AI-ENABLED DIGITAL TRANSFORMATION AND COMPETITIVE ADVANTAGE IN SMES: A STRATEGIC ANALYSIS WITHIN THE SPANISH BUSINESS ECOSYSTEM

Abstract

Small and medium-sized enterprises (SMEs) are increasingly adopting artificial intelligence (AI) to improve operational efficiency, strengthen innovation capabilities, and sustain long-term competitiveness. Within the Spanish business ecosystem, digital transformation has accelerated over the past decade due to technological progress, evolving customer expectations, and supportive national and European digitalization policies. Nevertheless, the adoption of AI among Spanish SMEs remains uneven, with significant differences across sectors, organizational capabilities, and regional innovation environments. This study examines how AI-driven digital transformation contributes to competitive advantage in Spanish SMEs from a strategic management perspective. Rather than treating AI as a standalone technological solution, the paper considers it an organizational capability that reshapes decision-making, resource allocation, customer engagement, and business model innovation. The discussion integrates perspectives from the resource-based view, dynamic capability theory, digital transformation research, and innovation management to explain the strategic mechanisms through which AI creates sustainable value. Particular attention is given to organizational readiness, leadership, digital culture, workforce skills, data governance, and ecosystem collaboration. The study also evaluates the challenges that continue to limit AI implementation, including financial constraints, technological complexity, cybersecurity concerns, regulatory compliance, and shortages of digital talent. The findings suggest that sustainable competitive advantage depends not solely on technological investment but on the ability of SMEs to integrate AI into strategic planning, organizational learning, and continuous innovation processes. The Spanish experience demonstrates that successful AI adoption emerges from the interaction between internal capabilities and external institutional support, providing valuable insights for SMEs operating in similar economic environments.