Digital transformation is reshaping how SMEs compete, but requires more than access to technology. This cluster examines whether the right conditions are in place for SMEs to navigate this transition successfully. It looks at how policies are designed and implemented to support SME digitalisation and productivity, how they build the digital safety environment that underpins trust and resilience, and how they support SMEs in moving beyond basic digital tools toward more advanced and sustainable technologies; assessing in each case whether policy ambition is matched by effective delivery and measurable outcomes at firm level.
SME Policy Index for Western Balkans and Türkiye 2026 – Economy Profile for Montenegro
Abstract
Digital transformation has become a key driver of small and medium-sized enterprise (SME) productivity, innovation and competitiveness, but its effective uptake depends on whether the environment in which firms operate provides the foundational conditions for adoption and upgrading. While digital tools can enable SMEs to streamline operations, access new markets and adopt more data-driven business models (OECD, 2021[1]), these benefits only materialise when complementary systems are in place, including skills formation, organisational support, interoperability frameworks and access to enabling services (Bianchini and Lasheras Sancho, 2025[2]; OECD, 2019[3]). Public policy, therefore, not only plays a critical role in shaping digitalisation of SMEs, it can also support deeper structural transformation (OECD, 2024[4]).
In Montenegro, digital transformation has been elevated as a strategic priority, yet policy efforts have so far primarily focused on horizontal digital governance rather than the specific needs of SMEs. Although existing strategies recognise the importance of digitalisation and skills development, implementation gaps persist, particularly in terms of targeted SME support, co-ordinated delivery mechanisms and sustained investment in firm-level digital capabilities. This section assesses whether the foundational conditions for SME digital upgrading are in place by examining Montenegro’s policy and financial support frameworks, the digital maturity of SMEs, and the availability of digital skills development opportunities.
4.1.1. Strengthening policy and financial support for SME digital transformation
Because SME digital transformation depends on co-ordinated progress across skills, infrastructure, innovation systems and access to finance, the quality of the policy framework and delivery architecture is a critical determinant of outcomes. Smaller firms typically face higher fixed costs of adoption, limited internal expertise and greater difficulty in sequencing investments, making them more dependent than large enterprises on coherent public support to derisk and guide digital upgrading (OECD, 2021[1]). Digital transformation is, therefore, best understood as a policy-intensive process: progress hinges not only on the availability of individual instruments, but on the extent to which governance arrangements align incentives, reduce fragmentation and provide predictable pathways from basic adoption to productivity-enhancing transformation (OECD, 2019[3]). In this context, robust and well co-ordinated policy and financial support mechanisms are essential to help SMEs along this path.
In Montenegro, digital transformation has been elevated as a strategic priority of the government, supported by several frameworks (Table 4.1) that collectively shape the approach to modernising the economy. These frameworks focus largely on enabling conditions, such as improving digital public services, interoperability, cybersecurity standards and basic digital skills, rather than on the deeper organisational and technological changes required for firm-level transformation (e.g. the integration of enterprise resource planning [ERP] or customer relationship management [CRM] systems, automation of production and logistics processes, data-driven decision making, or the redesign of business models around digital platforms and services). The Digital Transformation Strategy 2022-2026, while central, remains primarily oriented toward public sector digitalisation, with only indirect relevance for SMEs and limited translation of its objectives into concrete instruments or delivery mechanisms. References to the business sector tend to be high-level, outlining aspirations rather than specifying operational measures or financing vehicles that would support SMEs in adopting advanced technologies. A continuation of the strategy beyond its current programme period is planned, which could provide an opportunity to strengthen its SME-specific orientation. Thus, despite strong strategic intent, the current policy landscape in Montenegro lacks targeted funding, advisory services and implementation structures needed to drive sustained, enterprise-level digital transformation.
Notes: The table considers all policy frameworks that are relevant for SME digitalisation or digital transformation.
1. A strategy sets the overall vision, strategic objectives and long-term priorities for a given policy area whereas an action plan operationalises these priorities by defining concrete measures, responsible institutions, timelines and (where available) indicative budgets. In other words, the strategy explains what the government intends to achieve while the action plan details how it will be implemented. Action plans thus serve as the main reference point for assessing the extent to which strategic commitments translate into measurable, on-the-ground interventions.
2. An indirect SME targeting approach refers to strategies that do not contain SME-specific measures, instruments or implementation mechanisms, but instead pursue economy-wide objectives from which SMEs may benefit. While such strategies may support areas relevant to SMEs (e.g. innovation, digital infrastructure or skills), they do not explicitly account for SME-specific constraints, capacities or policy needs.
Source: Information provided by the government of Montenegro during the assessment period (2025).
In this context, the Strategy for the Development of MSMEs 2023-2026 is Montenegro’s only framework that consistently combines digital transformation with an explicit SME focus, making it the principal policy instrument for strengthening private sector competitiveness. It outlines measures to promote digital business models, expand SME access to digital tools and platforms, enhance digital and entrepreneurial skills, and support technology adoption through advisory services. The accompanying Action Plan includes activities such as strengthening business support organisations, improving SME access to information on digitalisation programmes, and facilitating technology uptake through capacity-building initiatives. Although digital transformation is recognised as a priority, particularly under the operational objective to enhance the digital transformation of the economy, the scope and ambition of these measures remain relatively limited, with few concrete funding mechanisms, modest targets and largely unspecified implementation pathways.
Two additional horizontal frameworks provide complementary support. The Smart Specialisation (S3) Implementation Plan 2025, bridging the 2021-2024 cycle, and the planned updated S3 framework, explicitly embed SME digitalisation under the operational objective on strengthening MSME competitiveness, including support for SME participation in the EU Digital Europe Programme. Similarly, the Industrial Policy 2024-2028 identifies “Enhancing the digital transformation of the economy” as a core objective. The accompanying 2025-2026 Action Plan includes the establishment of a European Digital Innovation Hub (EDIH) and an annual enterprise digitalisation survey, which, given Montenegro’s firm size distribution, will mainly target SMEs. Additionally, the Scientific and Research Strategy 2024-2028 and Action Plan complement these efforts by strengthening the innovation ecosystem through enhanced technology transfer, expanded research infrastructure, and support for digital and green innovation. While not SME-specific, these measures are indirectly relevant, particularly for innovative SMEs seeking research and development (R&D) collaboration. Access barriers, however, persist for smaller firms with limited absorptive capacity (OECD, 2021[1]).
At the broader reform policy level, the Reform Agenda and the Economic Reform Programme 2025-2027 recognise digital transformation as a horizontal priority for competitiveness, explicitly referring to accelerated digitalisation and SME innovation as drivers of sustainable and inclusive growth. Although these documents do not provide detailed operational measures, they confirm that digital transformation and SME innovation are acknowledged at the highest strategic level of government reforms.
Taken together, Montenegro’s policy frameworks provide a solid strategic foundation for digital transformation, but the SME dimension remains only partially operationalised. Across these frameworks, action plans include few dedicated SME-oriented funding instruments, structured advisory services, targeted skills initiatives or robust monitoring mechanisms. As a result, implementation remains uneven: larger or more digitally mature firms are better positioned to benefit from existing measures while SMEs receive limited operational guidance (OECD, 2021[1]).
The gap between strategic ambition and practical delivery is not only a matter of programme design but also of institutional arrangement, making it important to consider how responsibilities and co-ordination mechanisms shape implementation. Institutional co-ordination for digital transformation in Montenegro is primarily shared between two ministries, but remains only partially integrated. The Ministry of Public Administration leads economy-wide digital governance, including e‑government, cybersecurity, interoperability and data systems. The Ministry of Economic Development oversees enterprise and SME policy, competitiveness, innovation and market access. Although their mandates are complementary, digital governance reforms and SME support measures tend to progress in parallel rather than within a co-ordinated framework, limiting synergies across policy areas. A structural gap further reinforces this fragmentation: Montenegro lacks a dedicated SME implementation agency with an operational mandate to design and deliver SME-focused support programmes, including digital transformation, advisory services, financing instruments and capacity-building initiatives. Likewise, while a dedicated digital transformation centre is envisaged, it is not yet operational. In contrast, some WBT economies already operate similar structures with measurable impact.
Montenegro offers a small but growing set of financial instruments that support SME digitalisation, with the Programme for Improving the Competitiveness of the Economy serving as the only clearly identifiable government-led mechanism explicitly targeting SME digital transformation (Table 4.2). Its 2024 cycle included a dedicated Programme Line for Digitalisation, covering business software integration, customised software development and digital marketing, with a total budget of EUR 300 000 and differentiated reimbursement rates for micro, small and medium-sized enterprises (MSMEs); women- and youth-led firms, and businesses in less developed municipalities. While relevant in scope, the programme’s scale was modest and funding one-off and call-based rather than through a sustained multi-year instrument. Notably, the 2025 edition of the programme did not include a digitalisation line and it remains unclear whether it will return in 2026, creating uncertainty about future support. Alongside this, the Single Access Point Portal, managed by the Ministry of Economic Development, operates as a centralised digital platform providing guidance on support schemes, eligibility rules, application procedures and regulatory updates (SAP Portal, 2025[5]). However, no systematic data exist on how widely SMEs use the portal or how effective they find it in practice, and its impact is inherently limited by the narrow scope and inconsistency of the underlying digitalisation programmes it aggregates.
External financing channels play only a marginal and indirect role in supporting SME digitalisation in Montenegro. Most available instruments, such as the regional SME Go Green Programme which was launched in June 2025 and is available to SMEs through local partner banks as CKB and NLB Bank (NLB, 2025[6]), and the EBRD-EU SME Modernisation credit lines, are donor-funded schemes focused primarily on energy efficiency, equipment renewal and compliance with EU standards, with a limited focus on digital technologies. In parallel, plans for Montenegro to join the European Bank for Reconstruction and Development’s (EBRD) Go Digital Programme remain at an early stage, and the programme is not yet operational, further limiting direct support. While some eligible investments (e.g. automation, smart monitoring, digital control systems) can contribute to digital upgrading, these programmes are not designed to address digital transformation as a core objective and offer little support to overcome key barriers such as skills, business process redesign or integration of advanced digital tools. At the same time, while Montenegro has introduced some demand-driven instruments, including innovation vouchers through the Innovation Fund and digital transformation support through MontEDIH, which provides testing of digital solutions, advisory services and access to financial and technological resources, these remain limited in scale and reach. Evidence shows that voucher schemes are important and can be particularly effective for SMEs because they are agile, involve limited bureaucracy and allow firms to choose solutions tailored to their specific needs (Eurofund and Cedefop, 2025[7]). Therefore, in the absence of such SME instruments, existing financing programmes provide only occasional opportunities, but do not meaningfully reduce the structural obstacles SMEs face in digitalisation.
4.1.2. Assessing the digital maturity of SMEs in Montenegro
Assessing digital readiness requires going beyond headline adoption rates to examine how deeply and strategically SMEs integrate digital tools into their operations. Evidence shows that digital adoption among smaller firms is often incremental rather than transformative, as many rely on basic tools that do not fundamentally change business models or productivity, underscoring the need for structured public support to enable deeper technological upgrading (OECD, 2023[10]). Where governments co-ordinate measures, combining skills development, advisory services and accessible finance, SMEs are significantly more likely to adopt higher value digital applications and participate more effectively in digital markets (OECD, 2021[1]; 2023[10]).
