Leverage or Limit Does Firm Size Enhance or Hinder AI’s Impact on Performance?

Abstract

Artificial intelligence (AI) is increasingly seen as a key driver of business performance growth, but its actual benefits may depend to a large extent on the characteristics of the business itself, particularly its size. Existing research has largely assumed that AI has a consistent impact on all types of organizations. However, this study challenges this common assumption by examining whether business size alters the relationship between AI adoption and performance.

Based on the technology-organization-environment (TOE) framework, this study uses survey data from 2,009 private companies in the UK to empirically analyze the differences in the impact of AI adoption on small and medium-sized enterprises (SMEs) and large firms. Generalized linear models (GLMs) and multiple logistic regression models are used to assess the impact of the interaction between AI adoption and firm size on turnover.

The results show that while large firms generally have higher overall performance, SMEs achieve more significant marginal benefits after adopting AI. This finding suggests that, considering internal resource constraints, AI has the potential to act as a “performance equalizer.” This study emphasizes that digitalization strategies and support mechanisms should be adjusted according to firm size, and makes a substantial contribution to academic literature and policy practice. An AI implementation model tailored to SMEs is expected to be a key approach to narrowing the digital divide and fully realizing the economic potential of artificial intelligence.