Impact of Generative AI Adoption on Micro and Small Enterprises in Emerging Economies

Abstract

This study investigates the impact of generative artificial intelligence (AI) adoption on the performance of micro and small enterprises (MSEs) in emerging economies. As AI technologies continue to evolve, they present significant opportunities for MSEs to enhance efficiency, productivity, and customer engagement. However, MSEs in emerging economies often face challenges in adopting these technologies due to financial constraints, lack of technical expertise, and limited access to infrastructure. Using a quantitative approach, the study surveys 300 MSEs in India, Nigeria, and Egypt, examining the relationship between AI adoption and key business performance metrics such as revenue growth, productivity, and customer engagement. The results reveal a strong positive correlation between AI adoption and improvements in business performance, with high AI adoption associated with substantial gains in all three metrics. Regression analysis further confirms that AI adoption is a significant predictor of business success, explaining a large portion of the variance in performance outcomes. However, the study also identifies significant barriers to AI adoption, including financial limitations and technological readiness. These findings have important implications for both MSEs and policymakers, highlighting the need for supportive policies and initiatives to foster AI adoption in emerging economies.