A survey conducted by the OECD among SMEs in the Western Balkans and Türkiye (see Annex B) reveals that SME digital tools adoption in Montenegro is concentrated heavily in basic, entry-level solutions, reflecting an early stage of digital maturity (OECD, forthcoming[11]). The most commonly used solutions include a company website and e‑invoicing, both at 64%, and social media platform use at 43% (Figure 4.1), in line with trends observed across most WBT economies (OECD, forthcoming[11]). These tools support online visibility and administrative efficiency and require limited changes to internal processes. Their widespread use thus suggests that many SMEs have engaged with digitalisation at a minimal level, largely where adoption is low-cost, low-risk or externally driven. By contrast, adoption drops sharply for more advanced digital tools that require organisational restructuring, data-driven decision making or integration across multiple business functions. Notably, none of the surveyed SMEs reported the use of big data analytics, underscoring a pronounced gap in higher value digital capabilities. This pattern indicates that digitalisation among SMEs remains largely transactional rather than transformational.
Source: OECD (forthcoming[11]).
The motivations underpinning SME digital tool adoption in Montenegro point to a predominantly operational use of digital tools. Among surveyed firms, process automation is the most frequently cited driver, cited by 52% of surveyed SMEs, followed by efforts to expand the customer base at 40% (Figure 4.2) (OECD, forthcoming[11]). Compliance with government regulations, monitoring activity, and enhancing products or services each motivate around 36% of SMEs, indicating that firms often turn to digital tools to improve oversight and meet administrative requirements alongside basic efficiency gains. A notable outlier in Montenegro’s context is the very low share of SMEs citing increased domestic sales as a motivation, at only 8%. This is far below the WBT average of 43% of respondents that cited domestic sales growth as a major driver of digitalisation, a pattern largely explained by the fact that most SMEs in the sample have no or very limited engagement in international markets and operate primarily in small, local demand segments. More strategic or transformative motivations remain limited, with 20% of surveyed SMEs pointing to teleworking and 16% to employer branding as drivers for adopting digital tools.
Notes: The chart excludes respondents who cited “Do not use digital tools” in the previous question. See Figure 4.1.
Source: OECD (forthcoming[11]).
This limited strategic orientation may also be linked to low awareness of the available support: only 11% of SMEs report being aware of government programmes for digitalisation, a share lower than the WBT regional average of 17% and also below the OECD sample average of 20% (OECD, 2024[12]), suggesting that many firms may be missing opportunities to access guidance, incentives or financial support that could help them advance beyond basic digital adoption. Overall, the existing patterns among surveyed SMEs reveal considerable untapped potential for enterprises in Montenegro to shift from predominantly operational digital use toward more advanced, value-creating applications that could enhance competitiveness, product development and workforce capabilities.
Additionally, SME digital transformation is hindered by a number of structural and capacity-related barriers. The most frequently cited challenge is the lack of time for training, indicating that many surveyed SMEs struggle to dedicate resources to building the skills needed for deeper digitalisation (Figure 4.3) (OECD, forthcoming[11]). Financial constraints also play a significant role, with 39% of surveyed firms noting acquisition costs and 36% maintenance costs as key obstacles. Difficulties in finding qualified employees were reported by 29% of surveyed SMEs, while 25% point to the cost of training as an additional barrier. Unlike in several other WBT economies, insufficient digital talent within firms appears to be less of an issue in Montenegro, suggesting that constraints relate more to limited time and financial capacity than to fundamental skills shortages.
Note: “None” refers to respondents who reported no challenges related to digital tool use (i.e. they did not cite any of the listed challenges), regardless of whether they use digital tools.
Source: OECD (forthcoming[11]).
Overall, while awareness of digitalisation is increasing, many SMEs have yet to translate this into deeper business transformation. Digital uptake remains largely incremental, with limited integration of digital tools into core business processes.
4.1.3. Enhancing digital skills and capacities
Across OECD Member countries, digital transformation is increasingly driven not only by access to technology, but by firms’ ability to mobilise digital, managerial and problem-solving skills to redesign processes, adopt data-driven decision making and integrate emerging technologies (OECD, 2024[4]). Skills have thus become a central enabler of effective digital adoption rather than a complementary input. This shift is particularly challenging for SMEs, which are significantly less likely than large firms to provide formal digital training yet are more exposed to skills obsolescence as automation, artificial intelligence (AI) and platform-based business models diffuse across sectors (OECD, 2021[1]).
This structural gap is particularly relevant for Montenegro, where SMEs rely heavily on basic tools and lack the internal capacities needed for deeper digitalisation. With over 90% of jobs now requiring at least basic digital skills and demand growing the fastest for ICT-specialised, cybersecurity and data analytics competencies (European Commission, 2023[13]), the ability of SMEs in Montenegro to upskill and reskill their workforce is becoming a critical determinant of competitiveness and their ability to move up the digital maturity ladder.
Survey evidence illustrates how this challenge is playing out in practice. In Montenegro, surveyed SMEs continue to rely heavily on external sources of digital expertise, pointing to gaps in internal digital capacity: 44% of surveyed SMEs report hiring external consultants as their main source of support, in line with the OECD sample (OECD, 2024[12]), compared to 33% which rely on internal IT specialists (OECD, forthcoming[11]). This reliance is strongly linked to firm age: 47% of surveyed SMEs established before 2015 use internal specialists more frequently while newer firms overwhelmingly depend on external consultants (58%). Uptake of other sources of expertise remains limited, suggesting narrow pathways to acquiring digital skills. Despite this dependence, only 14% of surveyed SMEs identify a lack of digital skills as a barrier – one of the lowest rates in the region (Figure 4.4). This apparent disconnect likely reflects limited awareness of the skills required for deeper digitalisation, as many firms remain focused on basic tools and incremental adoption.
Source: OECD (forthcoming[11]).
At the system level, Montenegro combines relatively solid basic digital literacy, with 52% of the population having at least basic digital skills, close to the EU average (Eurostat, 2023[14]), with extremely low adult participation in learning at just 2.7% (Eurostat, 2020[15]), pointing to structural weaknesses in continuous upskilling and reskilling. Taken together, this suggests that while there is a baseline of digital familiarity, many SMEs lack the capacities and the learning pathways needed to build more advanced digital competencies, reinforcing a pattern in which firms underestimate their skills needs while continuing to depend on external expertise.
While evidence points to structural weaknesses in SME digital capabilities, Montenegro’s policy response has primarily focused on embedding digital skills development in education and digital governance frameworks, with a more limited focus on SME workforce upskilling. The Education System Digitalisation Strategy 2022-2027 explicitly prioritises the development of digital skills and competencies, alongside improvements in digital education infrastructure and teacher capacity. The broader Digital Transformation Strategy 2022-2026 similarly emphasises digital capacity building for citizens, businesses and the public sector, recognising digital competence as essential for a knowledge- and innovation-driven economy. While these frameworks provide clear policy direction, programmes targeting SMEs and their workforce are less visible. Although vocational and higher education systems are increasingly aligned with priority sectors, notably through higher enrolment in ICT-related fields, SME-specific upskilling initiatives and tailored digital training for smaller firms are not yet strongly defined (ETF, 2020[16]).
Some digital skills initiatives are beginning to emerge at the implementation level. The Employment Agency of Montenegro has launched free IT educational programmes aimed at jobseekers in Podgorica, Niksic and Bijelo Polje (EAM, 2025[17]; 2025[18]). However, the gap between strategic ambition and SME-oriented training remains apparent: many SMEs lack structured access to digital skills development packages tied directly to firm transformation or digital adoption efforts (OECD, forthcoming[11]). In sum, Montenegro has policy foundations for digital skills development in place, yet translating them into SME-targeted programmes, particularly those linking digital upskilling with business transformation, remains under-developed and requires further operationalisation.
Furthermore, engagement with EU- and donor-supported initiatives has expanded in recent years, providing important, though still indirect, opportunities for digital skills development in Montenegro. Through the IPA III (Instrument for Pre-accession Assistance) and Horizon Europe, firms and institutions in Montenegro participate in regional projects focused on digital readiness, innovation and entrepreneurship (European Commission, 2025[19]). The EU Digital Europe Programme 2021-2027 stands out (European Commission, 2023[20]), as it co-finances the newly established MontEDIH, which provides SMEs with access to testing facilities, digital skills training and advisory services on advanced technologies, and supports NCC Montenegro through the EuroCC4SEE project, linking academic institutions and firms to high-performance computing, data analytics and AI expertise. The United Nations Development Programme (UNDP) has also implemented targeted digital transformation and digital marketing workshops for entrepreneurs, helping to strengthen practical skills for small firms (Box 4.1). In addition, the Montenegro Education Programme, implemented with the European Investment Bank, invests around EUR 64 million to modernise education infrastructure and expand digital learning capacity while the government’s Digital Academy offers short online modules on digital competencies, including AI literacy, for civil servants and the wider public (MEP, 2026[21]). Although these initiatives contribute to the broader digital skills ecosystem, they remain project-based, externally funded or institution-oriented, and do not provide a sustained mechanism for SME-specific upskilling. This leaves major gaps in accessible, operational support for digital transformation.
In 2025, the United Nations Development Programme (UNDP) and EPAM Systems Montenegro signed a two-year memorandum of understanding to jointly advance digital transformation, human capital development and innovation in Montenegro. The partnership combines EPAM’s global technological expertise with the UNDP’s development mandate, creating a platform for expanding digital inclusion and improving the overall ecosystem for IT-driven growth.
A core focus of the co-operation is strengthening digital and IT skills among youth and vulnerable groups, who represent a significant share of the future small and medium-sized enterprise (SME) workforce. By improving access to training, employment pathways and volunteer-led mentoring, the initiative indirectly supports SMEs facing persistent shortages in qualified digital talent. The partnership also promotes innovation-oriented activities and awareness raising that can help create a more dynamic and digitally capable labour market.
While promising, the initiative is still in its early phase. Its long-term impact will depend on whether pilot activities evolve into structured support programmes that also reach small firms more directly. Without a mechanism to channel newly trained talent into SME-focused upskilling or advisory services, the benefits for the broader SME sector may remain diffuse.
Source: UNDP (2025[22]).
The way forward
Strengthen the SME focus within existing digital transformation and SME policy frameworks, introducing clearer targets, institutional responsibilities and delivery mechanisms. The government should enhance the SME-specific content of its current strategies, particularly the forthcoming renewal of the Digital Transformation Strategy and the MSME Strategy, by introducing measurable targets for SME digital adoption, clarifying the respective roles of the Ministry of Public Administration and the Ministry of Economic Development, and establishing SME-specific indicators to track progress at firm level. Support modalities should be differentiated by firm size and sector, combining entry-level instruments with more advanced solutions for digitally mature firms. In parallel, targeted awareness and outreach measures, including a centralised information portal and partnerships with chambers of commerce and business associations, would help increase SME awareness levels of available government support.
Boost implementation by establishing a dedicated Centre for Digital Transformation – a hands-on, business-facing structure. Beyond providing continuous support, the centre could serve as the central delivery mechanism for an integrated SME digital uptake programme that links diagnostics, advisory services and tailored finance. Firms would enter the programme through a standardised digital maturity assessment, receive customised guidance to develop transformation plans and be referred to earmarked financial instruments for implementation. Existing schemes could introduce digitalisation windows or scoring bonuses for investments in core tools such as ERP/CRM systems, production software, e-commerce, digital payments or basic cybersecurity. Locating the centre within an institution with strong SME reach, such as the Chamber of Commerce, with strategic oversight from the Ministry of Economic Development would ensure accessibility and coherence, supported by structured co-ordination with MontEDIH and other relevant actors.
