Kingston-REVA Joint Research Project: Indian MSMEs' responses to the Covid-19 pandemic crisis

Although the high level of performance of the Indian economy is commonly emphasised, there have been indications that economic growth (which in recent years has been approximately 7%) is faltering. There are implications particularly for small businesses operating in the manufacturing sector.

Consequently, managers of manufacturing businesses in India and other developing and emerging countries face a new challenge - how to satisfactorily respond to an economic downturn. This has been further exacerbated by the economic and social effects of the crisis emanating from the COVID-19 pandemic and government lockdowns that followed across the world in the first quarter of 2020, including India.

The severity of the effects of the pandemic for the global economy is projected to be worse than that of the global financial crisis of 2008-09 to the extent that the pandemic is being dubbed to be a new economic crisis. These have severe implications for small businesses in India and world over. Not surprisingly, their lack of experience in dealing with a downturn let alone a crisis is causing concern in the business community.

In this backdrop, this project aims to examine and study the experiences of small businesses in India as the effects of the of the current crisis from the Covid-19 pandemic unfolds.

The primary benefits from the research for small businesses will result from our analysis and recommendations with regards to strategic management adapted by firms of different sizes.

This project is concerned with the adaptability and resilience of businesses (particularly MSMEs) in how business managers respond to a deterioration of their market conditions due to external shocks. This is particularly pertinent in a context where managers are more used to managing growth.

Given the background and context above, this project aims to:

1. investigate strategies operating in sectors where market conditions have been deteriorating;
2. identify any differences in the responses of firms of different sizes and sectors;
3. make recommendations to the business community concerning the effectiveness of their strategic responses;
4. identify policy pointers for India's policy makers to support businesses that are actively pursuing a model of adaptation to these new conditions.

Conceptually, the project will draw on research undertaken on responses of small businesses to major external shocks.

The project will seek to identify the strategies emphasising the resilience of some smaller companies to major external shocks, which in other cases may emphasise their vulnerability, in comparison with their larger counterparts. In doing so, the project will involve wider stakeholders as part of the research design and is therefore designed to take place in two phases:

Phase 1

In the first phase (February - July 2020), the project will set up a unified conceptual framework by combining:

• (i) key findings from case-studies of individual small business experiences developed on the basis of one-to-one interviews with small business owners, entrepreneurs or managers;
• (ii) discussions with business and industry associations, policy makers and external experts through a stakeholders' consultation workshop, and
• (iii) a comprehensive and elaborate critical review of existing literature exploring both theoretical and empirical aspects of small business behaviour.

Phase 2

In the second phase (August 2020 - April 2021), the project will design an effective survey instrument using the conceptual framework developed in the first phase and undertake a large sample survey of approximately 600 MSME firms divided between Bengaluru and a Northern region in India which is to be selected.

The analyses from this survey will be used to develop a practical toolkit for businesses and to draw policy recommendations to support MSMEs during and after external shocks like the current COVID-19 crisis.

This phase will also do a follow up interview of the case-study companies from the first phase, six to eight months after the original interview to obtain feedback on the value of the toolkit and research results.

Information will be sought concerning any behavioural change linked to the project inputs.

The current project team comprises of academics at Kingston University, REVA University and external experts affiliated to other Indian institutions including the Indian Institute of Science and the Indian Institute of Management in Bengaluru.

The project team is expected to grow as one of the primary objectives of the project is to build capacity and international collaboration for knowledge transfer. Full details of members will be made available on this website in the second phase of the study.

The project team acknowledges the contribution of late Professor David Smallbone (Associate Director of the Small Business Research Centre, Faculty of Business and Social Sciences, Kingston University) in the original formulation of this project, which has been adapted to examine the effects of the current crisis from the Covid-19 pandemic on small businesses in India and their responses in the revised formulation of the project. The project team pay their tributes to Professor Smallbone, without whose vision, guidance and direction, this project would not have taken its current shape.