Mitigating the Impact of COVID-19 on SMEs Through Government Policy Intervention: A Systematic Literature Review and Bibliometric Analysis

Abstract

This paper aims to investigate government policy intervention for mitigating the impacts of COVID-19 on small and medium enterprises (SMEs). This paper has utilized a methodology comprising of bibliometrics, network, and content analyses on 831 documents extracted from the Scopus database to explore the extant literature on this domain. A systematic literature review has also been performed to propose the government policy intervention during the crisis framework. The analysis and review discerned that government policy interventions yielding the greatest success display a pronounced industry focus, regardless of a country’s economic context. Notably efficacious interventions encompass government support for market access and promotion, regulatory flexibility, wage subsidies, supply chain bolstering, sustainable long-term support, training and development, digitization aid, and industry-specific access to credit and capital. Collaborative efforts between governments and financial institutions also proved instrumental in expediting SME recovery. Furthermore, initiatives like knowledge-sharing, capacity-building, digitalization of SMEs, and crisis management training played pivotal roles in ensuring SME survival during the COVID-19 pandemic. This paper has also provided guidelines for future research direction.

Introduction

Small and Medium Enterprises (SMEs), being one of the central focuses of governments around the world [1, 2], mainly due to their positive impact on employment creation [3], innovation [4], regional development [5], Gross Domestic Product (GDP) [6], and overall economic sustainability [7] operate in a large competitive and global environment, which make them prone to contingencies as well as externalities [8]. According to Najib et al. [2], Chen et al. [9] Government support and interventions have already been proven as an effective means for shaping the environment for the SMEs that nurture and foster the growth and contribution of this particular type of business. Nevertheless, unprecedented situations, such as the COVID-19 pandemic, can evidently result in the collapse of different business sectors and industries, including SMEs [10,11,12], if not the whole economy. The pandemic substantiates that crisis situations need unique prevention and recovery mechanisms from the respective governments, without which the severity of the impact can be increased and recovery, prolonged [1, 13].

According to Kowo et al. [5], Mujahid, Begam [6], despite recent breakthroughs, such as Artificial Intelligence and Robotics, in the arena of industrial technologies and production, as well as conglomeration of large business corporations, the SMEs remained the lifeblood of all sorts of economies (e.g., developed and emerging). This significant contribution to the economies justifies the growing number of scholarly publications on SMEs and other closely associated domains. Notwithstanding the presence of a large number of scientific evidence and recommendations, the hardship of these businesses is apparent worldwide without regard to any specific context and eventual impact [14]. Thus, attributing to this contribution and the multiplicity of the SMEs’ success determinants, further scholarly endeavors for understanding SMEs and their relationship dynamics in the environments in which they operate is tenable.

When unprecedented crisis events are considered, the feebleness of government policies and existing economic mechanisms, has been proven by recent studies focused on the COVID-19 pandemic, suggesting a significant research gap in the area of crisis management for businesses [9, 15]. The same gap exists when only the SMEs are contemplated [16]. Again, despite the severe impact of the pandemic on the SMEs of smaller economies, very few studies focused on the role of government policies on their survival and recovery [17]. Though various aspects, such as the impact of government support, subsidies, and digitalization on SMEs, have been studied [18], clearly insignificant and insufficient research attention was provided on SMEs management during the crisis phenomenon Chundakkadan, Sasidharan [1] that led to thousands of closures and bankruptcies globally [12, 14, 19, 20]. Deterioratingly, “the role of governments during the unprecedented crisis situations for the businesses” rarely attracted scholarly attention [1, 21], forcing governments around the world to experiment with different strategies for mitigating the impacts of and convalescing from the COVID-19 pandemic, ultimately prolonging the adversities of the SMEs and the economy in general [2, 22]. As the effect of the pandemic started to fade out slowly, the scientific community now has evidence regarding the effectiveness of different government interventions taken during the pandemic for SMEs [9, 13, 16], which allowed and motivated the researchers to ask the following question. What is the most effective systematic way for governments to facilitate or sustain SMEs’ existence, operation, and resilience during a pandemic-like crisis? The researchers of the present study endeavored to answer this question, which holds the potential to minimize, if not prevent, the negative effect of events like the COVID-19 pandemic for SMEs. by utilizing Systematic Literature Review (SLR) and Bibliometric analysis techniques.

