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Generative artificial intelligence augmenting SME financial management

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  • Metzger, Michael
  • O'Reilly, Seán
  • Mac an Bhaird, Ciarán

Abstract

This study investigates the potential for entrepreneurs to leverage advances in technological innovation, specifically generative Artificial Intelligence (AI), to build management capability to mitigate business and financial risks. Drawing on theories of Technology Affordances and Constraints and the Resource-Based View (RBV) of the firm, recognising that small and medium-sized enterprises (SMEs) are inherently resource-constrained. We examine how AI-generated financial diagnostics can empower SMEs by generating accessible, real-time analysis and insights, thus bolstering the management function and increasing chances of survival and growth. Using a dataset of 1,150 UK SMEs spanning eight years of financial statements, we test a large language model (LLM) prediction assessment and analyse the potential for SMEs to utilise the technology, notwithstanding enterprise-specific constraints. We conclude that AI may be a very effective tool for smaller enterprises to augment the financial management function, although its efficacy hinges on organisational readiness, competence in interpreting data, and the will to act on automated red-flag alerts. These findings offer practical guidance for SMEs seeking to enhance their financial management processes in today's digital era.

Suggested Citation

  • Metzger, Michael & O'Reilly, Seán & Mac an Bhaird, Ciarán, 2025. "Generative artificial intelligence augmenting SME financial management," Technovation, Elsevier, vol. 147(C).
    • Handle: RePEc:eee:techno:v:147:y:2025:i:c:s0166497225001452
    DOI: 10.1016/j.technovation.2025.103313
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