AI could boost SME productivity by 133%
New research from the University of St Andrews Business School has found that Artificial Intelligence (AI) significantly positively impacts productivity levels for small and medium enterprises (SMEs) compared to non-adopters.
The study, led by Professor Ross Brown, suggests that adopting AI results in productivity gains of between of 27% and 133%.
The research drew upon the largest small business survey in the UK, the longitudinal Small Business Survey (LSBS), a large and well-known panel dataset conducted by the Department for Business and Trade. The survey interviewed just under 10,000 UK SMEs and followed a stratified random sampling design to ensure representativeness by region, sector, and firm size.
Other results show that firms with the lowest productivity levels are most likely to adopt AI technologies. Additionally, the benefits from AI adoption seem sector-specific, with service sector firms such as catering and hospitality particularly prominent among the beneficiaries of AI.
Despite its prominence, evidence on the “AI-productivity nexus” remains sparse and results mixed. This major ESRC-funded study, in collaboration with Oxford Brookes University, examined the issue of low productivity in UK SMEs.
Professor Brown, said:
“Our findings are quite emphatic and show a clear-cut productivity premium for SMEs who adopt AI. Given the UK Government’s mantra about raising productivity levels, increasing “AI adoption could potentially play a pivotal role in addressing the endemic problem of weak productivity in poorly performing SMEs. AI potentially offers SMEs “short cuts” that are easy to yield quick productivity “wins” such as planning staff rotas and reducing food wastage in a small restaurant-, but are relatively inexpensive and easy to enact.”