　that　both　AI　adoption　and　technological　readiness　significantly　enhance　employee　capacity　building,　which,　in　turn,　positively　impacts　sustainable　performance.　Employee　capacity　building　significantly　mediates　the　relationships　between　both　AI　adoption　and　sustainable　performance　as　well　as　between　technological　readiness　and　sustainable　performance.　Notably,　organizational　learning　shows　a　significant　moderating　effect　between　technological　readiness　and　employee　capacity　building　but　an　insignificant　moderating　effect　between　AI　adoption　and　employee　capacity　building.　These　findings　offer　actionable　insights　for　managers　in　optimizing　AI　and　readiness　strategies　to　enhance　capacity　building　and　sustainable　outcomes.　This　study　contributes　to　the　literature　by　being　one　of　the　first　to　integrate　AI　adoption　and　technological　readiness　with　employee　capacity　building　as　a　mediator　and　organizational　learning　as　a　moderator　in　the　context　of　SMEs.　Unlike　prior　research,　which　typically　examines　these　factors　independently,　our　framework　offers　a　holistic　approach　to　understanding　sustainable　performance.