Company use of AI: A Literature Review and Multiple Case Study of Korean SMEs

This study reviews the literature on organizational applications of artificial intelligence (AI) and investigates how small and medium-sized enterprises (SMEs) in Korea leverage AI to enhance productivity and competitiveness. While large firms often benefit from economies of scale in AI investments, SMEs—owing to their agility, lean structures, and minimal legacy constraints—may be uniquely positioned to integrate AI effectively. Prior research identifies two primary mechanisms of AI use in organizations: automation and augmentation. We begin by examining these mechanisms and their differential impacts across countries and industry sectors at firm level. The study also revisits the automation–augmentation dichotomy, illustrating how each mode can reinforce the other. We then present two case studies of SMEs actively deploying AI: a unicorn AI healthcare company and a small out-of-home (OOH) advertising startup. From these cases, we develop a typology of AI adoption: Born-AI firms, designed around AI from inception; fast adopters, which rapidly build digital readiness post-founding; and late adopters, which integrate AI technologies well after their founding. One case exemplifies a Born-AI firm, while the other represents a fast adopter. These cases yield several practical and theoretical implications, discussed in the final sections.