How Small Businesses Are Navigating the AI Frontier
By Dr. Emily Barrow Dejeu
Generative artificial intelligence (genAI) is rapidly reshaping the business world, offering powerful tools for everything from content creation and customer service to operations and strategy. While large companies are embracing these tools at scale, small and family-owned businesses face a different challenge: how to take advantage of AI without big budgets, large teams, or in-house tech experts.
Three new white papers authored by faculty and doctoral students at Carnegie Mellon’s Tepper School of Business with support from the explore this challenge from different angles. Together, they provide a compelling look at how small businesses are starting to use generative AI, what’s working, and where barriers remain.
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- Mapping GenAI Use and Impact in Small Businesses In Mapping GenAI Use and Impact in Small Businesses, and PhD student Gayoung Kim analyze data from over 2,300 U.S. microbusiness owners to understand who’s using genAI and why. They find that just 13% of these businesses had adopted AI tools by mid-2024, with another 13% planning to try them within the year. Adoption was more common among growth-focused, venture-backed firms, as well as those led by college-educated entrepreneurs and Black men. Most reported using genAI for creative or administrative tasks like writing marketing copy or organizing internal documents, while more strategic applications were still rare. The paper identifies four types of adopters, from light users to creative-heavy ones, and highlights how confidence, perceptions of relevance, and even stress about keeping up with tech trends shape adoption patterns.
- The Jagged Path of AI Adoption in Private Enterprise In The Jagged Path of AI Adoption in Private Enterprise, tells the story of #1 Cochran, a large regional auto dealership group navigating the messy realities of digital transformation. The dealership has piloted a variety of AI tools, from virtual financing systems to automated service lane inspections, while facing the usual challenges: employee resistance, technical growing pains, and uncertain returns on investment. The paper offers a behind-the-scenes look at how a traditional business is experimenting with AI, not just to improve efficiency, but to reinvent the customer experience. It’s a candid case study of what it takes to turn big ambitions into real-world change.
- BEACON: Coordinated AI Agents for Small Business Intelligence In BEACON: Business Enhancement through Adaptive COordinated Networks, recent PhD graduate presents a new approach to making AI work for small businesses. Rather than relying on a single all-purpose tool, BEACON uses a network of lightweight, specialized AI agents, each one focused on a business function like marketing, finance, or HR. These agents work together to help business owners make better decisions, and the system is designed to be affordable, private, and easy to adapt over time. BEACON even includes its own programming language to help these agents interact. The result is a more transparent, modular alternative to the “black-box” AI systems used by larger firms.
Together, these papers show both the promise and complexity of AI for small business. While adoption is still limited, especially for more advanced uses, the landscape is evolving quickly. As tools improve and new frameworks emerge, small businesses may not only catch up; they could help shape how AI gets used in everyday work.
For more on the Center for Intelligent Business’s work on generative AI and small business, visit /intelligentbusiness/expertise/genai.html.