SME Strategic Management Practices during the COVID-19 Pandemic in Developing Countries: An Empirical Test of the Threat Rigidity Hypothesis

Abstract

The study undertook to establish the strategic management practices adopted by Zambian SMEs during the COVID-19 pandemic and how they affected their performance. To help with meeting the foregoing objective, a pragmatic research approach which permits the use of mixed methods research design was adopted. With quantitative data being of primary focus, it successfully collected data from 333 SMEs who had been in operation for at least 4 years at the time of the survey. With data on strategic management practices and business performance collected using a Likert scale questionnaire, they were initially subjected to Exploratory Factor Analysis (EFA). EFA enabled the computation of factor scores, which are composite indices that represented the concepts of interest in as far as variable operationalization was concerned. The results show that surveyed SMEs adopted defensive strategic management practices in their attempt to navigate through the challenges that were presented by the COVID-19 pandemic. The extent to which surveyed SMEs were defensive was, however, moderate. On further investigating whether SMEs were justified in their preferences for execution of defensive strategic management actions as far as performance was concerned, the study found mixed results. Particularly, those who chose to scale down their operations were found to have performed better than their counterparts who did not. On the contrary, those that decided to restrict their scope of information search and processing had poorer performance outcomes than those that opted to do the opposite. On the basis of the foregoing, the study recommends a mix of offensive and defensive strategic managements practices when SMEs are facing a crisis environment for purposes of building resilience.