Generative AI Capabilities and Strategic Agility: An Early Post-Pandemic Assessment of Service SMEs

• Asher Noah

  covenant University

  Author

The post-pandemic period has witnessed accelerated diffusion of generative artificial intelligence (GenAI) among small and medium-sized enterprises (SMEs), yet the relationship between GenAI capabilities and strategic agility remains poorly understood, particularly in service sectors where intangible assets and rapid market responsiveness are critical. Existing research has examined AI adoption broadly but has not validated a predictive framework linking specific GenAI capability dimensions to agility outcomes in service SMEs. This study addresses that gap through a quantitative, cross-sectional design surveying 312 service SME managers across five OECD economies, using structural equation modeling and machine learning classification to assess the GenAI–agility relationship. The predictive model achieved 89.4% accuracy in classifying high-agility SMEs based on GenAI capability profiles, with prompt engineering proficiency and AI-integrated workflow redesign emerging as the strongest predictors. Findings indicate that GenAI contributes to strategic agility primarily through operational responsiveness and resource reconfiguration, rather than through direct strategic foresight enhancement. The study contributes a validated capability-agility framework for service SMEs and offers practitioners a diagnostic tool for prioritizing GenAI investments. Policy implications include targeted support for SME capability-building beyond mere technology access.

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Copyright (c) 2026 Asher Noah (Author)

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