April 12, 2024

Living in an AI Age: Younger U.S. Small Business Leaders More Likely to Already be Using AI Tools

By Lilly Gillespie

TL;DR

  • Younger leaders of Small and Medium-Sized Businesses (SMBs) are adopting AI faster than their older counterparts
  • As SMB leader age increases, AI adoption significantly decreases in a linear fashion
  • Older SMB leaders are at risk of losing out on AI-related benefits (efficiency, growth, innovation) that will be captured by younger SMB leaders

A new report driven by research from the Data Catalyst Institute and published by the Connected Commerce Council (3C) showed that U.S. small and medium-sized business (SMB) leaders are already integrating digital tools driven by artificial intelligence (AI) into their business operations. Generally, SMB leaders are interested in using AI for their businesses (81% of them). Nevertheless, while a majority of all business leaders say they understand AI tools (72%) and use or are planning to use AI tools (64%), our research shows that the age of a SMB leader age has a significant impact on whether a given business is already using AI.

Here, we more closely examine the relationship between small business leader’ age and their SMBs’ use of AI tools at work. The results are striking: Younger SMB leaders are more likely to understand, use, and report positive outcomes from AI tools in their businesses. When it comes to the impact of AI tools on businesses, younger leaders more often count tools as critical to the success of their businesses and agree AI tools will be critical for them over the next two years. 

Majorities in all age groups agree that AI tools can help level the playing field for businesses of all sizes. However, there is still an age effect, with a strong majority (69%) of SMB leaders ages 18-34 agreeing, compared to 54% of those aged 55+ (below). Our findings are supported by new research from the Bipartisan Policy Center (“Poll Shows Small Businesses Are Interested in and Benefit from AI” – Mar 18, 2024) which found that younger SMB owners are more comfortable with AI than their older peers across a variety of metrics.

Our initial analysis of SMB leader age grouped business leaders into three broad categories: 18-34, 36-54, and 55+. Based on the age effect we initially observed, we then asked whether the age effect was linear, or followed some other pattern. When breaking out respondents by exact age in years, we found a statistically significant correlation (R2=0.76, p<0.05) between the age in years of SMB leaders and the proportion of leaders at that age who are already using AI tools. In other words, the percentage of SMB leaders who are already using AI in their workplaces decreases as the age of the SMB leaders increases. We found similar age-specific SMB leader relationships with other questions, including whether business leaders understand AI, expect their headcount to increase, and say AI tools are critical to their business right now (not shown). 

What are the implications of such a result? For one thing, operating in this new “Age of AI,” we run the risk that older business leaders will fall behind younger peers in a “haves vs. have-nots” situation where only some businesses reap most of the benefits of AI in the next decade or so. Second, if this result is generalizable beyond SMB leaders to the wider U.S. population, then we can expect the same disparity society-wide. Finally, looked at another way, there is most likely a greater need for training about AI tools (and digital tools in general) for older business leaders, in order to get them up to speed on new innovations. Such training could be carried out by a combination of tech companies, nonprofits, and even local governments. 

Lilly Gillespie is a Senior Research Analyst at the RXN Group.

More Insights

Goldman Sachs: 70% of SMBs Applying for Loans Say It’s Difficult to Access Capital

Goldman Sachs reports that small business owners nationwide still struggle to gain the capital they need to operate and expand their businesses in a post-COVID market. In an environment of higher interest rates and tighter lending standards, SMBs applying for new loans find it difficult to access capital.

By Lilly Gillespie

Massachusetts Madness: Snapshot of a New Online Sports Wagering Market

Massachusetts goes live with online sports wagering just in time for March Madness 2023.

By Mark Drapeau