Launch an SME Digital Skills and Leadership Voucher Scheme anchored in MontEDIH and training providers. To address the fragmented landscape of digital skills offers, Montenegro should introduce a Digital Skills Voucher Scheme for SMEs that co-finances short, modular training for owners, managers and employees in areas such as digital productivity tools, e-commerce operations, data literacy, cybersecurity and AI readiness. Vouchers could be redeemable with accredited providers and prioritise microenterprises, tourism and trade sectors, and women-led enterprises. Training content should be tailored to firms’ sector, size and digital maturity level and tied to concrete technology projects identified through diagnostics (e.g. ERP implementation, online sales, basic data analytics). The scheme should track participation, completion and follow‑up technology adoption so it can evolve into a core, evidence-based pillar of SME digital transformation policy (Box 4.2).
France has developed a structured and scalable approach to small and medium-sized enterprise (SME) upskilling through Bpi France, the public investment bank, notably via its “SME Acceleration” programme. Rather than focusing solely on basic digital literacy, the programme targets growth-oriented SMEs and combines management training, digital transformation and strategic leadership development.
The SME Acceleration programme offers participating firms a 12-18-month support pathway, combining:
collective and individual training modules on digital technologies, data use and organisational transformation
strategic coaching for SME managers focused on growth planning, innovation and digital transition
peer learning and networking among SMEs facing similar scale-up challenges.
Training is delivered in partnership with business schools, universities and sector experts, ensuring strong links between applied knowledge and business needs. Public co-financing reduces costs for participating SMEs, making advanced training accessible beyond large firms.
By embedding digital skills into broader management and leadership development, the programme helps SMEs move from basic technology adoption to strategic digital transformation, supporting productivity growth and long-term competitiveness. This integrated model can be particularly relevant for Montenegro as it illustrates how public authorities can consolidate fragmented training initiatives into a coherent, demand-driven skills ecosystem for SMEs.
Sources: OECD (2025[23]); BPI France (2023[24]).
Once foundational conditions are in place the central question becomes whether digitalisation is translating into productivity gains at the firm level. Productivity growth among SMEs is shaped by how effectively firms use digital channels to sell, innovate and reorganise their operations and engage with markets (OECD, 2023[10]; 2021[1]). The COVID-19 pandemic significantly accelerated the expansion of e‑commerce and digital business models, further reinforcing the role of online channels as a key driver of SME resilience and productivity (OECD, 2021[1]). SMEs across the OECD and the European Union that actively engage in e-commerce and digital innovation are more likely to expand markets, diversify revenues and improve efficiency while those that remain digitally passive risk falling behind as competition intensifies (OECD, 2023[25]; European Commission, 2024[26]). Crucially, productivity gains do not stem from digital presence alone: they materialise when online sales, innovation activities and organisational change reinforce each other, allowing firms to scale, adapt and compete beyond local demand (OECD, 2023[10]; 2021[1]).
In Montenegro, the productivity-enhancing potential of e-commerce and digital innovation remains only partially realised at the firm level (OECD, forthcoming[11]). While the policy and regulatory environment have improved, most SMEs continue to engage with digital tools in a limited and non-strategic manner. This section will shed light on how e-commerce adoption and innovation activities - the key conditions for enabling firms to expand their markets, strengthen competitiveness and sustain growth in an increasingly digital economy - can contribute to SME productivity in Montenegro.
4.2.1. Leveraging the use of e-commerce and online platforms to drive SME growth
E-commerce and online platforms constitute a primary channel through which digitalisation can improve SME productivity. When online sales channels are integrated into core business processes rather than used as stand-alone add-ons, they enable firms to reduce transaction costs, broaden customer bases and use data more systematically to guide strategic decisions (OECD, 2025[27]). Firms that adopt hybrid sales models that combine physical presence with online channels can generate significant productivity gains by reducing transaction costs, broadening customer bases and enabling more data-driven decision making (OECD, 2023[25]). This aligns with broader e-commerce trends, where digital platforms increasingly shape trade and value chain participation, allowing SMEs to access new markets and customers (OECD, 2025[28]). For Montenegro, where SMEs operate in a small and highly open market, effective use of digital and online sales channels is increasingly important for expanding market reach and reducing dependence on local demand.
Despite this strong potential and strategic relevance, uptake among SMEs in Montenegro remains limited. A large share of surveyed SMEs does not engage with e-commerce platforms in any structured way, with 38% of them reporting that they do not use any e-commerce platform at all, one of the highest shares in the WBT region (OECD, forthcoming[11]). This low level of uptake persists despite strong evidence that the adoption of digital tools and hybrid sales practices can generate significant productivity gains, notably by reducing transaction costs, broadening customer bases and enabling more data-driven decision making (OECD, 2023[25]). It also contrasts with broader e-commerce trends across OECD Member countries, where digital platforms have increasingly reshaped trade and value chain participation, allowing SMEs to reach new markets and customers (OECD, 2025[28]). Among those SMEs that do engage with e‑commerce, their own websites are the most commonly used option at 32%, followed by social media platforms at 25%, other sales platforms at 14%, while only a small share (3.6%) rely on third-party marketplaces (Figure 4.5) (OECD, forthcoming[11]). However, among the SMEs that use online sales, they only contribute very little to overall revenues: 71% of surveyed SMEs report that less than 10% of their turnover comes from online channels, and only about 4% generate more than half of their revenues through e-commerce (OECD, forthcoming[11]). These patterns point to an early and shallow stage of e-commerce integration, where digital channels are neither widely adopted nor economically significant for most SMEs in Montenegro.
Source: OECD (forthcoming[11]).
Despite limited engagement with e-commerce and the modest contribution of online sales to SMEs’ revenues, Montenegro's broader policy framework acknowledges the importance of digital channels for competitiveness and internationalisation. The Digital Transformation Strategy 2022-2026 and the MSME Development Strategy 2023-2026 position digitalisation and online market access as key enablers of SME competitiveness, referencing improved MSME presence in digital markets and greater export readiness through online channels. Yet despite these policy signals, Montenegro does not have a comprehensive SME-related e-commerce pillar in any of its strategic frameworks, and existing SME-oriented measures remain general, lacking targeted instruments or actionable tools to support smaller firms in adopting e-commerce and cross-border digital trade.
Additionally, the government has aligned much of its e-commerce legislation with the EU acquis as part of its accession process, updating the legal framework to support online transactions and align with EU digital commerce directives. Montenegro’s E-commerce Law and related regulations are evolving in line with European practices to boost consumer confidence and regulate digital service providers (Samardžija, 2025[29]). Montenegro is also continuing reforms to align its consumer protection framework with the acquis: the Consumer Protection Law and the Law on General Product Safety have been adopted by Parliament, strengthening rights such as transparency and dispute resolution for online purchases (MonteBusiness, 2025[30]). On the payments side, Montenegro is modernising its digital payments infrastructure with support from the World Bank to expand fast and secure payment systems that underpin reliable online commerce (World Bank, 2025[31]). The Central Bank has amended the Payment System Law to harmonise payment services with EU standards consistent with the revised Payment Services Directive, enabling new services and improving consumer protection, competition and security in digital payments (CBCG, 2023[32]).
Nevertheless, financial support SMEs e-commerce uptake is yet to be developed. Montenegro does not operate dedicated financial schemes for e-commerce; thus SMEs may only access relevant components through broader programmes. The Programme for Improving Competitiveness of the Economy (PICE) has been implemented on an ongoing basis, ensuring continuity of support to SMEs from year to year. In 2024 it supported 94 SMEs with a budget of EUR 2.6 million, and in 2023 it supported 380 SMEs with a budget of EUR 2.4 million, including lines for digitalisation, marketing and mentoring (Montenegro Ministry of Economic Development, 2021[33]). However, no dedicated digitalisation line was included in the 2025 programme cycle, with support redirected towards equipment procurement and smart manufacturing capacity. Instead, in 2025 PICE offered educational activities and training sessions, aiming to ensure continuity of support for SMEs. Moreover, UNDP and EU-funded initiatives, such as IPA III Competitiveness support, have also offered practical workshops on digital branding, e-commerce logistics, and cross-border online trade within CEFTA (EU4ME, 2024[34]). Yet the absence of a dedicated e-commerce grant or loan facility limits scalability, and the reliance on donor programmes means that access varies widely depending on project cycles and sector targeting.
Beyond financial instruments, support for e-commerce in Montenegro has so far focused more on awareness-raising and ecosystem dialogue than on direct, operational assistance to SMEs. In 2024, the Chamber of Commerce of Montenegro, together with the E-commerce Association of Montenegro and the Balkan eCommerce Alliance, organised a roundtable to discuss the state of e-commerce, identify regulatory and logistical bottlenecks, and highlight emerging market opportunities, helping to build a shared understanding among policymakers, businesses and service providers (Chamber of Commerce, 2024[35]). Complementing this, the eCommerce4All platform published a practical Guide on How to Launch E‑Commerce in Montenegro (eCommerce4All, 2022[36]), offering step-by-step instructions on registration, platform selection, payment solutions and compliance. While these initiatives improve visibility and awareness, they stop short of providing the structured financial, advisory or capacity-building support SMEs need to move from information to implementation.
4.2.2. Fostering innovation and collaboration for SME productivity
Digitalisation contributes to productivity not only through sales channels but through its interaction with innovation and knowledge diffusion. SMEs that innovate, particularly through digital and data-driven tools, achieve stronger productivity gains and have greater resilience and higher growth potential, as innovation improves products, processes and overall efficiency (Hall, Lotti and Mairesse, 2012[37]; Mohnen, Polder and Van Leeuwen, 2018[38]). Yet evidence shows these benefits accrue mainly to those firms that are already more productive, which possess the organisational capacity, skills and intangible assets1 needed to fully capture the gains from digitalisation (Brynjolfsson and McAfee, 2011[39]). Across OECD Member countries, this dynamic has contributed to widening productivity gaps between leading and lagging firms, particularly in ICT-intensive sectors where more productive and larger firms are better positioned to exploit digital technologies (Berlingieri, Blanchenay and Criscuolo, 2017[40]; Andrews, Criscuolo and Gal, 2016[41]). This creates a risk that digitalisation widens performance gaps rather than closing them. Similar patterns persist across the European Union, with SMEs facing structural barriers such as limited finance, weaker technology transfer and lower absorptive capacity (European Commission, 2024[26]).
In Montenegro, understanding how policy frameworks and institutional support enable SMEs to engage in digital innovation is, therefore, central to assessing whether the economy can turn strategic ambition into broad-based productivity growth rather than progress concentrated among a small group of digitally advanced firms.
Against this backdrop, Montenegro’s innovation policy framework provides the institutional context through which digital innovation could either remain concentrated among a few firms or become a broader driver of productivity growth. This framework has been strengthened in recent years, notably through the Strategy for Scientific Research Activity 2024-2028 and its Action Plan forming the core strategic foundation for innovation development. The strategy outlines priority actions to strengthen research excellence, enhance technology transfer, deepen co-operation between academia and industry, and stimulate innovation-led economic growth. It also emphasises digital technologies through support for digital R&D infrastructure, data-driven innovation, and mechanisms enabling SMEs to access research capacities within universities and public institutions. Complementing this, the Industrial Policy 2024-2028 adds a broader horizontal layer, especially under Strategic Objective 3, which focuses on fostering innovation, strengthening institutional and technological infrastructure, promoting circular and green-oriented business models, and enhancing the digital transformation of the economy – objectives that are highly relevant for SMEs given their dominant share in Montenegro’s industrial base. Montenegro’s Smart Specialisation Strategy has also played an important role in shaping innovation development; while the previous cycle has expired, a new S3 is under preparation, signalling continuity in efforts to align research, innovation and economic development priorities. Additionally, the Digital Transformation Strategy 2022-2026 identifies innovation as a pillar of Montenegro’s digital transition and highlights the need to boost digital entrepreneurship, develop digital business models and foster the growth of technology-oriented SMEs. Across these frameworks, Montenegro signals a growing ambition to align innovation policy with digitalisation and SME competitiveness, though concrete implementation instruments have not been fully developed.
