AI-BASED RECRUITMENT AND APPLICANT TRUST: THE ROLE OF PERCEIVED FAIRNESS AND AI LITERACY

Abstract

The use of artificial intelligence in recruitment has grown quickly, yet many job applicants remain uncertain whether AI-based hiring systems will treat them fairly. Drawing on organizational justice theory, this study examined the effect of AI-based recruitment on applicant trust, the mediating role of perceived fairness in this relationship and the moderating role of AI literacy. Data were collected through an online survey from 318 job applicants in Lahore, Karachi and Islamabad, Pakistan, who had applied for jobs through processes involving AI-enabled tools during the previous twelve months. The data were analyzed with partial least squares structural equation modelling in SmartPLS 4. The results showed that AI-based recruitment had a positive effect on both applicant trust and perceived fairness, and that perceived fairness had a positive effect on applicant trust. Perceived fairness partially mediated the relationship between AI-based recruitment and applicant trust, while AI literacy strengthened the positive effect of AI-based recruitment on applicant trust. These findings extend organizational justice theory to AI-based hiring by showing that applicants' trust in such systems depends largely on whether they view the process as fair, and that applicants with a better understanding of AI respond more positively to it.