The Impact of Artificial Intelligence on the Psychological Well-being of Employees in Small Businesses and MSMEs

Abstract : Integrating Artificial Intelligence (AI) in small businesses and MSMEs has revolutionized operations while significantly affecting employee psychological well- being. This study investigates AI’s dual impact enhancing efficiency and inducing stress, anxiety, and job insecurity among workers. Focusing on sectors like food delivery, ride-hailing, and home services in urban and semi-urban India, this research combines case studies and mixed methods analysis to explore the challenges employees face. Recommendations for AI-human collaboration, psychological support, and transparent communication are offered to foster healthier workplaces. Findings highlight the need for balanced AI adoption strategies that prioritize both business growth and employee well-being.