Furthermore, the current digital innovation ecosystem in Montenegro is supported by a limited but gradually expanding institutional infrastructure that can benefit SMEs. The Science and Technology Park of Montenegro remains the central platform for innovation-driven entrepreneurship, linking research institutions with SMEs and start-ups through incubation, technology development and academia-industry collaboration (STP, 2025[42]). This is complemented by Tehnopolis in Niksic, which provides innovation and entrepreneurship support, prototyping facilities, and early-stage business services, as well as by emerging technology transfer structures within universities (Tehnopolis, 2025[43]). The Innovation Fund of Montenegro serves as the main operational instrument within this ecosystem, translating policy priorities into firm-level support programmes through grant schemes, co-financing and innovation vouchers, thereby filling part of the gap between strategic intent and implementation (Innovation Fund of Montenegro, 2025[44]). The National Competence Centre for High-Performance Computing (NCC Montenegro), established at the University of Donja Gorica and expanded through the EuroCC2 and EuroCC4SEE initiatives under the Digital Europe Programme, further strengthens the ecosystem by linking SMEs, academia and the public sector to high-performance computing, data analytics and AI expertise, serving as Montenegro's national focal point for these technologies (EuroCC, 2022[45]). Additional ecosystem actors also contribute: the EIT Community Hub Montenegro expands access to EU-level training, mentoring and innovation networks while the Institute of Modern Technologies supports matchmaking, co-creation and early-stage technology transfer, often providing advisory services free of charge to SMEs (EIT, 2025[46]). Taken together, these institutions provide an important foundation for SME innovation support, but their scale, co-ordination and outreach remain limited, constraining their impact on the broader SME base in Montenegro.
Financial incentives and support for SME digital innovation requires improvements. For instance, Montenegro’s competitive and low corporate income tax rate of 9% helps reduce the general tax burden (Karanovic & Partners, 2022[47]). Montenegro has also introduced fiscal incentives for research and innovation through the Law on Incentives for Research and Innovation Development, in force since 2020 and updated in 2025, through which over EUR 8 million in tax incentives have been granted to date (Government of Montenegro, 2025[48]). While this represents a meaningful step toward leveraging tax policy for innovation, the extent to which these incentives are accessible to and taken up by SMEs, particularly for digital transformation purposes, remains unclear. Some additional reinforcement comes from the Investment Support Programme 2025, which allocates EUR 1.2 million to micro and small enterprises (covering up to 80% of costs in less developed regions) (MonteBusiness, 2025[49]), though its focus is broader business upgrading rather than digitalisation. The Innovation Fund of Montenegro is a more targeted driver of innovation, which has rapidly become the key implementing body for innovation policy. Between 2022 and 2025, the fund launched 10 support programmes, opened 17 public calls, received 556 applications and awarded nearly EUR 6 million in grants, demonstrating growing institutional capacity (Innovation Fund Montenegro, 2025[50]). Its 2025 cycle introduces 6 programmes worth EUR 2.4 million, including a flagship Programme for Strengthening Innovation in MSMEs (EUR 1.2 million) supporting later stage technological development and experimental projects, with grants ranging from EUR 50 000 to EUR 200 000 (Innovation Fund Montenegro, 2025[50]). Together these programmes form the base of a more structured innovation ecosystem, though their impact is yet to be seen.
Moreover, the emerging MontEDIH, led by the University of Montenegro and co-financed by the European Union, also aims to provide SMEs with access to advanced digital technologies, testing facilities, training and innovation services, an important step in integrating Montenegro into broader EU digital innovation networks (Box 4.3) (MontEDIH, 2025[51]). Complementing this, Montenegro’s branch of the Enterprise Europe Network serves as a key contact point for SMEs seeking personalised advisory support on financing, innovation development, internationalisation and access to new markets (MontEENegro, 2025[52]). The consortium, co-ordinated by the Ministry of Regional Development and including the University of Montenegro’s Faculty of Mechanical Engineering, the Chamber of Commerce and the Business Center Bar, strengthens SME access to EU-level expertise and cross-border co-operation opportunities. Additional actors, such as the Directorate for Development of Small and Medium-Sized Enterprises and the academic research network, provide advisory services, ICT-related training and early‑stage technology transfer, though their contribution to SME digital innovation remains limited.
Launched in 2025, the Montenegrin European Digital Innovation Hub MontEDIH represents a key step toward building Montenegro’s digital innovation infrastructure. Led by the University of Montenegro and co-financed by the European Union (EU) through the Digital Europe Programme, MontEDIH provides small and medium-sized enterprises (SMEs) with access to digital technologies, emerging technologies, testing and experimentation facilities, training programmes, and innovation advisory services. Its service portfolio is designed to help SMEs pilot new tools, evaluate technological options and reduce the risks associated with digital transformation.
A major strength of MontEDIH is its role as a gateway to EU-level expertise and networks, enabling SMEs in Montenegro, many of which operate with limited internal capacities, to access specialised services that were previously unavailable domestically. The hub also supports technology scouting, awareness raising and early-stage skills development, offering a structured entry point for SMEs beginning their transformation journey.
However, the initiative is still in its early stages, and its long-term effectiveness will depend on its ability to scale services; ensure sustained funding beyond EU project cycles; and deepen collaboration with existing actors such as the Science and Technology Park, chambers of commerce, and sector associations. At present, support primarily targets digitally motivated or innovation-active firms, leaving room to expand outreach to the broader SME base.
Source: MontEDIH (2025[51]).
On the demand side, SME participation in digitally innovative practices is already relatively widespread in Montenegro. Over half of surveyed SMEs (54%) report applying some form of digital innovation to improve their products, services or processes, with 31% indicating moderate use and 23% significant use (Figure 4.6) (OECD, forthcoming[11]). A further 42% plan to adopt digital innovation practices in the near future, pointing to strong latent demand and potential for broader uptake. By contrast, only 4% of SMEs report no current engagement in digital innovation, suggesting relatively high awareness of its importance across the SME population. At the same time, adoption is uneven. SMEs led by male chief executive officers report substantially higher use of digital innovation (63%) than those led by women chief executive officers (40%) (OECD, forthcoming[11]). These patterns indicate a growing openness to innovation among surveyed SMEs in Montenegro, albeit with disparities that may reflect differences in leadership experience, networks or access to information.
Source: OECD (forthcoming[11]).
This growing openness to innovation is mirrored at the ecosystem level by exceptionally strong collaboration. The share of innovative SMEs co-operating with external partners is 146% of the EU average, indicating exceptionally high openness to knowledge exchange and joint innovation (European Commission, 2025[53]). This strong collaborative orientation positions SMEs well to access new technologies, diversify markets and build capacities through partnerships.
However, this strong collaborative orientation is not matched by a comparable level of investment in research and innovation. Montenegro’s R&D investment levels remain low despite modest recent improvements (Figure 4.7). Public and private R&D expenditure accounted for 0.49% of GDP in the 2020‑2023 period, pointing to a small increase compared to 0.35% in the 2014-2016 period. Moreover, expenditure appears to be higher in Montenegro than in several other WBT economies, but it is lower than in Türkiye (1.38%) and Serbia (0.90%). Moreover, public sector R&D expenditure increased by 8.5 percentage points in the period 2018-2025, and venture capital activity grew marginally by 0.7 percentage points. Both indicators, however, remain far below the 2025 EU averages of 31.7% for public R&D spending and 0.5% for venture capital (European Commission, 2025[53]). While these gains signal gradual momentum, they highlight a persistent underinvestment in research, innovation and high‑growth entrepreneurship and suggest potential for improvements.
Notes: Research and development expenditure as a percentage of GDP encompasses spending by governments, higher education institutions, business enterprises and private non-profit organisations. The 2014-2016 and 2020-2023 figures represent three-year unweighted averages of research and development expenditure as a percentage of gross domestic product.
Source: Eurostat (2024[54]).
The way forward
Refocus SME e-commerce support toward viable sectors and structural enablers. Rather than developing a broad SME e-commerce enablement programme, Montenegro should prioritise support that reflects the economy’s structural realities, namely high seasonality, a small domestic market and logistics bottlenecks that constrain reliable delivery. E-commerce initiatives should focus on sectors with clear digitalisation potential, where online visibility, booking platforms and targeted digital marketing can generate the highest returns. Support should emphasise marketplace integration with existing regional platforms and strengthen firms’ capacities in digital promotion and customer-facing tools rather than full-scale online store development (Box 4.4). To address core non-digital barriers, the programme should be complemented by measures improving last-mile delivery, fulfilment reliability and partnerships with logistics providers. Embedding this sector-focused approach within existing instruments would allow Montenegro to scale support efficiently without creating parallel structures.
Denmark supports small and medium-sized enterprise (SME) digitalisation through the SME:Digital programme launched in 2018 as part of the Strategy for Digital Growth. The initiative functions as a co‑ordinated, government-led support system to help smaller firms adopt digital tools and expand online sales across sectors. A key pillar of the programme is the E-Commerce Centre, a dedicated structure designed to assist SMEs in building viable online business models.
The E-Commerce Centre operates under the Ministry of Industry, Business and Financial Affairs, with contributions from the Ministry of Foreign Affairs, particularly in the area of export promotion and cross‑border e-commerce. The programme has benefited from sustained public funding, with approximately DKK 10 million allocated in 2018, DKK 20 million in 2019, and DKK 25 million annually in 2020 and 2021.
The initiative combines several practical instruments tailored to SME needs:
Consultancy grants for e-commerce development, covering part of the cost of expert support to assess digital readiness, prepare business cases and implement online sales solutions, with grants of up to around DKK 100 000.
Personalised e-commerce strategies, providing firms with tailored guidance on how to strengthen online sales in line with their sector and business model.
Hands-on workshops, where SMEs work directly with experts to address operational challenges in online selling, accompanied by small grants to support implementation.
Regulatory guidance and export support, including practical advice on consumer protection, platform use, cross-border sales and competition rules.
Beyond e-commerce, the SME:Digital portal also offers tools to assess firms’ digital maturity and design tailored digitalisation pathways, helping managers link technology adoption to concrete business outcomes.
Denmark’s experience shows that targeted, practical support mechanisms, combining advisory services, small grants and regulatory guidance, can help SMEs adopt e-commerce solutions that are aligned with their sectoral conditions and growth opportunities rather than promoting one-size-fits-all online business models.
Sources: SME:Digital (2025[55]); OECD (2021[1]).
