Vulnerability Analysis: A Tool for SMEs' Business Resilience

Abstract

This study is aimed at examining the vulnerability levels of businesses and assessing the influence of vulnerability on business resilience. This study was undertaken in Surakarta, Central Java, Indonesia. The sample selection method utilizes purposive random sampling. Data is gathered through structured interviews. The vulnerability level of businesses is gauged using an index. The vulnerability index was formulated based on three pivotal variables: exposure, sensitivity, and adaptive capacity. The vulnerability index was ascertained through the aggregation of values derived from all vulnerability indicators. The impact of vulnerability on changes in the external business environment resilience is analyzed through multinomial logistic regression. The research outcomes indicate that SMEs in the food and beverage sector fall within the bracket of moderate vulnerability. Sensitivity emerges as the most pivotal factor influencing the vulnerability index of business units, closely followed by adaptive capacity and exposure. These variables demonstrate a robust impact on SMEs resilience. The critical need for both government and business manager to prioritize ensuring access to suppliers and raw materials, manage raw material pricing, optimize product pricing strategies, and maintain market reach after macro-environmental uncertainty (disaster). This study emphasizes the importance of the durability of SMEs the nimble external environment, where access to suppliers and the price of raw materials, product prices, and market reach often change. It also reveals that sensitivity is a vital variable that affects the durability of SMEs.