Determinants of Business Resilience Framework for Small Businesses: Moderating Effects of Financial Literacy

Abstract

Covid-19 has significantly disrupted and devastated the world's economy. Data from Malaysia shows that more than 30,000 companies have closed their operations since the movement control order (MCO) implementation due to Covid-19 that began in March 2020. However, the effects on small businesses are especially severe, mainly due to the higher vulnerability levels and lower resilience related to their size. This study provides an empirical analysis of the key drivers leading to the business resilience of small businesses in Malaysia that have survived the Covid-19 pandemic. Data from 215 small businesses were collected physically and online across Malaysia from May 2021 to December 2021. Structural Equation Modeling (SEM) using Smart PLS 3.2.4 was used to analyse the data, whereby nine hypotheses were tested in the current study. The results showed that technology acceptance, government support, and financial literacy significantly influence business resilience among small businesses in Malaysia. The results also indicated that financial literacy moderates the relationship between compliance cost and government support with business resilience. Thus, the findings revealed three important determinants of small businesses' resilience framework, namely technology acceptance, government support, and financial literacy. The study recommends a dynamic, resilient framework to adopt in the "new normal" situation for the successful navigation of small businesses in the future. Moreover, the study provides insight into the key drivers for business resilience factors that small businesses must be concerned with, as the framework can be used to deal with not only the global pandemic but also uncertain conditions.

The Ability to Innovate and Adaptability to Create New Business Models Helps Businesses Recover Faster: A Case Study of Smes in Vietnam.

“…Still, it is now used in various other scientific disciplines, including engineering, sociology, disaster management, and business administration (Hadjielias et al, 2022). Resilience is a phrase that appears more frequently in business and startup literature and is based on the same meaning (Hamid et al, 2023). Business resilience is the ability of a company to adjust to changes in the environment while continuing to operate, keeping human resources, assets, and the brand's value.…”

“…Financial management is the process of planning, organizing, directing, and controlling an organization's financial resources to achieve its financial goals efficiently and effectively. It involves making informed financial decisions, analyzing financial data, and implementing strategies to maximize the organization's value while minimizing financial risk (Hamid et al, 2023;Kotsios, 2023).…”

“…Financial management includes identifying and controlling different financial risks like market, credit, and liquidity. Businesses that employ risk management techniques can better endure economic downturns and lessen the effect of financial shocks (Hamid et al, 2023). This can entail modernizing the infrastructure, making technological investments to boost operational effectiveness, or diversifying the sources of income to lessen dependency on certain markets.…”

“…Businesses that integrated digital technology into their operations before the pandemic are better equipped to transition to working 1 Greenwich Department, FPT University, Hanoi, Vietnam, hantt194@fe.edu.vn 2 Greenwich Department, FPT University, Hanoi, Vietnam, ThaoNTPGBH210439@fpt.edu.vn 3 Greenwich Department, FPT University, Hanoi, Vietnam, landth16@fe.edu.vn 4 Greenwich Department, FPT University, Hanoi, Vietnam, hann@fe.edu.vn *Corresponding author: Ha Thi Thu Nguyen, Email: hantt194@fe.edu.vn Copyright©JES2024on-line:journal.esrgroups.org remotely, selling online, and interacting with virtual customers during the lockdown and limited (Tung, 2022;He et al, 2023; M. K. Kim et al, 2018). Effective financial planning, prudent cost management, and access to finance have been instrumental in helping SMEs weather the economic downturn caused by the pandemic (Hamid et al, 2023).…”

Determining the success factors of micro-businesses in the post-pandemic era: Empirical evidence from Asnaf entrepreneurship in Malaysia

“…In line with Industry 4.0 and to remain competitive in business, the enhancement of technology in business is necessary, and a radical shift from traditional to new online business models is crucial [1,3]. Digital transformation is the new way to change the business for a competitive advantage [13]. In the context of SMEs, digital transformation is concerned with the digitalization of the whole organization and business processes [3].…”