A system dynamics approach to SME resilience under the economic stress of Covid-19 pandemic. A conceptual model and empirical analysis

Abstract

Covid-19 pandemic reshapes our knowledge and reconceptualises our belief in Small and Medium Enterprises (SMEs) as more flexible and resilient than bigger organisations under difficult socioeconomic conditions. The critical issue raised during the Covid-19 pandemic suggests that SMEs have confronted great challenges, which are not just concerned about SME survival, but also the paucity of strategic approach for firm revival and resilience. In dealing with the challenges, and based on a set of investigations, firstly, we provide a critically insightful review of the UK government Covid-19 responses based on four themes of UK government interventions. Secondly, we offer contextual evidence based on our analysis of SME performance, in relation to the government responding schemes and how that affects SME operations in the UK. Thirdly, we propose a framework with tentative strategic solutions based on both our theoretical reviews and the empirical analysis for how SMEs revive and become resilient.