Thriving in Turmoil: Unraveling the Interplay of Resources, Resilience, and Performance among SMEs in Times of Economic Vulnerability

Abstract

This research endeavours to contribute to the existing body of scholarly work by elucidating the pivotal role of social networks in bolstering the resilience of Small and Medium-sized Enterprises (SMEs) amid the propagation of COVID-19. Despite the considerable research on the interplay between networks and firms' performance, extant literature still needs to comprehensively elucidate how social networks influence organizational performance, particularly within the context of the personal dis-contact phase observed in Pakistan. Moreover, the crucial nexus between resilience, social networks, and firm performance still needs to be adequately explored. Consequently, this paper seeks to address these gaps by introducing a novel conceptual framework termed the Resource-Resilience-Performance framework. This framework aims to delineate the intricate mechanisms through which social networks, as a valuable resource, facilitate the adaptive capabilities of SMEs, thereby fostering resilience and ultimately enhancing sustainability amidst crises. Employing a deductive approach, this study adopts a survey strategy to gather data from 410 SME owner-managers, focusing on the third phase of the COVID-19 pandemic in Pakistan. Data collection is executed through an adaptive questionnaire. Subsequently, an analysis is conducted using SmartPLS with the Bootstrapping approach. The findings reveal that formal and informal social ties are crucial in providing SME owners with valuable information from their social networks. These networks serve as a support mechanism, aiding managers in making informed decisions amidst adversities and granting them a competitive edge over their counterparts. Given the unavailability of a comprehensive and up-to-date list of SMEs in Pakistan during the pandemic, the snowball sampling technique was utilized. Consequently, the generalizability of the findings may be questioned. However, there remains potential to establish a directory of SMEs and employ probability sampling techniques in future studies. This research contributes to social network theory by enriching our understanding of its application during the pandemic. Furthermore, it empirically demonstrates the instrumental role of social networks in providing support during crises, offering guidance to managers on cultivating robust social ties as a proactive strategy for navigating future uncertainties. Ultimately, this study underscores the significance of social capital as an immunizing factor for SMEs operating in developing countries, particularly within the context of Pakistan.