Weathering the storm: what successful SMEs are doing to beat the pandemic

Abstract

Purpose

The purpose of this paper is to identify the configurations of working capital and customer and supplier diversification employed by successful small and medium-sized enterprises (SMEs) before and during the COVID-19 pandemic.

Design/methodology/approach

This study employed a combinatory methodology to analyze how 124 Brazilian SMEs configured – before and during the pandemic – the size of their working capital and their levels of dependency on clients and suppliers.

Findings

High levels of working capital and supplier diversification were found to be key to SMEs' ability to thrive before and during the pandemic. However, while SMEs that were growing prior to the pandemic depended on a few major customers, firms flourishing during this time have divided their sales among many clients.

Research limitations/implications

This study focuses on what configurations SMEs have adopted during the crisis. Qualitative studies are needed to identify how SMEs reconfigure themselves in the face of a major crisis.

Practical implications

The results of this study indicate that SMEs hit by the pandemic should avoid retrenchment strategies. They might have better chances of success if they embrace their vulnerability and take risks to foster growth.

Social implications

The results of the study can help SMEs respond to the economic crisis caused by COVID-19, which has already caused the failure of millions of businesses worldwide.

Originality/value

This is the first empirical investigation of SMEs that are weathering the pandemic, and in this study, the authors have analyzed the three aspects of their operations, which have been struck the hardest by the crisis.

Citation

Marconatto, D.A.B., Teixeira, E.G., Peixoto, G.A. and Faccin, K. (2022), "Weathering the storm: what successful SMEs are doing to beat the pandemic", Management Decision, Vol. 60 No. 5, pp. 1369-1386. https://doi.org/10.1108/MD-11-2020-1507