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Study

German small and medium-sized firms: skills and innovation predict AI use better than size

20% of German small and medium-sized firms used AI in 2022–2024, five times the share in 2016–2018. Use rose from 19% in firms with fewer than 5 employees to 36% in firms with 50 or more. Once graduates, innovation, research and digital strategy were counted, size and sector mattered little.

By
Last reviewed
Type of study
Survey
Published
2026
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At a glance

Source
Zimmermann (KfW Research) (2026). Einsatz von Künstlicher Intelligenz vor allem in Unternehmen mit hohen Innovations- und Digitalisierungsaktivitäten. KfW Research, Fokus Volkswirtschaft No. 533 (11 February 2026), with No. 554 (29 July 2026). kfw.de · Not peer-reviewed: other researchers have not yet checked it for a journal.
How it was done
Firms in a large standing panel answered whether they had used AI in 2022–2024. The author then compared firms that differed in one trait at a time, such as size or research, with their other traits held the same. Survey. People answered questions once. It shows what goes together, not what causes what.
Who took part
About 6,800 firm responses to the 2025 wave of the KfW SME Panel, scaled up to all small and medium-sized firms in Germany.
Where
Germany; small and medium-sized firms in all sectors, from fewer than 5 employees upwards. KfW is Germany's state-owned development bank.

What it found

  • Use by size. 19% of firms with fewer than 5 employees used AI, 20% with 5–9, 29% with 10–49 and 36% with 50 or more.
  • What predicts use. The author modelled a typical firm and changed one trait at a time. A firm with no graduates and no innovation had an 8% chance of using AI. With graduates the chance was 13%. With innovation but no research of its own it was 19%. With occasional research it was 33%, and with continuous research 38%. With a digital strategy it was 35%.
  • Size and sector. Once those traits were counted, firm size and sector were “of only minor importance” to whether a firm used AI.
  • What the smallest firms use. Among firms with fewer than 5 employees, 13% used AI that writes text, such as chatbots, and 9% used text recognition (No. 554).
  • Where firms learn about AI. AI use went most closely with simple sources of information: trade journals, trade fairs, websites and advisory services (No. 554). The author reads this as a sign that finding a first use that works is the main hurdle.

When the result holds

Small firms use AI less often than larger ones. In this panel, most of that gap goes with skills, innovation and digital habits rather than with headcount.

Other surveys show a larger gap by size. In the European Union, 17% of small enterprises (10–49 employees) used AI in 2025, against 55% of large ones, according to Eurostat. The evidence on whether size itself holds small firms back points both ways.

Limits

  • The survey asks about AI use once. It shows what goes together, not what causes what.
  • The period is 2022–2024, mostly before the AI tools of 2025.
  • The survey’s definition of AI is broad. It includes machine learning, image recognition and robots as well as chatbots.
  • The papers give the author’s view, not necessarily KfW’s.

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