The objective of the present study includes identifying key themes and patterns in the publications made on government policy interventions for SMEs during and after the COVID-19 pandemic, targeted at SMEs in-crisis survival and recovery, to develop a comprehensive framework or guidelines to enrich the governmental readiness in managing future pandemic-like crisis. Therefore, the contribution of this research is manifold. First, this research, by revealing the patterns of government policies taken across the world amidst the pandemic, will enable more informed policy-making, targeted interventions, and proactive national- and international-level strategies. Developing economies and least-developed countries will be able to design responses for future pandemic crises that may reduce the vulnerability of their SME sectors. Second, this enhanced understanding of the government policy dynamics in crisis management will expand the knowledge horizon and stimulate future research. Again, as very few scientific studies have been conducted in this area, this research will act as a foundation, with compiled evidence from diverse environments, for comprehending SMEs’ performance and sustainability antecedents during crisis situations. Third, the proposed framework will increase governments’ readiness and expedite the recovery of the SMEs. Lastly, this cross-disciplinary research will provide valuable insight into different domains, including economics, policy, and crisis management, which will again enhance global economic stability through SMEs’ strives. However, a limited number of keywords have been utilized to gather only the research articles published in the area, indicating a major limitation of this research. Future scholarly works should focus on a wider selection of documents, as well as keywords, to further expand the insight accumulated by the researchers of the present study.

The structure of this paper is as follows. Succeeding this introductory chapter, the second chapter presents the literature review conducted for this research. With the third chapter transpiring the adopted methodologies, the researchers presented the findings in chapter four. In chapter five, the findings have been discussed in light of existing literature. The sixth chapter summarized the whole research. This paper concluded with a brief guideline or indication of the possible implications of the findings offered by the present study.

Literature review

The unprecedented advent of the COVID-19 pandemic changed the global landscape, affecting millions of lives and worldwide economic stability [11, 13, 23]. According to Delardas et al. [24], the impact of the pandemic is multidimensional, but businesses globally have suffered the most profound and noticeable brunt. Evidence indicates that the pandemic both directly and indirectly affected the global supply chain [4], demand for products and services [25], businesses’ operational procedures [20], and customers’ habits [25]. Among the business classes or categories, the SMEs were agonized the most, due to their lack of agility, capacity, resiliency, and adaptability [12, 21, 22]. The abruptness of the challenges imposed by the pandemic combined with the vulnerability of the SMEs, forced the governments to intervene and policize in favor of this type of businesses [9, 16, 26]. The acute contributions of SMEs to an economy strained the governments around the world to accentuate their survival and recovery [16, 27]. Apparently, government support played a pivotal role in safeguarding SMEs, as several studies have explored the efficacy of different policies and governmental strategies taken during and after the COVID-19 pandemic for SMEs, especially for their recovery, digital transformation, and resilience [9, 16]. For instance, Chundakkadan et al. [28], identified and observed the monetary support injected by the governments. Other studies, such as the scholarly endeavors by Supari, Anton [23], Takeda et al. [29], revealed governments’ intention to induce digitalization of SMEs. However, none of the studies recommend a single best-fit policy intervention for SMEs (see Table 3). The diversity in the needs of SMEs, industries, and customers implies extreme contextualization of governmental strategies [15, 16]. Regardless, due the unprecedented nature of the pandemic and negligible scientific interest on crisis management, a noticeable portion of the governments failed to safeguard SMEs’ existence, sustainability, and competitive resurgence. In other words, the existing literature failed to support governments in making informed decisions and effective policy [14, 21].

