Extended reality (XR) has the potential to be a game‐changer for SMEs. It can enhance competitiveness while supporting sustainable development and labour safety. The outbreak of COVID‐19 has further forced businesses to reflect on how technology might spur creativity and how innovation can affect their future survival. XR can facilitate product development, training, marketing and problem‐solving. We argue that policy should focus on increasing XR awareness in SMEs. Diffusion of XR is also contingent on R&D teams’ ability to exploit cultural assets to allow SMEs to take full advantage of their potential.