The Scope and Effects of Artificial Intelligence Implementation in Micro, Small, and Medium Enterprises

Artificial Intelligence (AI) has emerged as a transformative force in modern business, offering significant opportunities for enhancing productivity, operational efficiency, and decision-making processes. However, the adoption of AI in Micro, Small, and Medium Enterprises (MSMEs) remains a challenge due to financial constraints, skill shortages, technological complexities, and organizational resistance. Despite the growing body of research on AI adoption in large enterprises, there remains a significant gap in understanding the readiness and adoption dynamics within MSMEs, which operate with distinct constraints and opportunities. This study examines AI adoption in MSMEs, focusing on organizational readiness, perceived usefulness, external support, and barriers to implementation. A structured survey was conducted among 58 MSME representatives, and the data was analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM) to test relationships between AI adoption factors. Findings indicate that organizational readiness and perceived usefulness significantly influence AI adoption, while financial and technical barriers hinder progress. Additionally, external support from government initiatives, collaborations with technology providers, and industry partnerships plays a crucial role in overcoming adoption challenges. The study highlights the need for tailored financial incentives, targeted skill development programs, and collaborative ecosystems to enhance AI readiness in MSMEs. These findings contribute to the ongoing discourse on digital transformation in small businesses, providing insights for policymakers, business leaders, and technology stakeholders.