## 5 Challenges and Actionable Pathways for AI Adoption in SMEs
### Enhancing Human-AI Collaboration to Improve Organizational Productivity  
This subsection addresses productivity-related challenges under the organizational dimension of the TOE framework. In a highly competitive and dynamic environment, SMEs must take advantage of AI to increase productivity without compromising employment or organizational cohesion. However, many businesses face the dilemma of choosing between automation, which can displace workers, and augmentation, which aims to improve human capabilities through technology.  
**Augmentation** offers a strategic path forward. As argued by [92], AI-driven increase leads to productivity growth by allowing machines to complement--rather than replace--human labor. Unlike automation, which focuses on full task substitution, augmentation emphasizes synergy: machines contribute processing and scale, while humans provide judgment, creativity, and contextual understanding.  
The concept of **co-intelligence**, introduced by [120], reinforces this model. Co-intelligence is based on active collaboration between humans and machines, where tasks are divided to capitalize on the respective strengths of each. This collaborative approach empowers employees to remain central in decision-making while leveraging AI to improve speed and accuracy.  
Recent empirical findings support this approach. Ref. [97] emphasize the need for human-centered strategies in the adoption of AI in small businesses, advocating for the upgrading of the workforce and the integration of collaborative technologies to drive sustainable performance. Furthermore, ref. [112] identify employee participation and capability development as central to successful adoption of AI in SMEs, confirming that augmentation, rather than full automation, offers a more sustainable and inclusive productivity strategy.  
Other human-AI models, such as the **Centaur** and **Cyborg** metaphors, further illustrate augmentation [120]:  
* **Centaur teams** represent human-machine pairings that jointly perform tasks to outperform either work alone.
* **Cyborg workers** use embedded or connected AI systems to amplify their own capabilities in real-time, increasing performance and adaptability.  
These paradigms support the idea that AI should not replace people, but rather enhance human performance, innovation, and satisfaction.  
Actionable Strategies to adopt an augmentation-focused approach include:  
* **Design AI systems that complement--not replace--human roles** Focus on tools that support decision-making, improve accuracy, or automate repetitive tasks while leaving critical thinking and judgment to employees.
* **Invest in employee upskilling for AI collaboration** Provide training on how to work effectively with AI tools and interpret AI-generated outputs to empower employees in augmented workflows.
* **Promote a co-intelligence mindset across the organization** Encourage leadership and teams to frame AI not as a substitute, but as a partner in productivity and innovation.
* **Experiment with augmentation models such as Centaur and Cyborg approaches** Pilot use cases where human-AI synergy can be observed, measured, and refined, especially in customer service, product development, or strategic planning.  
In summary, shifting from automation to augmentation enables SMEs to improve productivity in a more inclusive and sustainable manner. By fostering human-AI collaboration, SMEs can protect jobs, increase engagement, and position themselves for long-term competitive advantage in the digital economy.  
As the internal capabilities of SMEs mature, additional challenges emerge at the interface between the organization and its external ecosystem--particularly in the areas of public-private collaboration, generative AI integration, and responsible governance.