Strengthen SME innovation support through targeted, place-based hubs aligned with Smart Specialisation priorities. Rather than expanding a wide network of new hubs, Montenegro should concentrate resources on developing a small number of high-capacity, sector-specific centres anchored in the Smart Specialisation Strategy’s priority areas. Given the economy’s strong centralisation and concentration of talent and research capacity in Podgorica, new facilities should only be established where there is a clear critical mass of firms, skills and supply chains, for example tourism-focused digital innovation services on the coast or agrifood-oriented support in northern regions. These centres should provide hands-on mentoring, prototyping facilities and access to advanced digital tools (Box 4.5) while maintaining strong operational links with the Science and Technology Park of Montenegro, Tehnopolis, university R&D units, and MontEDIH to avoid duplication. A place-based approach would minimise the risk of underused facilities and “empty-shell” hubs while ensuring that SMEs in high-potential sectors receive continuous, ecosystem-embedded support for innovation and technology adoption.
The High-Tech Campus Eindhoven in the Netherlands is widely regarded as one of Europe’s leading innovation ecosystems, often described as “the smartest square kilometre”. Instead of dispersing resources across many small facilities, the Dutch approach has concentrated investment in a single, high-density hub that brings firms, researchers and entrepreneurs together.
The campus hosts over 300 companies and around 12 500 engineers, researchers and innovators working in fields such as semiconductors, artificial intelligence, health technologies and advanced manufacturing. Its success is built on a few core features:
sector-focused clustering that concentrates firms around key high-tech specialisations
co-location of industry and research, enabling fast knowledge transfer and joint projects
shared advanced facilities such as labs and prototyping infrastructure
integrated ecosystem services, including mentoring, networking and venture support.
The Eindhoven model shows how concentrating resources in a small number of specialised, high‑capacity hubs can generate stronger innovation spillovers and more sustainable ecosystems than spreading investment across many smaller centres.
Source: High Tech Campus (2026[56]).
As firms expand their use of cloud services, digital payments and online platforms, their exposure to data‑related and cyber risks rises alongside potential productivity gains: SMEs face particular challenges in this context, as they typically operate with more limited resources, less formalised data governance practices and lower capacity to manage digital risks on an ongoing basis (OECD, 2021[1]; Bianchini and Lasheras Sancho, 2025[2]). At the same time, the European Union’s evolving regulatory framework for digital trust has raised minimum compliance requirements, making data protection and cybersecurity increasingly relevant for SMEs engaged in digital and cross-border activities (European Commission, 2024[57]).
In Montenegro, recent large-scale cyber incidents affecting government institutions have underscored vulnerabilities, while SME survey evidence points to uneven data governance practices, limited monitoring capacity and widespread reliance on basic security measures. Although most surveyed SMEs report having some form of data privacy policy in place (OECD, forthcoming[11]), uncertainty around data storage, incident detection and compliance obligations remains high. This combination of rising exposure and uneven preparedness highlights the importance of strengthening SME-level data protection and cybersecurity capacities as part of Montenegro’s broader digital transformation agenda. This section will look at the regulatory framework, institutional arrangements and firm-level practices shaping SME data protection and cybersecurity readiness in Montenegro.
4.3.1. Adapting data protection to evolving digital threats
Strong data protection frameworks help create confidence in digital services and can support business competitiveness by clarifying obligations and rights in increasingly data-intensive markets (EDPB, 2025[58]). For EU membership candidates such as Montenegro, aligning legislation with the General Data Protection Regulation (GDPR) is a key aspect of broader EU accession and digital integration, yet progress in full alignment and implementation remains ongoing (European Commission, 2025[59]). It is, therefore, critical to understand how SMEs in Montenegro manage data protection and integrate governance practices to assess the resilience and trustworthiness of their digital activities.
At 81%, a majority of surveyed SMEs in Montenegro report having a data privacy policy in place; however, 19% still operate without any formal measures, indicating that basic compliance is widespread but not yet universal (OECD, forthcoming[11]). These results also show clear differences by firm size: all surveyed medium-sized firms (100%) report having a data privacy policy in place, compared to 86% of small firms and 75% of microenterprises, meaning that one in four microenterprises still operates without formal privacy measures. Data storage practices further highlight the uneven maturity of digital risk management: the two most common approaches are on-site storage (37%) and hybrid models combining cloud and on-site solutions (41%) (Figure 4.8). While the uptake of hybrid storage suggests that a share of surveyed SMEs is moving toward more secure and integrated systems, the continued reliance on solely on-site storage, and the fact that 23% of SMEs are unsure of how their data are stored, points to significant gaps in awareness, capability and trust in cloud solutions. Moreover, perceptions of difficulty are also mixed: 57% of surveyed SMEs report that data storage is challenging, 39% are neutral and only 3% say it is not a challenge at all (OECD, forthcoming[11]), indicating that for many firms, particularly smaller or newer ones, data management represents a significant obstacle to digital adoption.
Source: OECD (forthcoming[11]).
These patterns indicate that data management in Montenegro is evolving but still constrained by limited digital capacity and uneven understanding of cybersecurity risks (OECD, forthcoming[11]). This underscores the need for clearer guidance, stronger incentives and targeted support to promote more resilient and scalable data practices among SMEs.
Furthermore, Montenegro’s alignment with the EU data protection framework has advanced gradually but remains incomplete and uneven in implementation. The economy still operates under the Law on Personal Data Protection (2020), most recently amended in 2024 (Official Gazette No. 77/2024), which sets out core principles such as consent, transparency, purpose limitation and data security obligations for data controllers. However, despite these updates, the law has not yet achieved full alignment with the GDPR, as it continues to reflect the former Directive 95/46/EC in significant respects (European Commission, 2025[59]). A fully GDPR-aligned Personal Data Protection Law remains under preparation, with a draft having undergone public consultation in 2024. The new draft law aims to strengthen rules on cross-border data transfers, introduce clearer obligations for processors, enhance data-subject rights and modernise enforcement tools to match EU standards. Under the current framework, fines for non-compliance can reach EUR 20 000 for legal entities and EUR 2 000 for responsible persons, but enforcement remains limited in practice (Popović and Samardžija, 2025[60]).
The Agency for Personal Data Protection and Free Access to Information (AZLP) is the main authority responsible for enforcing Montenegro’s Law on Personal Data Protection, including supervising compliance, investigating breaches, issuing legislative opinions and providing guidance to data controllers. Under the law, all controllers, including SMEs, must notify the AZLP of any personal data breach that may pose a risk to individuals’ rights and freedoms, typically within 72 hours (Popović and Samardžija, 2025[60]). Although the AZLP’s independence is formally guaranteed, human, financial and IT capacities remain insufficient to effectively enforce the current legal framework or prepare for the forthcoming GDPR-aligned law (European Commission, 2024[61]). The AZLP has not yet been equipped to implement more advanced supervisory tools and Montenegro has ratified the original Council of Europe Convention 108 on data protection, but has not yet ratified the 2018 amending Protocol (Convention 108+), which modernises the Convention and strengthens alignment with EU data protection standards, further limiting harmonisation with contemporary EU norms. While the AZLP provides general guidelines, awareness workshops and opinions on data-processing practices, SME-specific templates, simplified compliance checklists and sector-tailored guidance are largely absent. As a result, many SMEs depend on ad hoc external consultants rather than consistent, official support adapted to their operational needs.
This points to a broader gap in the support ecosystem: dedicated programmes to help SMEs build secure and compliant data management systems remain largely absent. Some targeted but small-scale initiatives have nevertheless emerged. The AZLP is implementing a Twinning+ project to harmonise legislation with EU standards, deliver personal data protection training and work with private sector data controllers on internal compliance (AZLP, 2025[62]). In parallel, the former Council of Europe HELP course, adapted to Montenegro’s legal framework, offered accessible guidance on privacy and data protection obligations; though aimed at legal professionals, it also helped SMEs understand their responsibilities (COE, 2018[63]). Nevertheless, these initiatives appear to be time-bound and project-based, with limited evidence of their institutionalisation or continuation as permanent, SME-oriented support mechanisms.
Taken together, Montenegro’s efforts demonstrate steady but incomplete progress toward a coherent and modern data protection environment for SMEs. Legislative alignment with the GDPR is underway but not yet finalised and enforcement capacity remains modest relative to the growing complexity of data processing practices in public institutions and SMEs. Existing guidance and awareness measures remain general and insufficiently tailored to SMEs’ needs. Thus, the overall model still leans toward soft compliance focused on awareness and guidance rather than consistent enforcement, which limits deterrence and weakens incentives for firms to develop systematic data governance practices.
4.3.2. Strengthening SME cybersecurity resilience
Cyber incidents can have disproportionately severe consequences for smaller firms (OECD, 2021[1]), but weak cybersecurity can also function as a market barrier: SMEs with insufficient safeguards risk exclusion from procurement opportunities, international value chains and collaboration with larger firms that impose stricter digital security requirements (OECD, 2023[10]). Strengthening SME cybersecurity is thus not only about risk mitigation but also about safeguarding market access as digital ecosystems become more interconnected and regulated.
In the past years, Montenegro has faced a sharp rise in cybersecurity threats as digitalisation accelerates across public and private systems. The most serious incident to date occurred in August 2022, when a large-scale co-ordinated cyberattack crippled the government’s information network, disabling access to official websites and email systems across numerous institutions, including courts, the cadastral office, and the Revenue and Customs Administration (BIRN, 2024[64]). Electronic communication among public bodies and toward citizens and businesses, through more than 5 500 official email accounts, came to a standstill. It was later confirmed that 17 information systems across 10 institutions were encrypted, affecting around 150 computers. One of the most severely hit was the Social Welfare Information System, a critical platform responsible for processing and disbursing roughly 200 000 monthly payments, amounting to nearly EUR 200 million annually (BIRN, 2024[64]). The temporary shutdown of the Social Welfare Information System not only disrupted administrative operations but also endangered the livelihoods of thousands of beneficiaries, with spillover effects across interoperable government systems.
These events exposed foundational vulnerabilities in Montenegro’s cyber preparedness. The economy ranked 97th globally in the 2022 Cyber Security Index, reflecting gaps in incident response, infrastructure protection and institutional capacity (NCSI, 2022[65]). Larger incidents, including the ransomware attack on the Statistical Office in November 2024, underscore the persistence of these risks (MONSTAT, 2024[66]). In response, Montenegro, with support from the European Union, has launched a new Government Security Operations Centre in Podgorica, co-funded by the European Commission with EUR 4.4 million to strengthen real-time monitoring, threat detection and co-ordinated response across sectors (EEAS, 2024[67]; Maigre, 2025[68]). While the Government Security Operations Centre marks a significant institutional step forward, the combination of increasingly complex attacks and still-limited capabilities highlights the urgency for developing comprehensive, economy-wide cybersecurity measures, particularly for SMEs, which generally lack the technical expertise, financial resources and incident-management capacity needed to withstand cybersecurity shocks.
More precisely, the vulnerability of Montenegro’s cybersecurity environment is reflected in the private sector. The cybersecurity maturity of surveyed SMEs in Montenegro appears relatively limited: at 56%, more than half report challenges in data and cyber protection while only 4% do not consider them as an obstacle at all (OECD, forthcoming[11]). Older surveyed SMEs, those established before 2015, report substantially greater difficulty at 67%, compared with 42% of newer SMEs, likely reflecting the struggle to adapt legacy systems and practices to increasingly complex digital processes and data requirements. Actual cybersecurity practices show even more pronounced gaps: 29% of surveyed SMEs do not have any cybersecurity measures, a level significantly above the OECD sample average of 9% (Figure 4.9) (OECD, forthcoming[11]; Bianchini and Lasheras Sancho, 2025[2]). Among those SMEs that do take action, adoption is mostly limited to basic tools such as strong passwords, used by 50% of surveyed SMEs, and antivirus software, used by 39%. The low uptake of more advanced measures, including training or regular risk assessments, points to constraints in technical capacity, awareness and resource allocation, leaving many SMEs in Montenegro vulnerable to cyber risks and highlighting the need for more targeted support to strengthen enterprise-wide cybersecurity practices.
