Unravelling the impact of COVID-19 on SMEs: What can academic research tell us?

COVID-19 outbreak of 2020 has changed the stance on how small and large firms do business. Importantly, the pandemic is likely to have a greater influence on the survival and sustainability of small and medium enterprises (SMEs) worldwide. The objective of this paper is to present a comprehensive overview of the state of academic research currently available on COVID-19 and its impacts on SMEs. Specifically, this paper presents a systematic review of academic literature using the Web of Science database and includes articles published from all years till June 1, 2021. The review findings reveal a total of 37 studies published on SMEs and COVID-19 from different SME sectors and geographic regions emerge in 2020-21. There were 13 articles published in 2020 and 24 articles (nearly double) published by 1 June 2021. This clearly illustrates a growing urgency in the publications trend. Thematic and bibliographic analysis of the data reveals research emerging around two broad themes or clusters. The first cluster includes papers around the perceived impact of the pandemic on SMEs including impact on owners, employees and economy. Review results suggest that SMEs started to experience the negative impacts of the pandemic within few weeks of the onset itself like disrupted supply chains, reduced market demand, workforce disruption due to employees unable to report to work and even firm closures. SMEs were reported as financially fragile in a pandemic situation with increased likelihood of firm closures as a majority of SMEs are likely to run out of cash. There was a greater negative impact indicated for women business owners and for people from ethnic minorities. The second cluster included papers around the risk that SMEs are facing, crisis management, resilience and survival strategies for COVID-19. Some studies suggest marketing and financial strategies for survival and resilience. For example, having ‘precautionary savings’ especially in the case of SMEs for black swan events including pandemics can be potential risk management strategy. Some studies report positive influence of technology adoption in dealing with the pandemic crises. For example, a study from Indonesia reported the use of social media for marketing their products and connecting with customers during the pandemic lock down. Studies from Poland and China explored financial strategies like moderate to highly conservative trade credits that some SMEs adopted during COVID-19. A study reported having an international market base like ‘being global’ helped in firm survival and performance. Many studies emphasize the role of government support as an enabler in dealing with turbulent business environments. In addition, there were individual studies around other topics like business models of SMEs, working from home, sustainable social responsibility, entrepreneurial orientation and others in the context of SMEs. Overall, findings of the paper offer important implications for research, policy and practice by illustrating an overview of the state of research on this topical area. Notably, there is a great need for further research in this area.