Assessing the impact of the COVID-19 pandemic on small and medium-sized enterprises performance

Abstract

This study has several purposes. First, identify indicators contributing to the performance of small and medium-sized enterprises (SMEs) that could be affected by the COVID-19. Second, formulate the framework to measure the level of vulnerability of SMEs. Third, assign the SMEs into several clusters. Data used in this research were collected through web-based closed questionnaires and short telephone interviews. This study used Content Validity Analysis, Analytical Hierarchy Process, Multi-Attribute Value Theory approach, K-means Clustering Analysis, and Discriminant Analysis for data processing. The data processing results indicated that the 44 valid indicators belonging to ten dimensions could be used to measure the level of vulnerability of SMEs whose performance was affected by the COVID-19 pandemic. The surveyed SMEs can be segmented into four clusters, namely resilient cluster, low vulnerability cluster, moderate vulnerability cluster, and high vulnerability cluster. Most of the surveyed SMEs belong to the moderate and high vulnerability clusters. The differences between the clusters were based on 16 indicators. These indicators include levels of supplier disruption and the SMEs’ market in which the SMEs operate or expect to operate. The results of this study help quantify how the pandemic could generate different levels of impact on each indicator that could depend on the business and what policymakers should consider as they contemplate the scale of the required intervention. Overall, this study contributes to the literature on the effects of the pandemic on SMEs by synthesizing the findings of studies on the impact of COVID-19 on SMEs. The study also determined the framework and the equation for measuring the level of SME vulnerability caused by the pandemic.