IMPACT OF AI ON OPERATIONAL EFFICIENCY AND PROFIT MARGINS OFSMALL BUSINESSES IN MARKET ENTRANTS

Abstract

The study investigates the impact of Artificial Intelligence (AI) on the operational efficiency and profit margins of small businesses entering new markets, focusing on Nigeria. A quantitative research design was employed to measure the relationship between AI adoption, efficiency, and profitability. A sample size of 100 small businesses was selected using a stratified random sampling technique, ensuring representation across various industries and geographic locations. Data were collected through structured questionnaires, which captured information on AI adoption levels, operational improvements, and changes in profitability. The survey questions used a 5-point Likert scale to quantify perceptions and outcomes related to AI. Descriptive statistics were employed to summarize the demographic characteristics of respondents, while inferential analysis, including a one-way ANOVA, was conducted to test the research hypothesis regarding operational efficiency differences among businesses with varying levels of AI adoption. SPSS software facilitated the analysis, ensuring robustness and statistical validity. Ethical considerations, including informed consent and confidentiality, were prioritized throughout the data collection process. The findings revealed a statistically significant positive relationship between AI adoption and operational efficiency, as well as enhanced profit margins.
Additionally, challenges such as high costs and lack of technical expertise were identified as barriers to adoption. The study's results underscore the importance of a strategic approach to AI integration
for small businesses, offering insights into how tailored support and phased implementation can maximize the benefits of AI. This mixed method approach provides a comprehensive understanding of AI's
role in enhancing the competitiveness of small market entrants.