Data Governance Readiness for AI Adoption in Sarawak SMEs: A Conceptual Framework

Small and medium enterprises (SMEs) are increasingly encouraged to digitalise and adopt data-driven, AI-enabled business models. However, discussions of AI adoption readiness often overlook the governance conditions that ensure AI use is reliable, responsible, and sustainable. This paper examines data governance readiness for AI adoption in Sarawak SMEs and argues that AI readiness should be understood as a socio-technical and governance-dependent condition rather than a narrow technology adoption outcome. Adopting a conceptual approach, the paper synthesises literature on data governance, SME digital transformation, and AI governance, and situates these insights within the Malaysia-Sarawak policy context. It then proposes a framework organised around six interrelated dimensions: leadership and decision rights; data quality and stewardship; security, privacy, and risk controls; data architecture and infrastructure; data literacy and workforce capability; and policies, compliance, and governance processes. The paper contributes by integrating these strands into a context-aware model that explains how governance foundations shape SME preparedness for AI adoption in an emerging regional setting. It also highlights the need to move beyond tool-focused discussions of AI and toward a more grounded understanding of organisational readiness. The framework is intended to support future empirical research and to offer a practical lens for SMEs, policymakers, and other stakeholders concerned with responsible AI adoption in Sarawak.