Empowering SMEs through generative AI: entrepreneurial orientation and digital literacy effects

Purpose This study aims to examine how generative artificial intelligence (GenAI) adoption is associated with the growth and social impact of small and medium enterprises (SMEs). Drawing on the Technology Readiness perspective, the study also investigates the mediating role of entrepreneurial orientation (EO) and the moderating role of digital literacy (DL). Design/methodology/approach A quantitative cross-sectional design was employed using survey responses from 65 SME professionals in India. GenAI adoption was measured through its use in idea generation, content creation, operational support and decision assistance. The proposed relationships were tested using partial least squares-structural equation modeling. Findings The findings indicate that GenAI adoption is positively associated with SME growth and social impact and with EO. EO partially mediated the relationship between GenAI adoption and SME outcomes. However, the moderating role of DL was not statistically supported. Research limitations/implications The cross-sectional design limits causal interpretation, and the relatively small sample size may affect generalizability. Future studies may examine additional organizational and contextual factors influencing GenAI adoption in SMEs. Practical implications The findings suggest that SMEs benefit from GenAI adoption when technological implementation is supported by entrepreneurial behavior and adaptive organizational practices. Originality/value This study contributes to the emerging literature on GenAI and SMEs by explaining how EO links GenAI adoption with SME growth and social impact within the context of Indian SMEs.