Determinants of Artificial Intelligence Adoption among MSMEs in Medan City: The Role of Digital Literacy and Human Resource Readiness

Abstract

The rapid advancement of Artificial Intelligence (AI) has accelerated digital
transformation across various sectors, including Micro, Small, and Medium
Enterprises (MSMEs). Nevertheless, AI adoption among MSMEs remains
influenced by several factors, particularly digital literacy and human resource
readiness. This study aims to examine the effects of digital literacy and human
resource readiness on AI adoption among MSMEs in Medan City, Indonesia. A
quantitative approach with an explanatory research design was employed. The
study involved 80 MSMEs owners selected through purposive sampling. Data
were collected using a structured questionnaire and analyzed using multiple
linear regression with IBM SPSS Statistics 30. The results show that digital
literacy has a positive and statistically significant effect on AI adoption (β =
0.202; p = 0.042), while human resource readiness has a stronger positive and
statistically significant effect (β = 0.638; p < 0.001). Simultaneously, both
variables significantly affect AI adoption (F = 65.140; p < 0.001), with an R² of
0.629, indicating that 62.9% of the variance in AI adoption is explained by the
model. These findings highlight the importance of strengthening digital literacy
and human resource readiness to support AI adoption among MSMEs. The study
contributes empirical evidence for policymakers and MSMEs support
institutions in developing targeted capacity-building programs to accelerate
sustainable digital transformation.