Source: OECD (forthcoming[11]).
Looking at cyber incidents, 15% of surveyed SMEs report having been hacked; this is closely in line with the OECD sample average of 16%. Almost half (48%) state they have not experienced a breach (OECD, forthcoming[11]; 2024[12]). Notably, however, 37% of surveyed SMEs are unsure whether a cyber incident has occurred, underscoring low awareness, weak monitoring practices, and limited detection and reporting capacity. These gaps suggest that many SMEs in Montenegro may underestimate cyber risks and lack the systems needed to identify threats early, reinforcing the need for affordable training, stronger guidance and more proactive cybersecurity support. Although SMEs are generally less digitally intensive than larger firms, the growing use of cloud services, AI tools and online platforms is expanding their vulnerability, especially in digitally intensive sectors or those handling sensitive data or high transaction volumes (OECD, 2021[1]).
At the institutional level, the government’s response is framed. At the policy level, the Cybersecurity Strategy 2022-2026 provides the core strategic framework for strengthening Montenegro’s cyber resilience. Its overarching goal is to ensure a sustainable system capable of detecting, mitigating and defending against increasingly complex cyber threats. The strategy sets seven operational objectives focused on improving incident-response mechanisms, enhancing prevention and risk management practices, protecting critical information infrastructure, and raising the digital resilience of the public and private sectors. It also places a strong emphasis on public awareness and education, calling for continuous training of public sector employees and economy-wide campaigns to promote cybersecurity hygiene among businesses and citizens. International co-operation is a key pillar: Montenegro aligns its cybersecurity posture with the North Atlantic Treaty Organization and the European Union, and has ratified the Budapest Convention on Cybercrime, signing its Second Additional Protocol in 2022 to deepen cross-border co-operation on electronic evidence (BIRN, 2024[64]). Together these measures signal Montenegro’s recognition that cyber risk is a strategic concern, even though the translation of these ambitions into SME-focused operational support remains limited.
Responsibility for cyber policy lies with the Ministry of Public Administration, which leads digital governance and oversees the implementation of Montenegro’s cybersecurity framework. The strategy envisages the establishment of a dedicated Cybersecurity Agency to centralise expertise, reduce professional staff outflow and provide more efficient incident management. The Cybersecurity Agency was established at end-2024, and the Rulebook on Internal Organisation and Systematisation, which defines the agency's internal structure, key responsibilities and operational mechanisms, was adopted at end-2025. The transfer of employees is expected to follow in line with the Law on Information Security, with the agency expected to become fully operational by June 2026. However, according to the government's 2024 implementation report, key operational steps such as filling at least 30% of planned positions and initiating procurement of technical equipment were not carried out in 2024 because the law entered into force at the end of the year. For incident response and monitoring, Montenegro’s computer emergency response team functions under this governance structure, supported by the broader ecosystem of public-private co‑operation. However, while the strategic and institutional framework for cybersecurity have improved, further efforts will be needed to translate these arrangements into accessible, practical support for SMEs, particularly in terms of compliance guidance, affordable protection measures and incident-response preparedness.
While Montenegro does not yet operate a fully dedicated funding scheme for SME cybersecurity, several initiatives provide indirect or partial support. A cybersecurity capacity-building centre supported by the government of France is expected to deliver training in areas such as cybercrime, cybersecurity governance and digital diplomacy, contributing to broader skills development and risk awareness that can indirectly benefit the business community, including SMEs (France Ministry for Europe and Foreign Affairs, 2022[69]). Awareness-raising efforts are also expanding. In 2023, the Science and Technology Park of Montenegro hosted the conference “Cyber Security in the Service of Business Improvement: Optimising Risk to Achieve Competitive Advantage”, bringing together experts, policymakers and firms to discuss practical approaches to managing cyber risks in business operations (Science and Technology Park of Montenegro, 2023[70]). In parallel, the government-run Digital Academy offers a course on cybersecurity – security culture and data protection – which contributes to general digital security awareness among civil servants and the wider public (Montenegro Ministry of Public Administration, 2025[71]). However, these initiatives remain largely informational and are not targeted specifically at SMEs, underscoring the gap between broad awareness-raising efforts and the structured, operational cybersecurity support required for smaller firms to build resilience.
The way forward
Develop practical SME data protection toolkits and introduce light-touch compliance support services. Montenegro should task the Agency for Personal Data Protection and Free Access to Information with producing SME-friendly, sector-specific data protection toolkits that translate legal requirements into clear operational steps. These toolkits should be risk-based – distinguishing between essential (“must-have”) obligations and additional (“good-to-have”) practices – and include plain language checklists, template privacy notices and examples tailored to common SME contexts such as tourism booking systems, outsourced accounting or payroll, and basic cloud-storage decisions. Building on the ongoing Twinning+ and Council of Europe HELP initiatives, the agency could introduce light advisory sessions or short online tutorials to help SMEs map their data flows and identify gaps. Distributing these materials through channels SMEs already use, including the Chamber of Commerce and the Single Access Point portal, would increase reach and support more consistent alignment with EU standards as Montenegro advances on its accession path.
Introduce a SME Cybersecurity Readiness Programme combining basic protection tools, training and diagnostics. To address the large share of SMEs in Montenegro using no cybersecurity measures, the government should establish an SME-focused programme delivered jointly by CIRT.ME, MontEDIH, chambers of commerce and ICT Cortex. The programme should include a standardised basic protection kit; hands-on introductory workshops on detecting phishing; managing access rights; safe data handling; and a simple self-assessment tool enabling SMEs to evaluate vulnerabilities in monitoring, incident response and data protection (Box 4.6). Basic onboarding support would allow participating firms to implement minimum safeguards during the training itself. This structured, practical approach would raise baseline cyber hygiene, reduce vulnerability among micro and small firms, and complement Montenegro’s cybersecurity strategy with a concrete SME-level mechanism.
The United States provides a relevant example of how governments can strengthen small and medium‑sized enterprise (SME) cybersecurity through targeted financial support combined with hands-on training and counselling. In 2022, the United States Small Business Administration launched the Cybersecurity for Small Business Pilot Program to help small firms improve their cyber resilience in response to rising digital threats.
The programme provides direct financial assistance to eligible small businesses to cover the costs of cybersecurity training, risk assessments and professional advisory services. Funding can be used for practical activities such as identifying vulnerabilities, improving password and access management practices, implementing basic cybersecurity tools and developing incident-response plans.
One of the initiative’s core features is its emphasis on hands-on counselling and guidance delivered through certified service providers and local support networks. SMEs receive tailored advice based on their size, sector and digital maturity, helping them move from reactive responses to cyber incidents toward more preventive and structured security management. The pilot also seeks to lower cost barriers by co-financing services that would otherwise be unaffordable for many small firms.
The US approach illustrates how voucher-based or small-grant schemes, combined with practical training and trusted advisory support, can significantly enhance SME cybersecurity readiness without imposing excessive compliance burdens.
Sources: OECD (2025[23]); United States Small Business Administration (2022[72]).
Beyond consolidation and safe scaling of basic digitalisation, the next challenge lies in whether SMEs are prepared to adopt advanced technologies in ways that are economically and environmentally sustainable, supporting long-term competitiveness without widening structural divides. Advanced digital technologies are reshaping how SMEs compete, innovate and raise productivity. Although adoption among SMEs has accelerated rapidly in recent years, nearly doubling for small firms and increasing strongly for medium‑sized enterprises between 2022 and 2024, largely driven by the spread of low-cost, easy-to-use generative AI tools (OECD, 2024[12]), structural constraints continue to limit broader uptake. Smaller firms face persistent barriers, including limited internal resources, skills gaps and weaker organisational capacity, which constrain their ability to integrate advanced technologies compared with larger sized enterprises (OECD, 2025[27]). OECD findings show that AI adoption is still significantly lower among SMEs than larger firms (OECD, 2025[73]). Firm-level evidence also confirms that AI use is strongly associated with complementary assets, such as digital skills, data capacities and organisational readiness, which are more prevalent among larger firms (Calvino and Fontanelli, 2023[74]). As a result, the diffusion of advanced digital technologies remains uneven across firm sizes, making supportive policy frameworks critical for broad‑based productivity gains and inclusive digital transformation.
As in other WBT economies, this challenge is particularly relevant in Montenegro given that limited adoption of advanced technologies risks widening performance gaps between digitally capable firms and those operating with basic tools, potentially constraining competitiveness and opportunities for diversification. This section examines how SMEs in Montenegro are adopting AI and emerging technologies and the extent to which policy instruments support sustainable and energy-efficient uptake, identifying progress made and remaining bottlenecks.
4.4.1. Encouraging SME adoption of artificial intelligence and emerging technologies
AI and other data-driven technologies are reshaping production, service delivery and decision making, creating new opportunities for efficiency and innovation across sectors (OECD, 2022[75]). Yet evidence shows that SMEs capture far fewer AI-related benefits than larger firms because they typically lack the data infrastructure, managerial know-how and strategic planning capacities needed to integrate AI into everyday operations (OECD, 2021[1]). As a result, early experimentation often remains superficial, limited to off-the-shelf applications, while the deeper organisational changes required for productivity gains rarely materialise without targeted public support. OECD findings further underline that, although AI adoption is rising rapidly, it remains relatively low overall, particularly in core business functions, highlighting the need for differentiated policy approaches that reflect SMEs’ varying levels of digital maturity and readiness (OECD, 2025[76]).
Montenegro does not yet have a dedicated AI strategy, and the policy approach to emerging technologies is still embedded indirectly across broader digital frameworks (Table 4.3). The Digital Transformation Strategy 2022-2026 identifies advanced technologies, including AI, big data analytics, cloud computing and automation, as critical components of the economy’s digital transition. However, its focus is primarily on ecosystem development and public sector digitalisation rather than on defining SME-specific pathways, funding instruments or advisory mechanisms to support businesses in experimenting with or adopting AI solutions. A first step towards a more structured approach was taken in late October 2025, when Montenegro held the first constitutive meeting of the Working Group responsible for preparing the Artificial Intelligence Strategy 2026-2030 and the accompanying Action Plan for 2026. This signalled a shift toward a more structured, dedicated policy framework for AI.
The Scientific and Research Strategy 2024-2028 more explicitly references AI, positioning AI and data‑driven innovation as strategic research priorities. The strategy aims to strengthen research infrastructure, foster university-industry collaboration and expand technology transfer mechanisms. While these measures may indirectly benefit SMEs, they are primarily oriented towards the research community. Thus, Montenegro’s current policy landscape acknowledges the importance of emerging technologies but remains broad and high-level, offering strategic direction without a clear framework for supporting SME uptake of AI or other advanced digital tools. Complementing this, the 2025 S3 Implementation Plan introduces a more tangible AI-related measure through the planned establishment of a regional accelerator for sustainability and AI (Measure 4.2.4), implemented by the Innovation Fund with a budget of EUR 1.5 million. The accelerator is expected to support up to 20 early-stage technology companies through a structured programme, helping position Montenegro as a regional innovation hub and attracting talent and investment. Additionally, the Implementation Plan ensures continuity between the current Smart Specialisation Strategy 2019-2024 and the forthcoming strategy for 2026-2031, the adoption of which is expected in the second quarter of 2026.
