## 5 Challenges and Actionable Pathways for AI Adoption in SMEs
### Cultivating an Innovation-Driven Culture to Support AI Adoption  
This subsection addresses the cultural and organizational barriers to AI adoption within SMEs, falling under the organizational dimension of the TOE framework. A major challenge in this context is the resistance to change that can emerge from rigid hierarchies, limited exposure to digital tools, and fear of job displacement, factors that slow or prevent AI adoption. As noted in [112], cultural inertia and lack of digital maturity are among the most persistent organizational challenges that impede the diffusion of AI in small companies. In support, refs. [3; 97] emphasize that fostering innovation-driven environments, supported by leadership and strategic alignment, is essential for SMEs to realize the full benefits of AI integration.  
Regionally, ref. [27] show that in the European context, a lack of innovation culture and slow organizational learning are key inhibitors of AI readiness in SMEs. Similarly, in Saudi Arabia, ref. [29] highlight that resistance to change and low managerial awareness are major barriers to technology assimilation. In India, ref. [28] find that weak organizational openness and conservative leadership styles contribute to reluctance to experimentation and AI learning. These findings underscore the need for inclusive leadership-driven innovation cultures that empower employees to participate in digital transformation.  
To foster a culture that embraces innovation and technological transformation, SMEs must create conditions that promote experimentation, collaboration, and inclusive participation. The following strategies can help build such a culture:  
* **Promote an Innovation Mindset Internally** Encourage creativity, openness to new ideas, and willingness to experiment. Support innovation champions within the organization and reward proactive behavior that contributes to digital initiatives.
* **Implement AI through Gradual, Pilot-Driven Approaches** Use small-scale pilot projects to introduce AI incrementally, allowing employees to gain confidence, understand its value and see its alignment with long-term goals without overwhelming disruption.
* **Create Internal Spaces for Learning and Experimentation** Establish safe environments for trial-and-error, where staff can test ideas and learn new tools without fear of failure. This fosters continuous learning and reduces resistance to change.
* **Encourage Open Innovation and External Collaboration** Engage employees, clients, partners, and external experts in co-creation. Opening innovation processes to diverse stakeholders increases idea generation and fosters a sense of shared ownership over change.
* **Lead Change Management with Transparency and Inclusion** Clearly communicate the purpose, benefits, and implications of AI adoption. Address concerns directly, involve staff in solution design, and promote social responsibility along with economic efficiency.  
In summary, cultivating an innovation-driven culture is essential to overcome internal resistance and ensure that AI adoption is embraced throughout the organization. By promoting creativity, collaboration, and inclusivity, along with transparent change management, SMEs can align technological transformation with the engagement of human capital and long-term organizational resilience.