The role of artificial intelligence in the competitiveness of Maltese small & medium businesses

Abstract

This pilot study investigates the role of Artificial Intelligence (AI) in enhancing the competitiveness of Maltese small and medium-sized businesses (SMBs), focusing on its potential to mitigate the liability of smallness and the factors influencing its adoption across sectors. A sequential mixed-methods approach was employed. The first stage involved qualitative semi-structured interviews with 15 decision-makers from Maltese SMBs across different sectors, generating insights into AI adoption drivers and barriers. These findings informed a second-stage quantitative survey, which yielded 127 valid responses which provided broader empirical support for the identified patterns. The analysis was guided by the Resource-Based View (RBV), Dynamic Capabilities (DC), and Situated AI theoretical lenses. The findings highlight a clear sectoral divide, with more digitally mature service-oriented firms demonstrating higher levels of AI adoption than firms in production and distribution sectors. A central paradox emerges: while AI can act as a resource amplifier capable of mitigating structural constraints, its adoption is often hindered by the same limitations it seeks to address. Leadership mindset and foundational digital maturity are identified as critical enablers. This study provides context-specific insights into AI adoption within a small-state economy and offers practical implications for SMB leaders, policymakers, and technology providers.