Adoption of Artificial Intelligence in Small and Medium Enterprises: A Technology–Organization–Environment Perspective

Small and medium enterprises (SMEs) adopt artificial intelligence (AI) at lower rates than large firms, and the determinants of their adoption decisions are less well understood. This paper applies the technology– organization–environment (TOE) framework to SME AI adoption, specifying nine determinants across the three contexts and a technology–organisation interaction in which digital skills amplify the effect of technology readiness. The model is examined in a simulation of 1,200 SMEs in which adoption is generated from the hypothesised logistic process. Estimated odds ratios identify digital skills (10.2) and technology readiness (7.9) as the strongest facilitators, followed by top-management support (4.1) and relative advantage (3.1); perceived complexity (0.27) and regulatory uncertainty (0.59) are inhibitors; and firm size has a modest effect (1.36 per log unit). The technology–skills interaction is positive, so that technology readiness raises adoption much more among SMEs with digital skills. The paper interprets the results for SME managers, technology vendors and policymakers, arguing that skills and readiness are the binding constraints for SMEs rather than cost alone, and specifies a survey design for testing the model. The contribution is a TOE model of AI adoption tailor