Small and medium enterprises have been discovered to have a shorter lifespan during the economic depression. High corporate capital, inadequate financial resources, and limited technical and managerial competencies contribute to the challenges (Beck-Kunt et al., 2005). Latham (2009) and Robbins & Pearce II (1993), claim that small and medium-sized firms are most susceptible to economic depression. As a result, the social and economic pandemics associated with people’s wellbeing, for instance, the COVID-19 pandemic, are likely to cause a detrimental impact on enterprises that rely on strong relationships with people, whether they are suppliers or consumers.
Numerous non-governmental (NGOs) and governmental organizations have offered SMEs different forms of support to prevent the sector from subsiding due to the COVID-19 epidemic. According to Ahmad et al. (2019), the governments formulated different approaches to combating the impact of the pandemic. According to Song et al. (2020), SMEs received aid from financial institutions and international and non-governmental organizations during the pandemic. In addition, the entrepreneurs have used different tactics to deal with the pandemic’s aftermath. According to Thorgren and Williams (2020), experts projected that SME’s practices and views would aim to reduce expenditure, disaster management at the start of the pandemic, and the adoption of modern technology.
Studies show that COVID-19 crisis business performance and response processes examined each action separately to see how it affected firms’ performance. For instance, it was found that modern technology helps SMEs tackle the crisis’ effects (Guo et al. 2020). The results emphasize the benefits of IT in facilitating SMEs in mitigating the various problems resulting from the COVID-19 pandemic. Conventionally, strategic agility lowers the detrimental outcome of the pandemic on SMEs performance. As a result, these findings are an administrative technique for small business’ crisis response methods.
Few studies have been conducted on businesses’ performance techniques after the COVID-19 outbreak. According to Omar et al. (2020), when the enterprises were confronted with the COVID-19 pandemic, the SMEs depended on marketing and financial approaches for survival. These findings are noteworthy because they aimed at the SME’s long-term performance rather than their short-term existence. Therefore, further studies should be conducted on the effects of strategic measures on small and medium enterprises’ long-term performance and competence.
Furthermore, few studies have been conducted on the effects of foreign aid to SMEs following the COVID-19 crisis on their sustainability. As a result, the purpose of this study is to investigate the various innovative strategies used by SMEs to deal with the economic effects of COVID-19. The current study analyzed the impact of SMEs ‘ innovative techniques on their existence and performance. The study looked into the function of assistance in intervening in the relationship between SMEs’ innovative tactics and their commercial survival and performance. The current research on SMEs’ organizational and marketing innovation techniques in response to the COVID-19 pandemic aftermath in Saudi Arabia is essentially founded on the premise that, during disasters, innovative processes may aid in improving the performance of an enterprise, thus ensuring its survival.
This research contributes to the expanding body of research on SMEs’ strategies and foreign aid during calamities. It provides novel clues for SMEs and regulators on the function of international funding in facilitating innovation strategies for a firm’s survival.
SMEs’ performance and innovation practices
All enterprises must have innovative strategies to compete in a world of rivalry, technical advancement, and cyclical crises. Innovation is adopting modern technology or a managerial approach to ensure entrepreneurial success. (Tornatzky et al., 1990). Therefore, “innovative practices” is the execution of modern approaches to challenges facing SMEs, such as new product, service, or process concepts; current marketing strategies; or modern administrative procedures for the betterment of the performance of an enterprise. Organizational innovation initiatives are driven by a desire for remuneration in the form of enhanced performance. As a result, innovation is the implementation of new strategies in a firm’s procedures to improve performance.
On the other hand, success is the achievement of the institution’s sales, market share, strategic goals, profitability, and competition (Hult et al., 2004). According to Yildz et al. (2014), performance is the ability of an organization to effectively execute its tasks that leads to business success. Achieving a high level of performance naturally signals commercial success. Therefore, measuring a company’s performance allows it to expand its aspects of operations while also allowing it to take corrective action to address the flaws.
However, there is a relationship between performance and innovation for small and medium-sized businesses. Innovation capabilities have a positive impact on SMEs’ success. The critical cause of the progress in SME’s financial metrics is developing new inventions (Zulu-Chisanga et al., 2016). Similarly, the specific performance of a business is a result of the competent implementation of strategies. Managerial strategies influence the SME’s income more than technological advancements (Lin and Chen 2007). As a result, SMEs’ innovative approaches can help organizations perform better in all environments, including the COVID-19 pandemic. As a result, the following options have been proposed:
H1: The practices of SME in terms of innovation have a major positive on its impact its performance.