Methodology

As already mentioned, the researchers utilized both qualitative and quantitative analysis techniques to identify key themes, publication trends, and emerging patterns, following the guidelines provided by Linnenluecke et al. [30]. The literature search was conducted on the Scopus Database, with the search query presented in Table 1. The search was performed on 31st July 2023, which extracted a total of 831 journal articles published in English (Fig. 1). These documents were then quantitatively analyzed using bibliometric analysis techniques coupled with network and co-occurrence analysis. After identifying the relevancy and most impactful documents in terms of local and global citation, the researchers conducted a systematic literature analysis on 23 documents to identify the discussed policy interventions and recommendations, as well as the applied methodologies of the selected papers. The qualitative analysis technique, SLR, lastly, was used to summarize and report the findings.

Table 1 Search Query

Fig. 1

Number of articles selected

Analysis and findings

Summary statistics

As already mentioned, the literature search conducted for this study revealed a total of 831 scholarly works. The analysis on the bibliographic information of these documents revealed the contribution of 418 different sources and 2530 individual authors. Table 2 presents the overview of the data. From 2020 to 2023, the topic celebrated a 108.01% growth rate, which is significantly higher than other comparable topics [31,32,33]. Among the documents, only 77 are single-authored. The individual who contributed to this topic used 1398 different keywords, indicating diversities between the works. With an average citation of 7.303 the documents published on this topic manifest a wide array of implications. Lastly, the international co-authorship percentage indicates a global collaboration tendency.

Table 2 Overview of the Data

Performance analysis

According to Ellegaard, Wallin [34], the performance of any scholarly area can be measured based on the annual publication and citation trends. Figure 2 presents both of these trends. As the figure indicates, the annual publication number rose sharply every year (from 01st January 2020 to 31st July 2023). The emergence of the COVID-19 pandemic motivated authors around the world to study the role of government interventions since 2020. The annual publication number grew rapidly. For 2023, till 31st July, a total of 324 scientific productions were made in this area. Despite the progressive escalation in the quantum of publications recorded on an annual basis, a conspicuous trend emerges in the form of a discernible decrement in the average annual citation count. This ostensibly counterintuitive phenomenon finds its rationale in the mitigated impact of the COVID-19 pandemic, which has inevitably cast a pall over the scholarly discourse in different domains.

Fig. 2

Performance analysis of the area

Co-occurrence analysis

The bibliometric analysis allowed the researchers to identify key themes from the most frequently employed keywords. Figure 3 presents the results, which delineate a total of six themes. The first theme, colored in green, suggests that a set of scholarly attention has been devoted to study the crisis situation (e.g., the impact of the pandemic, the performance of the businesses, and unemployment issues). The second theme, colored in yellow, suggests that a noticeable number of studies have been conducted in the area to investigate the government policy measures for managing and mitigating the COVID-19 pandemic crisis. Again, the theme, colored in purple, insinuates that during and after the pandemic, a number of scholars have focused on investigating the digital transformation of SMEs, suggesting a possible motivation of the government and the SMEs to promote and incorporate digitalization for increasing resiliency against the pandemic situation. Furthermore, the analysis revealed a theme concentrating on government support for the sustainable development of SMEs. This theme, colored in red, implies that governments around the world have also emphasized the sustainable development of SMEs along with their recovery. Moreover, the analysis discovered a group of studies that discussed and unearthed the strategies taken by SMEs during the pandemic time. The thematic map also presents the scholarly interest in studying the financial endowments of SMEs and the impact of subsidies on them. This co-occurrence analysis manifests that, considering the diversity of focus within the selected documents, an SLR for extracting effective government interventions targeted at SMEs’ recovery and resiliency is quite possible.

Fig. 3

Thematic network of the keywords

Key strategies

The SLR conducted for this research revealed different strategies taken by the governments to facilitate SMEs’ recovery and post-pandemic development that have been studied rigorously through scientific research endeavors. The review of the literature and other secondary sources indicate the distinctiveness among the strategies taken by the governments [1, 9, 28]. For example, the United States implemented the “Paycheck Protection Program” for workforce continuity [26], the UK introduced the “Coronavirus Business Interruption Loan Scheme” to aid disrupted businesses [35], and Germany initiated the “KfW Special Programme” for financial solutions [25]. Australia’s “JobKeeper Payment” aimed at job retention [13], while South Korea’s “Emergency Management Fund” and Japan’s “Subsidy Program for Sustaining Businesses” focused on crisis management [36, 37]. The researchers also identified interventions implemented by the developing countries. Countries such as, India launched the “Emergency Credit Line Guarantee Scheme” for operational resilience [38], Brazil’s “Pronampe” addressed micro and small enterprises [39], and South Africa established the “COVID-19 SME Relief Fund” as stated by Fubah, Moos [12]. Furthermore, Bangladesh provided a “Low-interest loan program” for industry resurgence [40], and Nigeria introduced the “Targeted Credit Facility” for households and SMEs [20], Ellegaard, Wallin [34, 41]. These strategies reflect global commitment to mitigate pandemic-induced economic challenges.

