Development strategy of SMEs in the new normal era of coronavirus disease 2019 (COVID-19): A literature review

Abstract

The global pandemic known as COVID-19 has spread throughout the world and poses a threat to all countries, including the economic crisis in Indonesia. The government of Indonesia directly regulates policy to all companies or business units to prevent the spread of COVID-19 in their business environment. Small and Medium Enterprises (SME) also has been affected by COVID-19. They must decrease operational hours, employee shift systems, and implement health protocols according to standards in prevention. This study aims to review the current impact from the perspectives of SMEs owners and also strategy suggestions during the COVID-19 outbreak. The studies focus on the impact of large-scale social restrictions on SMEs economic activities and outline the recommendations for improving current responses to developing business strategy. This current study conducted a literature review of publicly available information to recommends valuable insights to the business survival and recovery system of SMEs business during a COVID-19 outbreak. The results show financial management, distribution of supply chain, digital transformation, network relationship, government policy, & orientation & information as a business strategy. This study will ideally contribute towards the creation of success for SMEs to thrive during and after a crisis.

Redefining Transformation Drivers in SMEs toward Business Performance with Covid-19 Situation in Indonesia

“…Another view on business environment change in SME discussed by García-Villagrán (2021) regarding survival strategy in the supply chain that SME should focus on since the availability of materials and goods, delivery time, and inventory management is changed. Challenges faced by SMEs in developing countries can lead to business success or failure (Pratama et al, 2021). The negative impact of business changes affected by the pandemic can be avoided through strategic development design.…”

“…The Indonesian government issued the large-scale social restriction policy in response Covid-19 outbreak by minimizing people's outside activities, prohibiting social gatherings, and requiring staying at home (Oktora et al, 2020). The policy of social restriction impacts people's physical and psychological effects and economic consequences, particularly on micro-, small-, and medium-sized enterprises (MSMEs, Pratama et al, 2021;Rodrigues et al, 2021).…”

“…According to Indonesia Statistics Bureau (BPS, 2020), 84% of SMEs in Indonesia experience revenue decrease because of the change in market demand and supply impacted by the Covid-19 pandemic. The condition may be related to the impact of Covid-19, which has resulted in consumer behavior change, knowledge gap in managerial and technology caused digitalization, operational hours decrease, and delivery delay in the supply chain (García-villagrán et al, 2020;Klein & Todesco, 2021;Pratama et al, 2021). Besides, SME needs to enrich their management, strategic planning, and innovation knowledge to formulate their new business model to adapt to new market demand to survive (Caballero-Morales, 2021).…”

“…Also, the drivers related to the study from Winarsih et al (2021) regarding transformation that taken to result in sustainability in SMEs such as technology (digital marketing utilization to promote a product), organization (maintain cash flow and monitoring business transaction), financial (re-budgeting), and supply chain (inventory management). Complemented prior studies, research by Pratama et al (2021) discuss strategic development in SMEs. The paper presented a literature review on how Indonesian SMEs respond to business survival and recovery during the Covid-19 outbreak.…”

“…However, as the main literature in transformation drivers, a study by Gregurec et al (2021) has not identified the change of distribution on supply chain, network relationship, and government policy, which was proposed by Fath et al (2021); Garcíavillagrán et al (2020); Nurunnabi (2020); Pratama et al (2021); Winarsih et al (2021) as the driver factors SMEs should focus in coping the pandemic crisis. In addition, apart from driver factors in SMEs' transformation which they recommend important for business continuity, these studies have not determined whether these driving factors affect business performance economically and non-economically.…”