1. The Artificial Intelligence Strategy 2026-2030 is currently under preparation. In February 2026, a two-day workshop of the drafting Working Group was held in cooperation with UNDP, focusing on defining the strategic framework, priority areas and key measures for the responsible development and use of AI in Montenegro. Adoption is expected by end-2026.
Source: Information provided by the government of Montenegro during the assessment period (2025).
Beyond this targeted initiative, the overall financial support framework for AI remains underdeveloped. Montenegro does not yet operate dedicated financial instruments specifically for AI or emerging technologies, but SMEs can access several programmes that indirectly support advanced digital investment. The former Programme for Improving the Competitiveness of the Economy co-financed digital solutions that form the foundation for more advanced technologies (Western Balkans Info Hub, 2023[77]), while the EBRD’s Go Digital Programme now offers loans, grants and technical assistance to support digitalisation, automation and green technologies (EBRD, 2025[78]). The recently approved EUR 6 million Innovation Fund Support Plan 2025 further expands innovation financing and is expected to create additional pathways for SMEs experimenting with advanced digital tools (MonteBusiness, 2025[79]). The plan includes three major initiatives: 1) strengthening existing instruments; 2) launching a Regional Accelerator for Sustainability and AI; and 3) introducing a GovTech programme that fosters collaboration between start-ups and public institutions. Phase II of the GovTech Programme, with a budget of EUR 2 million and a public call for funding of innovative solutions planned for 2026, is expected to further expand support. Together these initiatives aim to create a more coherent and progressive support architecture, accompanying firms from early-stage innovation through to commercialisation, while improving opportunities for investment attraction and internationalisation in areas such as sustainable technologies and AI.
Simultaneously, several new initiatives are broadening SMEs’ access to emerging digital capabilities in Montenegro. The newly launched MontEDIH Hub now provides SMEs and public institutions with access to testing facilities, digital skills training and advisory services to support early adoption of advanced technologies. Sector-specific experimentation is also progressing: through the UNIDO-Slovenia Tourism 4.0 project, Montenegro is piloting virtual reality, augmented reality, 3D simulation and photogrammetry2 tools in tourism services, offering early examples of how immersive technologies can enhance service quality and customer experience (Box 4.7). These developments, together with ongoing support from the Science and Technology Park of Montenegro, mark incremental but important steps toward building a more enabling ecosystem for emerging technology uptake among SMEs.
Montenegro’s participation in the UNIDO-Slovenia Tourism 4.0 project marks one of Montenegro’s most concrete examples of sector-specific digital innovation. Through this initiative, small and medium-sized enterprises (SMEs) in the tourism sector and local stakeholders are piloting virtual reality, augmented reality, 3D simulation and photogrammetry tools to enhance visitor experiences, reinterpret cultural heritage and modernise service delivery. These technologies allow tourism operators, many of which are micro or family-run businesses, to experiment with low-carbon, digitally enriched products that can increase competitiveness without major infrastructure investments.
A key strength of Tourism 4.0 is its emphasis on hands-on experimentation, enabling SMEs to test cutting-edge tools they would otherwise be unlikely to access. The project also promotes collaboration between technology experts, tourism operators and heritage institutions, helping SMEs understand how emerging technologies can be embedded into real business models.
However, participation remains limited to selected pilots, and the initiative currently operates without a structured mechanism to scale lessons across the broader tourism ecosystem. Many SMEs still lack the skills, equipment or financial capacity to adopt immersive technologies independently, and the project’s reliance on donor funding raises questions about its long-term continuity.
Despite these limitations, Tourism 4.0 demonstrates the potential of targeted, sector-oriented initiatives to introduce SMEs to emerging technologies and stimulate early adoption in a key industry. It highlights how immersive tools can support digital transformation and sustainable, experience-based tourism development in Montenegro.
Source: UNIDO (2025[80]).
Alongside these ecosystem initiatives, the IT community in Montenegro has begun showcasing early AI applications with relevance for business operations. The launch of Oxiom FinBot, Montenegro’s first locally developed AI system, demonstrated how AI can improve accounting, administration and decision making by offering faster, more precise and more efficient workflows (VOP, 2025[81]). This project, presented by Business Universal Media in partnership with the Association of Managers of Montenegro and supported by the Ministry of Finance and the European Union, illustrates the potential for home-grown AI solutions to contribute to economic development if institutional support continues to deepen. The ecosystem is also increasingly shaped by community-driven actors such as the Montenegro AI Association, a member of ICT Cortex, which actively promotes AI literacy; organises meet-ups and workshops; and fosters collaboration between developers, businesses and academia. Broader awareness is also growing through ad hoc initiatives: the IT Spot 2025 conference, hosted by ICT Cortex, convened the economy’s tech and business communities for lectures, workshops and networking focused on digital transformation and emerging technologies (ADRIA, 2025[82]).
Meanwhile, the first report on AI readiness in Montenegro’s public administration, supported by the UNDP and published in 2025, signals increasing policy attention to AI, though its scope remains focused on the public sector rather than private sector adoption (UNDP, 2025[83]).
Nevertheless, albeit some of these efforts, the adoption of emerging technologies among surveyed SMEs in Montenegro remains limited, despite a comparatively higher uptake of AI than observed in the OECD sample (OECD, forthcoming[11]; 2024[12]) and also above the WBT regional average of 39%. About 46% of surveyed SMEs report using some form of AI, primarily generative AI tools for content creation and information generation, used by 32%, while the use of more sophisticated applications such as custom AI systems is very rare and no firms report using machine learning (Figure 4.10). Uptake appears to be shaped by firm age: at 54%, newer firms established after 2015 adopt AI at higher rates, compared to older firms which stand at 40% (OECD, forthcoming[11]). Beyond AI, however, the overall picture remains underwhelming: 89% of surveyed SMEs do not use any advanced technologies beyond basic digital tools, highlighting a substantial gap between interest in digitalisation and the practical implementation of more complex solutions.
Note: AI: artificial intelligence.
Source: OECD (forthcoming[11]).
Moreover, SMEs in Montenegro generally hold cautious perceptions of generative AI, with limited confidence in its business benefits. A majority of surveyed SMEs disagree that generative AI can reduce staffing needs, with 81% rejecting this idea and 74% stating that it does not create new revenue sources (OECD, forthcoming[11]). Views are more mixed regarding its contribution to innovation and efficiency in daily tasks, suggesting uncertainty about its practical value beyond basic experimentation. This contrasts with OECD sample findings, where among generative AI users, 91% report productivity gains, 76% improved innovation, 66% reduced staffing needs and 62% new revenue opportunities, indicating a more positive perception of business benefits in more digitally mature SMEs (Bianchini and Lasheras Sancho, 2025[2]). Additionally, surveyed SMEs in Montenegro appear comparatively unconcerned about the risks associated with generative AI: 82% disagree that it distributes harmful content, 71% do not believe it creates data privacy problems and an equal share disagree that it provides inaccurate information. Overall awareness and capacity are evenly split, with half of surveyed SMEs reporting that they understand how to use the technology and its associated risks while the other half do not (OECD, forthcoming[11]). Together these perceptions indicate that while SMEs in Montenegro are not strongly alarmed by AI-related risks, they also remain unconvinced of its strategic potential, limiting broader uptake and integration into business models.
As Montenegro invests in digital infrastructure and new technology hubs, the environmental footprint of emerging technologies is becoming a relevant concern for SME adoption. Energy intensity in Montenegro’s economy is roughly 2.5 times higher than the EU-27 average, reflecting heavy reliance on older infrastructure and less efficient systems (World Bank, 2024[84]). Additionally, Montenegro’s electricity production remains significantly fossil fuel dependent, with the Pljevlja coal-fired power plant alone contributing about 40% of electricity generation (Global Energy Monitor, 2025[85]), raising issues of carbon intensity for any substantial growth in digital compute loads. As SMEs increasingly engage with data‑intensive applications, such as AI modelling, cloud services or continuous processing, they may unknowingly face higher energy and resource costs, and thus higher environmental and economic risk if they do not adopt efficient digital practices.
4.4.2. Promoting a sustainable digital transformation
Digitalisation is increasingly intertwined with environmental performance, shaping how SMEs manage energy use, resources and regulatory compliance. While digital tools can significantly improve energy efficiency, monitoring and reporting they may also increase costs and emissions if adopted without sustainability considerations (OECD, 2024[4]; 2023[10]). For Montenegro’s SMEs, operating in an energy‑intensive economy and facing rising EU climate and environmental, social and governance requirements, the ability to combine digital and green upgrading is becoming a critical determinant of competitiveness. This makes the design of coherent, SME-oriented green-digital support particularly relevant as digital adoption accelerates.
At the policy level, government policy frameworks in Montenegro acknowledge the intersection of the digital and environmental transitions, but the integration remains nascent and modest in implementation. The Digital Transformation Strategy 2022-2026 identifies ICT sector development and infrastructure modernisation as strategic directions and aligns with the sustainable development agenda, noting that digital tools can support innovation, improved service delivery and green business models. However, it does not provide SME-specific funding or comprehensive guidance that explicitly link digital technology adoption with environmental performance, energy efficiency or circular economy practices. Thus, while the vision is present, practical support for SMEs to use digitalisation in service of environmental objectives remains limited.
Several programmes support the integration of digitalisation with environmental objectives, though most operate at the intersection of innovation and energy efficiency rather than as explicitly green-digital schemes. The Innovation and Energy Efficiency Programme 2024, a joint initiative of the Ministry of Economic Development, the Ministry of Education, Science and Innovation and the Ministry of Mining and Energy, implemented through the Innovation Fund, provides non-repayable support of EUR 50 000-200 000, covering up to 80% of project costs, for investments such as modern production equipment, smart monitoring systems and improved energy management solutions, many of which rely on digital optimisation tools (IFM, 2024[86]). In 2024, 14 companies from the manufacturing sector were contracted under the programme, receiving a total of approximately EUR 2.2 million for investments in production modernisation, smart and digital solutions, automation and staff capacity building. The programme is expected to continue with a new public call in 2026. While these instruments offer SMEs an important entry point into resource-efficient digital technologies, their scale remains modest relative to the broader needs of the SME sector. Complementary financial products exist, such as energy efficiency and sustainability loans offered through the Development Bank of Montenegro, but these focus on environmental upgrades and do not explicitly integrate digitalisation, despite digital tools often being embedded in such investments (Chamber of Commerce, 2024[87]; Development Bank of Montenegro, 2025[88]). Awareness-raising initiatives also play a role: in April 2024, the Chamber of Commerce of Montenegro, in co-operation with the Association of French-Montenegrin Companies and La French Tech Podgorica, organised the conference “The Impact of Innovative Technologies on Sustainable Development”, highlighting opportunities for using technology to support greener business practices (Chamber of Commerce, 2024[89]). However, such events mainly foster dialogue and networking rather than providing the operational support SMEs need to implement green-digital solutions.
