AI promises big gains for businesses, but family-owned firms are cautious to embrace it. A new study by Maija Worek from our study program Management & Entrepreneurship explores the challenges these companies face when adopting AI, and what they can do to overcome them.
AI in Family Businesses: A Tough Nut to Crack
Artificial Intelligence (AI) is reshaping industries at an incredible pace, offering businesses opportunities for efficiency, automation, and growth. Yet, despite these benefits, adoption of AI is nothing but straightforward. Maija Worek published a study together with Päivi Aaltonen from the Finnish LUT University (Lappeenranta University of Technology) in “Contemporary Issues in Industry 5.0” by Palgrave McMillan, that investigates what hurdles they face along the way.
Why Family Firms Struggle with AI Adoption
While AI adoption is slow across many industries, family businesses face obstacles. According to the study, these challenges can be grouped into three main categories: people, organization, and environment.
1. People: Talent and Resistance to Change
One of the biggest challenges family firms faces is attracting and retaining AI talent. Employees often fear AI will replace their jobs, leading to internal resistance.
Companies that have successfully integrated AI found that clear communication and involving employees early in the process helped reduce fear. Rather than seeing AI as a threat, workers must be encouraged to view it as a tool that enhances their roles as central actors.
2. Organization: Priorities and Structures
Unlike startups or tech-driven companies, family firms often have deeply rooted traditions and long-standing ways of doing business. This makes it difficult for them to prioritize radical technologies such as AI. Managers may struggle to justify AI-related spending when its benefits are not immediately clear or measurable.
Additionally, complex organizational structures can slow AI adoption. Many family businesses operate in silos, making cross-functional collaboration or creation of new structures difficult. Without clear leadership and a well-defined AI strategy, these firms can end up stuck in a cycle of indecision.
3. Environment: Industry and Customer Expectations
Legal compliance and industry-specific standards adds another layer of difficulty. Also, Customers play a role in AI adoption. Many expect digital services to be included in traditional products, making it hard for companies to price and sell AI-driven solutions effectively. Finding the right partners to support AI development is another challenge, as family businesses tend to prefer long-term, stable relationships with suppliers and technology providers.
Breaking Through the Barriers
So, what can family firms do to overcome these obstacles? The study suggests a few key strategies:
- Educate and Engage Employees: AI adoption works best when employees feel involved. Transparent communication about AI’s role in the company can help ease fears and build support.
- Align AI with Business Goals: Companies that integrate AI into their core strategy, rather than treating it as an add-on, are more likely to succeed.
- Simplify Organizational Structures: Reducing internal silos and fostering cross-department collaboration can make AI adoption smoother and more effective.
- Find the Right Partners: Working with trusted technology providers can help bridge knowledge gaps and accelerate AI implementation.
Looking Ahead
The potential of AI in family-owned businesses is enormous—but only if they can overcome these challenges. As digital transformation continues to reshape industries, family firms that embrace AI early will gain a competitive edge. The key lies in balancing tradition with innovation, ensuring that AI is seen not as a disruption, but as a vital tool for the future.
The chapter “AI Adoption Challenges in Family-Owned Firms: A Case Study” by Maija Worek and Päivi Aaltonen is part of the open access book “Contemporary Issues in Industry 5.0”.