Generative AI (GenAI) can act as a catalyst for the transformation of small and medium-sized family businesses (NextGen)

Many large companies are early adopters of artificial intelligence (AI) to improve their operations and drive innovation. Among the different types of AI, generative AI (GenAI), which is capable of creating new content such as text, images or code, is becoming increasingly popular. But what about small and medium-sized family businesses?

A recent study conducted by PwC’s Global NextGen in 2024 explores how generative AI can benefit small and medium-sized family businesses to compete in an increasingly digital workspace. The study focuses on the next generation of family business leaders, known as NextGen, who are members of a family of entrepreneurs between the ages of 18 and early 40s and aspire to become responsible owners, influential board members or visionary leaders. This survey of more than 900 NextGen individuals found that this group is not only more optimistic about generative AI than the incumbent generation, but they also recognize the urgent need to integrate AI into their businesses.

According to the 2024 PwC Global CEO Survey, NextGen’s vision aligns with that of global CEOs. The research shows that 70% of business leaders believe generative AI will have a significant impact on the way their companies create, deliver and capture value. It is important to note that developing an early generative AI strategy is crucial to staying ahead of the accelerating existential crises.

Family businesses play an important role in the global economy, contributing approximately 70% of global GDP and employing 60% of the world’s workforce. Therefore, the adoption of generative AI is not only essential for individual companies to remain competitive, but also to shape the global economic landscape.

As future business owners and heirs to significant wealth transfers, NextGen individuals have a unique responsibility to their business, employees, families, society and the environment. This responsibility includes navigating the hype, hopes, and fears surrounding generative AI.

Research shows a strong belief in generative AI: the report presents a key finding that strengthens its argument. According to the report, 73% of NextG leaders involved in family businesses view generative AI as a powerful force for business transformation.

However, the report also indicates that family businesses are not yet ready to take advantage of the opportunities that AI offers. More than 70% of NextGen leaders see AI as a transformative tool, but nearly half of family businesses have banned or not yet explored AI. Only 7% of family businesses have implemented AI, compared to 32% of all CEOs who have already done so.

One of the reasons why family businesses are reluctant to adopt AI is because of their limited access to capital. However, the investment landscape is evolving and private equity is increasingly becoming an attractive option for family businesses looking for capital injection, strategic partnerships or quick exits.

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