From Code to Culture: The Role of AI in Shaping Organizational Identity in Software Development SMEs in Southeast Europe

Abstract

This study explores how Artificial Intelligence (AI) influences and transforms organizational culture and climate within small and medium-sized software enterprises (SMEs) in Southeastern Europe. The study addresses a critical gap in the existing literature, which has predominantly focused on technical and operational outcomes of AI adoption, while under examining its cultural, psychological, and human implications. By investigating how AI affects leadership, communication, employee empowerment, and organizational identity, this research provides new insights into the intersection between technology and culture in a region characterized by post-transition dynamics, hybrid work models, and limited institutional support for innovation.
To capture both measurable patterns and subjective experiences, a parallel mixed-methods design was employed. The quantitative phase involved a customized survey instrument integrating elements from the Competing Values Framework and Grid-Group Cultural Theory, distributed among employees and managers across nine Southeast European countries. Exploratory factor analysis and reliability testing (Cronbach’s α) confirmed two primary dimensions of cultural transformation, organizational and personal benefits of AI use. The qualitative phase consisted of fourteen semi-structured interviews with professionals in software SMEs, conducted across different roles and national contexts, to deepen the interpretation of quantitative findings through thematic analysis following (Braun & Clarke, 2006a).
The findings indicate that AI acts as both an enabler and a disruptor of organizational culture. On one hand, AI enhances transparency, efficiency, and knowledge sharing; on the other, it introduces new challenges related to trust, psychological safety, and leadership credibility. Leaders often face tension between technological optimization and human connection, while employees perceive growing ambiguity in their roles and career development paths. The regional context of Southeastern Europe further amplifies this duality: high adaptability and informal collaboration coexist with structural instability and uneven digital maturity.
The study contributes to the theoretical discourse by integrating AI influence as a determinant of cultural change within existing organizational culture models. It extends the Competing Values Framework by introducing AI as a contextual moderator of cultural dynamics, affecting both deep-seated assumptions (culture) and situational perceptions (climate). Furthermore, it proposes a context-aware framework for assessing AI cultural readiness, emphasizing psychological safety, communication clarity, and value alignment as critical mediators of sustainable AI adoption.
Practically, the study results offer guidance for SME leaders, consultants, and policymakers seeking to align technological transformation with human-centric organizational development. The research highlights the importance of leadership empathy, ethical AI integration, and continuous learning as strategic levers for cultural resilience.
Overall, this study advances understanding of how intelligent technologies reshape the fabric of organizational life, revealing that the success of AI adoption depends not only on infrastructure or skills, but on the culture that surrounds and sustains them.