Artificial intelligence adoption and revenue growth in European SMEs: synergies with IoT and big data analytics

Purpose: The conventional notion that adopting Artificial Intelligence (AI) positively affects firm performance is often confronted with various examples of failures. In this context, large-scale empirical evidence of the economic performance implications of adopting AI is poor, especially in the context of Small and Medium Sized Enterprises (SMEs). Drawing upon the Resource-Based View and the Digital Complementary Asset literature, we assessed whether the adoption of AI affects SMEs’ revenue growth. Design/methodology/approach: First, we examine the relationship between the adoption of AI and SMEs’ revenue growth. Second, we assess whether AI complements the Internet of Things (IoT) and Big Data Analytics (BDA). We use firm-level data from the European Commission in 2020 on 11,429 European SMEs (Flash Eurobarometer 486). Findings: Among the key findings, we found that ceteris paribus, the adoption of AI positively affects SMEs’ revenue growth and, in conjunction with IoT and BDA, appears to be even more beneficial. Originality/value: Our results suggest that AI fosters SME growth, especially in combination with IoT and BDA. Thus, SME managers should be aware of the positive impacts of investments in AI and make decisions accordingly. Likewise, policymakers are aware of the positive effects of SMEs’ reliance on AI, so they may design policies and funding schemes to push this digitalization of SMEs further.