PORTRAYING THE AI-DEVELOPING FIRMS IN CROATIA

Adopting AI within various sectors (governance, business, civil society) has led to a significant increase in the global AI market size. As the latest EU-member state, Croatia stands as an example of fast-growing AI usage, following the EU trends and maintaining the AI adoption rate close to the EU-28 average. Croatia may be an interesting example of a small post-transition economy with underexplored AI potential; however, the structured data on the AI-developing companies is missing. This research sheds light on this narrow but promising part of the Croatian business sector. The original survey data aims to portray the AI developing sector by attributes of firms developing AI applications and solutions in Croatia in 2025. We empirically assess the AI developer’s subsector in the small EU economy and analyse characteristics of different types of AI developing firms in terms of size, sector in which they operate, regional distribution, and financial results. We also distinguish firms according to their AI adoption stage, which aligns with the innovation diffusion theory classification (Rogers, 1962). Compared to other relatively scarce data sources on the AI adoption and development in Croatia, the added value of this study is that it includes the micro firms in the survey and analysis. Among surveyed AI developing firms, 74% are micro-sized firms with fewer than 10 employees. In the subsample of micro firms, there is a notable share of firms with only one or two employees. More than half of the AI developing firms come from the capital city of Zagreb. Most AI developing firms operate in manufacturing (46% of firms surveyed) and ICT sectors (43%), yielding very different financial results. The findings of AI-related activity of Croatian firms increase the overall knowledge of their AI potential and their role in fostering an innovation-driven economy. This is particularly important given that 44% of AI developing firms are early adopters of this new technology. The policy recommendations offered are developed in line with the EU policy framework.