Challenges and opportunities in AI adoption for small and medium-sized family firms

: a strategic analysis

Abstract

Artificial Intelligence (AI) is reshaping industries, yet small and medium­sized family firms often struggle to unlock its potential. Many family­owned SMEs resist change, face financial constraints, and lack AI expertise, which makes AI adoption a complex challenge. This study examines the unique hurdles family businesses encounter and offers a structured framework to help owners, successors, and consultants navigate AI integration effectively. Using a qualitative approach, this research combines in­depth expert interviews with a systematic literature review. Insights from various participants, including family firm owners, successors, non­family managers, AI specialists, and consultants, provide a well­rounded perspective on both the obstacles and opportunities of AI adoption. Findings reveal that financial constraints, generational resistance, and risk aversion frequently slow down AI implementation. However, family firms also have key advantages, such as agility, strong stakeholder relationships, and a long­term vision. These advantages, when leveraged strategically, can drive successful AI adoption. These strengths can help improving efficiency, decision­making, and competitive positioning. To address adoption challenges, this study presents a phased framework that prioritizes leadership commitment, alignment with family values, workforce training, gradual implementation, and ongoing adaptation. By following this structured approach, family firms can integrate AI in a way that enhances competitiveness while preserving their traditions and core identity.

Date of Award	6 May 2025
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	Liliana Brioso Martins de Andrade Dinis (Supervisor)