“HARNESSING ARTIFICIAL INTELLIGENCE FOR MSME COMPETITIVENESS: A DATA-DRIVEN EVALUATION OF INNOVATION, EFFICIENCY, AND MARKET ADAPTABILITY IN THE DIGITAL AGE”

Abstract

This research paper explores the role of Artificial Intelligence (AI) in enhancing the competitiveness of Micro, Small, and Medium Enterprises (MSMEs) in India by examining how AI influences innovation, operational efficiency, and market adaptability in the digital age. The primary purpose of the study is to quantify the impact of AI adoption on MSMEs and provide empirical evidence on how AI technologies can help these enterprises become more competitive in increasingly volatile and dynamic markets. The study employs a mixed-methods approach, utilizing both quantitative and qualitative data. A survey of 400 MSMEs across various sectors such as manufacturing, services, and agri-tech is conducted, complemented by secondary data from established databases and in-depth case studies of six firms. The quantitative analysis includes statistical techniques such as PLS-SEM to measure the impact of AI on innovation outcomes, cost efficiency, and market adaptability, while thematic coding is used to derive insights from the case study interviews. Preliminary results suggest a positive relationship between AI adoption and improved innovation metrics, significant efficiency gains in production and service processes, and enhanced market adaptability, with firms leveraging AI able to pivot quickly in response to market shifts. The study concludes with actionable recommendations for MSMEs on how to integrate AI technologies effectively to enhance their competitive positioning. Policy implications for supporting AI adoption in MSMEs are also discussed.