A parallel development is Montenegro’s participation in a regional dialogue on digital tools for the green transition, signalling growing interest in linking sustainability with digital innovation. Discussions led by the Global Alliance for Market-Based Mechanisms for Decarbonisation and Sustainable Finance focus on developing a digital platform that automates reporting on energy consumption and emissions (Radanovic, 2025[90]). This tool aims to help SMEs more easily access green loans, grants and financial markets by simplifying environmental, social and governance compliance and decarbonisation reporting. The initiative positions Montenegro as one of the first WBT economies considering this approach. While still at an early stage, it represents a potentially important step toward enabling SMEs to meet EU-aligned sustainability standards through accessible, digitally supported reporting mechanisms. Complementary efforts are also emerging at the ecosystem level: EEN Montenegro has promoted a sustainability self-assessment tool developed under the Coastour project (Coastour, 2026[91]), which helps tourism SMEs evaluate their sustainability performance and prepare for more competitive and sustainable growth. In parallel, a circular economy self-assessment tool for businesses is being developed under the Circular Transition and Responsible Business Conduct project, implemented by the Ministry of Economic Development in partnership with UNDP (UNDP, 2026[92]), while a User Guide for the EU Eco-Management and Audit Scheme (EMAS) is being prepared under the GEF7 project (Biodiversity of Montenegro, 2024[93]). Together, these initiatives signal a gradual broadening of the digital-green support landscape for SMEs in Montenegro, though most remain at an early stage of development.
Moreover, donor-supported initiatives further complement these efforts. The EBRD’s Go Digital Programme offers blended finance, grants and technical assistance for projects that combine digital technologies with cleaner production, automation and reduced energy use (EBRD, 2025[78]). The UNIDO-Slovenia Tourism 4.0 project also introduces advanced digital tools while promoting more sustainable and resource-efficient tourism services (UNIDO, 2025[80]). Innovation infrastructure, including the Science and Technology Park of Montenegro and the newly launched MontEDIH, provides SMEs with access to digital tools, testing facilities and advisory support relevant for green-digital upgrading, although their sustainability-oriented offerings are still developing (MontEDIH, 2025[51]). Overall, while several mechanisms support investments at the nexus of digitalisation and environmental performance, only a few initiatives directly target SMEs with fully integrated green-digital transformation support.
At the SME level, engagement with environmentally sustainable digital practices remains at an early but promising stage. About 36% of surveyed SMEs report having a formal plan or strategy to reduce their environmental footprint using digital tools, with older firms – those established before 2015 – significantly more likely to have such plans at 53% compared with only 10% among newer firms (OECD, forthcoming[11]). On the other hand, at 56%, the majority of surveyed SMEs do not yet have a formal strategy but indicate that they are planning to develop one, suggesting strong latent interest and a clear need for guidance and support to translate intent into action (Figure 4.11). At 8%, however, only a small share of surveyed SMEs claims to be carbon-neutral, and notably no firm reported having no intention to adopt environmental measures in the future. Moreover, as in other WBT economies, SMEs offering green products or services are substantially more proactive, with 57% having environmental plans compared to only 9% among other firms, indicating that market orientation and business model play an important role in driving digital sustainability efforts (OECD, forthcoming[11]).
Source: OECD (forthcoming[11]).
Furthermore, awareness of digital technologies’ environmental impact among surveyed SMEs in Montenegro is relatively strong, with 80% reporting that they consider the environmental footprint of ICT services and equipment when making purchases (OECD, forthcoming[11]). However, practices related to end-of-life management of digital devices reveal important gaps: the most common approaches to disposing of unused ICT equipment are sending it to electronic waste collection, reported by 36% of surveyed SMEs, or simply keeping obsolete devices, reported by 32%. Meanwhile, 28% of surveyed SMEs are unsure about how such equipment is handled and 4% dispose of it through general waste, indicating limited understanding of appropriate e-waste practices. The high share of uncertainty underscores persistent challenges in greening ICT use and highlights the need for clearer guidance, stronger awareness campaigns and improved infrastructure for environmentally responsible disposal.
Similarly, monitoring of environmental performance through digital tools among SMEs in Montenegro presents a mixed but generally encouraging picture. While 20% of surveyed SMEs do not track any environmental indicators and 10% are unsure, the majority monitor at least one aspect of their environmental footprint (OECD, forthcoming[11]). The most commonly tracked areas are energy consumption at 50% and energy efficiency at 60%; carbon footprint measurement remains limited at 20%, reflecting early-stage engagement with more advanced sustainability metrics (Figure 4.12). These findings indicate that many surveyed SMEs in Montenegro are beginning to adopt greener practices, but environmental management remains partial and uneven, with significant room to develop more systematic and comprehensive monitoring frameworks.
Note: Tracking energy efficiency: e.g. reductions in energy waste, impact of energy-saving upgrades like LED lighting or efficient machinery; Tracking energy consumption: e.g. electricity and gas consumption by department or production line, peak vs. off-peak usage patterns, etc.
Source: OECD (forthcoming[11]).
Despite growing recognition of the synergies between digitalisation and environmental sustainability, Montenegro’s current policy and support landscape remains too fragmented to drive meaningful change among SMEs. Most initiatives approach green and digital priorities separately, resulting in limited incentives, weak guidance and insufficient capacity-building for firms to adopt environmentally responsible digital technologies. The absence of SME-specific instruments, whether financial, technical or advisory, means that only a narrow share of better-resourced or externally supported firms can engage in green‑digital upgrading. Consequently, progress is uneven and largely project-driven, with little evidence of systemic uptake across the SME base.
The way forward
Develop an integrated Artificial Intelligence Roadmap with a clear SME adoption pillar. Montenegro should prepare an AI and Digital Transformation Roadmap that complements the Digital Transformation Strategy 2022-2026 and the forthcoming AI Strategy 2026-2030, ensuring that AI, broader digitalisation and sustainability objectives are addressed within a single, coherent framework. The roadmap should explicitly incorporate an SME pillar, identifying priority sectors; outlining responsible AI guidelines; and providing practical tools such as vendor selection checklists, template data governance procedures and sector-specific implementation pathways (Box 4.8). It should also define a co-ordinated capacity-building agenda delivered jointly by MontEDIH, the Science and Technology Park of Montenegro, Tehnopolis, universities, and the Chamber of Commerce, covering AI literacy, data readiness and hands-on support. To reduce barriers for smaller firms, the roadmap should promote shared digital infrastructure, applied testbeds and demonstration environments, and workforce-oriented training formats that allow SMEs to experiment with AI solutions before full deployment. By integrating AI within broader digital and green priorities, the roadmap would provide SMEs with clarity, reduce fragmentation and anchor Montenegro's emerging technology agenda within an operational, EU-aligned framework.
Germany’s artificial intelligence (AI) strategy combines a strong emphasis on trustworthy, human‑centred AI with a clear focus on small and medium-sized enterprises (SMEs). From the launch of its AI Strategy in 2018, public funding had increased from EUR 3 billion to EUR 5 billion by 2025, with implementation co-ordinated across ministries to translate research excellence into practical SME adoption.
Germany’s approach centres on lowering technical and skills barriers for SMEs through shared infrastructure and applied support:
AI factories and compute access: As a host of the EuroHPC AI Factories, Germany provides SMEs with access to advanced computing and expertise. The Jupiter AI Factory, linked to Europe’s first exascale supercomputer, and HammerHAI at the University of Stuttgart’s High Performance Computing Center offer cloud-based access to AI tools, curated datasets, pre‑trained models and hybrid AI simulation workloads, enabling SMEs to experiment without heavy upfront investment.
AI service centres (since 2022): Four centres provide SMEs with advisory support and computing resources for applied AI use cases, particularly for firms lacking in-house AI capacity.
Targeted funding programmes: The KI4KMU programme supported SME-led AI innovation with grants covering up to 50% of project costs, while the “Generative AI for SMEs” programme (EUR 30 million, launched in 2025) targets concrete applications such as predictive maintenance, automated design and natural language interfaces.
Hands-on skills and adoption support: AI studios, funded by the Ministry of Labour, provide low-threshold, practical learning environments for employees, using fixed and mobile units to reach SMEs economy-wide, with a target of 2 600 firms by 2026. These efforts are reinforced by Mittelstand-Digital Innovation Hubs and the Cybersecurity for SMEs initiative.
Germany’s model focuses on access rather than ownership: shared computing, applied testbeds, co‑funded projects and worker-centred learning environments enable SMEs to adopt AI incrementally, manage risk and build internal capacities without large upfront investments while strengthening the country’s innovation ecosystem and industrial competitiveness.
Source: OECD (2025[73]).
Establish a unified AI and Emerging Technologies Adoption Facility for SMEs. Instead of separate funding channels for digitalisation, AI and green transition, Montenegro should create a single SME Emerging Technologies Facility that provides integrated financial support for investments in AI tools, automation, data analytics and energy-efficient digital solutions. This facility could be housed within the Innovation Fund or co-financed through EU or donor programmes, offering experimentation vouchers, co-financing for implementation and mandatory training tied to each investment. Eligibility should be linked to standardised diagnostics delivered through MontEDIH or a future Centre for Digital Transformation, ensuring SMEs receive tailored guidance before accessing finance. By consolidating funding streams into one predictable mechanism, Montenegro would improve efficiency, reduce administrative burdens and enable SMEs to progress from basic digitalisation toward deeper, productivity-enhancing technologies.
Introduce an SME “Green Digital Toolkit” and voucher scheme to support energy-efficient digital adoption. Montenegro should develop a practical Green Digital Toolkit that is fully integrated into the SME support system described above rather than operating as a separate environmental measure. The toolkit should include step-by-step guidance for adopting digital solutions that reduce resource use (Internet of Things energy monitoring, cloud-based resource tracking, digital waste management tools, paperless workflows), along with templates for tracking energy, water and waste and practical instructions for responsible ICT procurement and e-waste disposal (Box 4.9). Small green-digital vouchers, delivered through the same Emerging Technologies Facility, should help SMEs finance initial adoption and pilot projects. Embedding this environmental component within a unified digital/AI support pathway ensures coherence with Montenegro’s green transition goals and EU sustainability requirements while avoiding the creation of fragmented, parallel programmes.
Ireland has integrated green and digital priorities within its small and medium-sized enterprise (SME) support framework, notably through the Harnessing Digital – Digital Ireland Framework and the SME Strategy for a Sustainable and Digital Europe. A central instrument is the Climate Toolkit 4 Business, a government-led initiative designed to help SMEs begin their transition toward lower carbon and more resource-efficient operations.
The toolkit provides practical, step-by-step support rather than complex regulatory guidance, making it accessible for smaller firms with limited internal capacity. Key features include:
A carbon footprint calculator, allowing SMEs to estimate emissions based on energy use, travel and waste data.
Tailored action plans, offering concrete recommendations to improve energy efficiency, reduce resource consumption and adopt sustainable practices.
Integrated financial guidance, linking firms to relevant grants, energy audit schemes and funding for low-carbon technologies.
Practical sustainability roadmaps, helping SMEs identify cost-saving opportunities, improve resource efficiency and respond to growing demand for environmentally responsible products and services.
Ireland’s approach shows how a simple, user-friendly toolkit, combined with access to financing, can help SMEs translate sustainability goals into concrete actions while aligning digital adoption with environmental objectives.
Source: National Enterprise Hub (2026[94]).
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← 1. This is due to intangible assets, such as data, software, organisational know-how and brand value, being characterised by scalability, sunk costs, synergies and non-rivalry – features that tend to reinforce the productivity advantages of leading firms (Haskel, J; Westlake, S;, 2018[95]).
← 2. Virtual reality refers to fully immersive digital environments accessed through headsets, while augmented reality superimposes digital information onto real-world surroundings. 3D simulation involves digital modelling of objects or processes for training or design, and photogrammetry creates 3D models from multiple photographs for accurate visualisation and reconstruction purposes.