SME Digitisation and sustainable business models to overcome the crisis
More and more companies are adopting innovation and sustainability strategies. SME EnterPRIZE, Generali's initiative dedicated to European SMEs, recognises and values companies that carry out notable sustainability initiatives and encourages public debate on the topic
Since its emergence at the end of 2019, the COVID-19 pandemic has had severe negative consequences on the economies of all countries around the globe. The restrictions imposed to limit the spread of the virus have led to distortions in the supply and demand systems of goods, with repercussions for all economic sectors and institutions, including small and medium-sized enterprises (SMEs). Studies have shown that the lockdowns and displacement prevention policies adopted by governments in many countries have severely affected SMEs, crippling their operations, weakening their positions and exposing them to financial risks. SMEs have also suffered from a shortage of workers and production input due to changing supply chains, which in turn has negatively affected sales and their ability to meet financial obligations and pay employees' wages.
This coincided with a decrease in consumer spending due to reduced income and widespread feelings of uncertainty. As a result, many SMEs found themselves unable to cope with the situation and some companies were forced to cease their activities and remain closed from the early months of the pandemic.
To keep afloat in these difficult times, several governments have provided financial support to SMEs and adopted policies to mitigate the negative consequences of the crisis. In many cases, however, the response has come from the companies themselves, which have increasingly started to focus on innovation and the digital transformation. Several studies conducted over the past year have found that the use of digital technology – and particularly information technology - is helping SMEs survive and cope with the effects of the pandemic. Similarly, the practice of 'strategic agility' mitigated the negative effects of the COVID-19 crisis on SME performance.
For example, the study "Digitisation and Public Crisis Responses of Small and Medium Enterprises: Implications from a COVID-19 Survey” used a dataset from a survey of 518 Chinese SMEs to examine the relationship between SME digitisation and their public crisis response: the empirical results show that digitisation enabled SMEs to respond effectively to the crisis by harnessing their dynamic capabilities.
As highlighted by the Organisation for Economic Cooperation and Development (OECD), COVID-19 in particular accelerated the digital transition. During the pandemic, many companies shifted operations online to stay in business, with online platforms playing an increasingly crucial role in connecting users to markets, suppliers or resources.
Many changes are set to last, given the investments made. Of the SMEs that accelerated their digital use during the pandemic, around two-thirds are self-employed, micro and small businesses, and 78 percent of medium-sized enterprises have declared that these changes will be permanent.
The accelerated transition to digital has, on the other hand, underlined how exposed small and medium-sized enterprises and entrepreneurship (SMEs&E) are to digital security risks, with cyber attacks increasing on unprepared SMEs.
The pandemic has pushed governments towards an unprecedented prioritisation of SME digitisation, retraining and innovation, and increasingly targeted recovery packages were first adopted in June 2020 to support sustainable recovery.
According to the OECD, SMEs were not only able to access more support during the crisis, they were also able to digitise more quickly. Support for start-ups and scale-ups has also been extended, not only to help overcome liquidity constraints, but also to access innovation and growth capital. It is too early to say whether these innovations will lead to higher productivity, but the specificities of the current crisis may have favoured some forms of innovation more than others, which could make today's start-ups more resilient, especially in the post-COVID economy.
It is with this in mind that Generali, on the occasion of the Group's 190th anniversary, has launched the SME EnterPRIZE project, a flagship initiative included in the Generali 2021 strategic plan and dedicated to European SMEs to promote sustainable business models and encourage public debate on sustainability.
SMEs are the backbone of the European economy: they account for more than 99 percent of businesses in the EU, employ two-thirds of all workers in the private sector, and contribute 56 percent of the value added created by European companies. Promoting SMEs in their sustainable business transformation, especially during these unprecedented historical times, will have a positive impact on the real economy and the future of communities, therefore ensuring long-term sustainable development in line with Europe's priorities.
During the SME EnterPRIZE event, which will take place in Brussels on 28 September in the presence of European institutions, Generali will present the first edition of a White Paper - developed in collaboration with SDA Bocconi – that aims to study the integration of sustainability principles in European SMEs. The event will also give visibility to the “Sustainability Heroes”: entrepreneurs who have implemented notable sustainability initiatives in their business activities and who can inspire fellow entrepreneurs, thus becoming sustainability ambassadors.
For further information visit https://www.sme-enterprize.com/.