SME survival and innovation practices
The term “enterprise survival” was used to describe how long it takes a business to complete its operations from its inception to termination (Bercovitz & Mitchell, 2007). Besides the managers, the enterprise’s long-term viability benefits numerous people in the community. Among them are employees, customers, and suppliers. According to Danes et al. (2008) and Kalleberg & Leicht (1986), survival is crucial for business performance. If a company adapts to its environment, it will survive. It is evident that SMEs have a shorter lifespan, are profitable, and are more influenced by external environmental influences than huge corporations. According to Miner (1997), some analysts believe that a business’s survival is the primary determinant of its success. In the case of a pandemic, SMEs’ survival is jeopardized. Problems impede SMEs’ performance and risk their projects since their adverse effects spread to the firm’s external environment (Dhochak & Sharma, 2015). For instance, limited funding options during a crisis due to lack of proper information, economic inefficiencies, and poor capital throughout the market affect the businesses.
Several studies show a correlation between corporate innovation and long-term survival. According to Ortiz-Villajos (2014), the capacity to innovate determines a company’s long-term survival. Moreover, innovation is the driving force for an enterprise’s sustainability and performance; it allows for expansion and growth and continues prospects (Gaynor, 2002). The use of innovations to mitigate the challenges that SMEs encounter can contribute to their prosperity and survival. An organization’s longevity is inextricably related to its innovativeness. Various research has evaluated this correlation by pinpointing key characteristics connected to corporate longevity and innovation. For example, a competitive advantage is a crucial pillar of a firm’s survival. Companies can’t survive and thrive unless they’re creative (Schumpeter, 1942). As a result, various innovative measures to combat the adverse effects of SMEs can lead to positive aftermath. Hence, the second hypothesis of the study is as follows:
H2: The practices of a SME in terms of innovation have a significant positive impact on its performance.
SMEs and external Assistance
External assistance is the financial aid that a business receives from a third party (Global, I, 2018). SME’s commonly seek outside help because it provides the experience and expertise needed to improve their competitive position and strategic prospects. On the other hand, SMEs can obtain financial assistance from advocates, agencies, institutions, and the government to optimize their farms’ capabilities, increase their competitiveness, support business growth and expansion, and improve performance. External aid is either indirect or direct. Direct external assistance entails financial assistance such as the acquisition of assets, completion of development plans, or purchase of technology to counter financial shortages. According to Nishimura & Okamuro (2011) and Freitas & Von Tunzelmann (2008), direct external aid is usually offered in compliance with government regulations or the agreements of a financial intermediary. This aid helps to eliminate ignorance and increase information availability. Indirect external support is a form of ideas, advice, and consulting given by specialists and advisory officers. The research shows that SMEs obtain little benefit from it due to inadequate awareness and an inability of entrepreneurs to choose suitable assistance.
SMEs depend on external assistance for the development and implementation of ideas provided. Woodman et al. (1993) stated that the foundation for innovations is obtained from the company’s external environment and business information. Besides, enterprise breakthroughs come from the combination of external and internal knowledge. According to Amabile (1996) and Scott & Bruce (1994), external assistance can also provide personnel and financial resources to an organization to aid internal innovation.
Several research studies have been conducted to determine the link between external assistance and business achievement. The utilization of external support increases the financial index of small businesses (Kent, 1994). By Larsson et al. (2003). Thus, external service has been defined as a type of advice obtained by SMEs from managerial consultancies and has a productive impact on company development. External consultants increase the viability, performance, and expansion of SMEs. Moreover, utilizing external assistance improves a company’s competitive advantage. Dollinger (1985) emphasized the significant impact of the macro environment on the performance of SME’s. According to Bylund and McCaffrey (2017) and Matlar et al. (2005), there is a positive association between a firm’s performance and the use of outside assistance.
However, researchers stated the link between innovative practices and business success warranted the use of a supporting variable as a moderator factor (Covin & Slevin, 1989; Jones & de Zubielqui, 2017; Li & Atuahene-Gima, 2001). This moderator would then originate from the company’s external environment. Therefore, there is a positive correlation between a business’s achievement and its survival chances. Additionally, documented research illustrates that an organization’s long-term viability depends on sustained excellence. Therefore, macro environmental conditions and disasters, such as the COVID-19 epidemic, directly affect a firm’s survival and performance. External aid obtained by SMEs to mitigate the COVID-19 outbreak’s effects, cements the correlation between enterprise performance and innovation processes. As a result, the following recommendations are made:
H3: When a SME receives more external help, the favorable relationship between its innovation activities and performance may be stronger.
H4: When a SME receives more external help, the beneficial relationship between its innovative activities and survival may be stronger.
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