Masters of disasters? Challenges and opportunities for SMEs in times of crisis

Abstract

Small and medium-sized enterprises (SMEs) are the backbone of every economy. So, when an external crisis jeopardizes markets, such as the recent COVID-19 outbreak, SMEs are hit with great force. Their so-called liability of smallness, a lack of resources that would shield them from outside shocks, worsens the situation. This manuscript conducts a literature study on 69 manuscripts that studied SMEs in previous crises and proposes ways to overcome economic downturns in the areas of finance, strategy and the institutional environment. The paper finds a "strategy/funding chicken-and-egg-problem" and proposes an effectual world view when dealing with situations of great uncertainty.

Facing post COVID-19 era, what is really important for Ecuadorian SMEs?

“…For that reason, SMEs need to dealing with crisis before, during, and after they have occurred, and crisis management provide with the skills and techniques required to identify, assess, understand, and cope with a crisis situation, especially from the moment it first occurs. 2,21,5…”

“…Even if they are prepared, if suddenly they have to shut doors and their revenue stream goes to zero, or just to a fraction of what it used to be, they will run out of money in no time. 2,5,13 And run out of cash means that SMEs is dead. This is a real crisis that is in the hands of everyone: governments, academics, researchers and the entrepreneurs themselves.…”

“…2,14 The smaller the organization, the closer the decision-makers are to their customers and other stakeholders facilitating helpful market information to a better focus. 2,12,14 In the wake of COVID-19, Ecuadorian government have issued a mandatory lockdown. SMEs, a critical part of the Ecuador economy, are scrambling to stay afloat, but also are under extreme duress feeling the economic strain amid COVID-19; a lot of them are folding up.…”

The coronavirus (COVID-19) pandemic: challenges among Iranian startups

“…Thus, understanding their challenges has become mandatory for these innovative entities (Etemad 2020). Nevertheless, just a few recent studies have already published in this domain, most of which were investigating the challenges in the world's top economies, such as Germany (e.g., see, Maritz et al 2020;Kuckertz et al 2020), and a few studies have previously investigated the challenges faced by startups in emerging economies like Iran (Eggers 2020). Based on the mentioned above issues, we categorized these challenges into two groups: (i) general challenges, and (ii) crisis-related challenges.…”

The COVID-19 Effect in Mexican SMEs

“…SMEs have characteristics that support them when there is a crisis. Being small organizations helps them to be flexible when new opportunities arise [8]. COVID-19 is a highly infectious and lethal virus; people's sense of insecurity is significant and may include feelings of severe panic.…”