Digital Transformation in SMEs: Developing Digital Business Model Innovations Based on Artificial Intelligence

Abstract

The strategic goal of most organisations is to improve business operations for successful organisational performance. Digital transformation is a time of swift technological changes posing an ongoing challenge for Small and Medium Enterprises (SMEs) to establish high-performance work systems for organisational performance. Hence SMEs are exploring new technologies to stay competitive and develop innovative business models in the digital transformation era. Artificial Intelligence (AI) technologies may enable SMEs to enhance practices and improve their business model innovation strategies. This chapter examined the existing literature on the digital transformation of SMEs by implementing Artificial Intelligence. The goal was to emphasise how AI can significantly change business processes, practices, and overall organisational performance, ultimately supporting the development of digital business models in SMEs. The study's findings indicated that AI holds great potential for SMEs to enhance their business processes, practices, and overall performance, enabling them to better navigate their increasingly competitive environment. Therefore, it is recommended that managers of SMEs explore opportunities to incorporate AI and other advanced technologies into their business innovation processes. By doing so, SMEs can generate tangible value by strengthening their dynamic capabilities, improving efficiency, and mitigating operational risks.