Key policy recommendations by existing studies

Table 3 presents the empirical evidence regarding the efficacy of different policy interventions. As already mentioned, the SLR conducted for this research allowed the researchers of the present study to gather and present the findings systematically.

Table 3 SLR presenting key findings and implications

Governmental strategic response framework for the pandemic

The SLR also allowed the researchers to identify the key themes or patterns in government policies. Figure 4 presents the proposed government policy intervention during the crisis (GPIC) framework.

Fig. 4

GPIC framework

Discussion

The literature review conducted for this research allowed the researcher to claim that governmental support or policy intervention should be methodologically formulated and strategically implemented for SMEs operating in distinguished industries. Figure 4 presents a comprehensive framework that holds the potential to guide governments in future pandemic-like crisis situations.

The SLR revealed that the government policy interventions with utmost industry focus are the most successful without regard to the countries’ economic situation as stated by Isabelle et al. [45] and Mahmoud et al. [48]. Government supports related to market access and promotion, flexible regulatory compliance, wage subsidy, supply chain assistance, long-term sustainability support, training and development, digitization support, and access to credit and capital with a focus on industries the SMEs are operating in are the most successful ones [13, 22, 46, 50, 51]. Support, provided through a collaboration between governments and financial institutes, also successfully expedited SMEs’ recovery [2, 15, 28, 46]. Furthermore, knowledge-sharing and capacity-building activities, including digitalization of SMEs and training and development for crisis management, allowed SMEs to survive during the Covid-19 pandemic [9, 52, 53].

Conclusion

This research employed bibliometric analysis and SLR techniques to identify effective government policies for SMEs’ survival, development, and recovery during crisis situations. The analysis revealed that the scientific works published in this area are diverse, which allowed the researchers to identify the most effective and relevant papers with different focus areas. The cluster analysis indicated six different research focuses. The areas included research on financial endowments and subsides, impact of the crisis, government policy measures for crisis management, strategies taken by SMEs and governments for digital transformation during the pandemic, government support for sustainable development, strategic approaches employed by the SMEs to initiate recovery from the damages caused by the COVID-19. The SLR allowed the researchers to specify the exact policies formulated by the governments around the world. The SLR further revealed that industry-focused approaches were the most successful ones around the world. Again, it is evident that without continuous development and capacity building, SMEs will not be able to adapt and response to the changing global environment and future crisis. Attributing to its novelty, the findings of this research will be valuable for governments, businesses, and scholars globally.

Practical and theoretical implications

This study’s foremost contribution lies in its cross-disciplinary approach, offering valuable insights into economics, policy, and crisis management. Hence, it will assist global economic stability through the resilience of SMEs. Most significantly, this research provides valuable directions for the governments of the smaller nations and developing economies to formulate effective and proven policies for the SMEs, that are the most vulnerable entities, in future nation-wide or international crisis. Moreover, the research identifies key themes and patterns in government policy interventions for SMEs during and after the COVID-19 pandemic, aiming to develop a comprehensive framework to enhance governmental preparedness for future pandemic-like crises. Unveiling global policy dynamics empowers informed decision-making, enabling targeted interventions and strategies. It also addresses knowledge gaps, establishing a foundation for understanding SME performance during crises. Ultimately, the proposed framework accelerates government readiness and expedites SME recovery.

Limitations and future research avenue

This research employed limited keywords and only one database to collect the scientific publications. Besides, only the articles published in English were considered for the analysis. Future scholars should diversify the selection to expand the horizon that has been explored by this study.