AI Adoption in Small and Medium Enterprises (SMEs): Opportunities and Challenges

Abstract

Artificial Intelligence (AI) is rapidly transforming business operations across industries, offering significant potential for innovation, efficiency, and competitiveness. For Small and Medium Enterprises (SMEs), AI presents unique opportunities to streamline processes, enhance customer experiences, improve decision-making, and compete with larger enterprises in the digital economy. From automated customer service and intelligent supply chain management to predictive analytics and personalized marketing, AI applications can empower SMEs to operate more efficiently and scale effectively. However, the adoption of AI in SMEs is not without challenges. Limited financial resources, lack of technical expertise, data scarcity, and concerns about integration and cybersecurity pose significant barriers. This paper explores both the opportunities and constraints faced by SMEs in adopting AI technologies. It further examines policy support, capacity-building strategies, and practical frameworks needed to foster inclusive and sustainable AI adoption among small businesses. By addressing these issues, SMEs can harness the power of AI to drive long-term growth and innovation.