Navigating Institutional and Capability Barriers in Agentic Artificial Intelligence Adoption: Evidence from Small and Medium Enterprises in Bangladesh

<p dir="ltr">This study examines the barriers to and innovative solutions for the adoption of Agentic Artificial Intelligence (AAI) among small and medium-sized enterprises (SMEs) in Bangladesh. AAI, an advanced and transformative evolution of generative AI, promises significant enhancements in knowledge sharing, autonomy, and overall organisational performance. However, its integration into developing economies, particularly Bangladesh, remains underexplored. Drawing on institutional and dynamic capability theories, this research examines how contextual, structural, and capability-related factors shape the adoption of AAI within SMEs.</p><p dir="ltr"> Employing a qualitative research design, the study conducted 14 semi-structured interviews with a diverse array of participants, including SME owners, technology experts, and government officials in the bustling city of Dhaka, Bangladesh. Through thematic analysis, significant barriers and solutions were identified, bolstered by rigorous methods such as triangulation, peer debriefing, and member checking to ensure the credibility and authenticity of the findings.</p><p dir="ltr">The thematic analysis identified eight critical barriers to AAI adoption: slow internet speeds, limited technological knowledge and skills, inadequate infrastructure, insufficient government support, ongoing political instability, prohibitive adoption costs, and a lack of a robust legal framework. To counteract these challenges, participants proposed a comprehensive set of solutions: the development of awareness and educational programs, the enhancement of technological infrastructure, the improvement of internet connectivity, the establishment of supportive legal and policy frameworks, the provision of financial incentives, the fostering of collaborative public–private partnerships, and the integration of AAI education into academic curricula. These findings highlight that the adoption of AAI is influenced not only by the readiness of individual firms but also significantly shaped by the maturity of institutional and ecosystem factors.</p><p dir="ltr">This research is among the pioneering studies to empirically investigate AAI adoption among SMEs in a developing-economy context. By interweaving institutional and dynamic capability theories, this study makes a valuable contribution to the expanding literature on intelligent systems. It offers a comprehensive framework that connects the dots between institutional context, organisational capability, and knowledge management, ultimately facilitating a deeper understanding of AAI adoption in emerging markets.</p>