A new NFIB survey shows that typically innovative and responsive entrepreneurs lag behind bigger companies in using AI to improve their operations.

Small businesses make up the majority of companies in the U.S., but are also known for being among the most innovative when meeting customer demands. Despite that reputation for speed and flexibility, a new study indicates their owners have been slow to adopt new technology to increase productivity, especially quickly evolving artificial intelligence (AI) tools.

Entrepreneurs’ more modest rate of tech adoption was the major takeaway from the National Federation of Independent Business’s (NFIB) newly released Small Business and Technology Survey. The leading data point underscoring that hesitancy was the finding that only 24 percent of smaller companies polled said they used any form of AI in their operations. By contrast, about 78 percent of all corporate organizations reported using AI in 2024, according to a recent Stanford University study. Yet while 63 percent of NFIB respondents said they believe the use and performance of AI will be important in their respective sectors within the next five years, 76 percent said they still haven’t adopted the tech.

“Small business owners are our nation’s top source of innovation, yet many small businesses struggle to keep up with technological advancements,” said Holly Wade, executive director of the NFIB Research Center, in comments accompanying the report. The survey indicated that the size and finances of responding companies was often a factor in their slow adoption or upgrading of new tech like AI. Just 21 percent of businesses with just one employee reported using chatbots like ChatGPT or programs including Copilot, Grammarly, Canva, and Lunmen5. That rate then increased to 48 percent at firms with 50 workers or more people. That latter number is closer to the results of a recent Reimagine Main Street study. It found 51 percent of modest-sized companies had either already begun experimenting with AI apps, or were using them on a regular basis. In that poll, too, only about a quarter of respondents considered themselves confirmed users of AI.

Despite the large majority of the 521 smaller company owners the NFIB surveyed who hadn’t yet started using AI, most holdouts said they remained aware that it and other forms of quickly improving tech will be vital to their businesses in the near term. “This includes the rapid proliferation of AI and how technology impacts business operations now, and their anticipation of how it will impact them in the future,” Wade said. Just how are those entrepreneurs putting AI to use for their businesses—or planning to do so before long?

Nearly 30 percent cited communications tasks like composing emails, memos, or documents. Another 27 percent reported using it for marketing or advertising, while 14 percent cited business or predictive analysis. Just under 10 percent used it in customer service, with 4 percent deploying it for accounting, process automation, and cybersecurity or fraud detection work, respectively. One area small business owners already integrating AI said it hadn’t changed their operation was in staffing. Fully 98 percent said adoption and use of the tech had had no change on their employee headcounts. But AI wasn’t the only area where those smaller companies lagged behind large corporations in operational upgrades.

Only 57 percent of respondents said they’d introduced new or significantly updated tech assets over the past two years, despite the swift pace of hardware and software development. Again, as with AI adoption, the smaller the size of the responding business the slower its rate of new technology investments, the NFIB report said. But 65 percent of respondents that spent money to upgrade their technology said it had allowed them to remain competitive, while 11 percent said it had permitted them to gain a competitive advantage over rivals. “Though small businesses are the economy’s mainspring of innovation, our new survey data makes it clear that for many, keeping up with their neighboring competitors is sufficient,” the report concluded. “It may seem paradoxical that the most innovative segment of the economy is sometimes the farthest behind on technology, but the data show clearly that uptake for the smallest businesses lags substantially behind their larger competitors. This is the current status quo, but it is not permanent. With a little attention from all the relevant stakeholders, a more equal playing field is possible.”