Abstract: The rapid advancements in artificial intelligence (AI) and robotics have sparked concerns about their potential impact on productivity in small and medium enterprises (SMEs) in the Western Balkans region. One of the major concerns is the possible displacement of the workforce, which necessitates the need for psychological adaptation to these technologies. Despite this, the adoption of AI in SMEs may bring a multitude of benefits, including improved financial performance, increased employee engagement, efficient data management, and enhanced marketing strategies, as highlighted by Kumar and Kalse. The importance of AI adoption for SMEs was highlighted during the challenges posed by the COVID-19 pandemic. This research examines the impact of AI and robotics on SMEs in the Western Balkans region, focusing on the necessary psychological adjustments for employees and the economic outcomes associated with technology adoption. The study aims to assess the current level of integration of AI and robotics in SMEs in the Western Balkans, exploring the challenges faced by these enterprises in adopting these technologies.

Keywords: AI and robotics, Productivity impact, Technology adoption, Psychological adaptation, Western Balkans.

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