SMEs’ Innovativeness and Technology Adoption as Downsizing Strategies during COVID-19: The Moderating Role of Financial Sustainability in the Tourism Industry Using Structural Equation Modelling

Abstract

This study aims to identify why firms, specifically SMEs in the hospitality and tourism industry, downsized during the recent global economic distress caused by COVID-19. This study applied a quantitative methodology by distributing online questionnaires to SME owners and managers who operate in the tourism industry of the UAE. We analysed the collected data using structural equation modelling. A total of 320 questionnaires were analysed using the PLS-SEM analytic tool. Our findings revealed that the investigated constructs, namely financial sustainability, SMEs’ innovativeness, and technology adoption predict the implementation of downsizing strategies during economic distress. However, financial sustainability failed to expedite SMEs’ innovativeness and technology adoption during this period. Therefore, the findings of this study show the impacts of financial strength, technology adoption, and innovativeness on implementing downsizing strategies, and provide suggested recommendations in light of the observed results.