Activate, legitimize, embed: enacting generative artificial intelligence adoption in small and medium-sized enterprises

Abstract

Generative artificial intelligence (GenAI) holds transformative potential for small and medium-sized enterprises (SMEs). Yet, despite increasing access to GenAI tool use, many SMEs face significant challenges in moving beyond experimentation toward sustained adoption. While extant literature covers the strategic benefits, ethical considerations and performance implications, limited insight exists into how adoption is enacted across individual and organizational levels. This study, therefore, adopts an enactment perspective to examine how SMEs adopt GenAI, and how enablers and barriers across technological, organizational and environmental (TOE) dimensions interact to shape this process. This exploratory, qualitative study draws on 31 semi-structured interviews with SME decision-makers across European–Mediterranean contexts (Germany and France), supplemented by data from South Africa and Vietnam to enrich analytical depth across varying levels of digital maturity and institutional contexts. Data were analyzed inductively, using the Gioia methodology. The study develops a three-phase process model of GenAI adoption enactment in SMEs: (1) activation of individual trust and engagement, (2) legitimizing and direction setting and (3) embedding and sustained value realization. GenAI unfolds through the interplay of bottom-up individual experimentation and top-down organizational legitimization, with distinct TOE dimensions dominating each phase. Sustained adoption emerges when these dynamics are deliberately coordinated. The study offers two theoretical contributions. First, it extends the TOE framework from a static-factor model to a dynamic, processual account of GenAI adoption enactment in SMEs. Second, it complements TOE with bricolage to explain how structural conditions are operationalized through micro-level “making do” practices in resource-constrained contexts.