JOURNAL OF ENGINEERING MANAGEMENT AND COMPETITIVENESS (JEMC) VOL. 15, NO. 1, 2025, 43-56 ISSN 2217-8147 (Online) ©2025 University of Novi Sad, Technical faculty “Mihajlo Pupin” Zrenjanin, Republic of Serbia Available online at http://www.tfzr.uns.ac.rs/jemc ARTIFICIAL INTELLIGENCE FOR SMALL AND MEDIUM BUSINESS: PERSPECTIVES AND CHALLENGES DOI: 10.5937/JEMC2501043K UDC: 334.72:004.8 Original Scientific Paper Anna KRAMARENKO 1 1 V.N. Karazin Kharkiv National University, 61022, Maidan Svobody 4, Kharkiv, Ukraine Corresponding author. E-mail: a.o.kramarenko@karazin.ua ORCID ID (https://orcid.org/0000-0001-5987-1247) Paper received: 23.02.2025.; Paper accepted: 16.03.2025. This research examines the perspectives and challenges of artificial intelligence (AI) implementation in small and medium-sized enterprises (SMEs). Through analysis of academic literature, industry reports, and survey data from 63 companies, the study investigates the potential applications, benefits, and barriers to AI adoption among SMEs. The findings reveal that while AI offers significant opportunities for SMEs in areas such as process automation, data analytics, customer experience personalisation, and operational optimisation, adoption rates remain low. The research identifies several key barriers, including limited access to industry data, insufficient financial resources, lack of technical expertise, and challenges with data integration. Survey results indicate that only 13% of surveyed companies have experience working with AI, despite widespread use of basic information management systems. The study highlights five primary areas where generative AI can enhance SME performance: content creation, automated operations, venture business ideation, financial management, and operational optimisation. The conclusions emphasise the need for targeted support mechanisms, improved educational programmes, and policy frameworks to facilitate AI adoption among SMEs. This research contributes to understanding the role of AI in SME development and provides practical insights for business leaders, policymakers, and researchers working to enhance AI integration in small and medium- sized businesses. Keywords: Artificial Intelligence, Small and Medium Enterprises (SMEs), Digital Transformation. INTRODUCTION In the coming years, as generational artificial intelligence continues to advance, its role may evolve from a mere assistant to a coach, mentor, or even a specialised partner. The steady progress of generational artificial intelligence can also blur and redefine the boundaries between individuals, organisations, and systems, highlighting the need for a fresh perspective on entrepreneurial success. This transformation is particularly critical for small and medium-sized enterprises (SMEs), which form the backbone of many economies (OECD, 2024). Generational artificial intelligence presents entrepreneurs with entirely new avenues for achieving entrepreneurial success, social impact, and wealth creation. This underscores the importance of interdisciplinary research to fully grasp these possibilities. Such research fosters collaboration between technology innovators, policymakers, entrepreneurs, and educators. The collaboration between the three key players in the «triple helix» — the government, universities, and businesses — reveals the underdevelopment of the business component and the ambiguity of the role of universities in the innovation ecosystem. To address this issue, it is crucial to implement artificial intelligence technologies that enable seamless communication between all parties involved and enhance decision-making processes. The theoretical framework of this study emphasises the significance of responsible and people-centric utilisation of AI tools that foster entrepreneurial endeavours. Despite the potential challenges associated with the implementation and utilisation of artificial