Small and Medium Enterprises and Global Risks: Evidence from Manufacturing SMEs in Turkey

Ali Asgary,Hale Özyürek,Ali Ihsan Ozdemir

doi:10.1007/s13753-020-00247-0

Abstract

This study investigated how small and medium enterprises (SMEs) in a country perceive major global risks. The aim was to explore how country attributes and circumstances affect SME assessments of the likelihood, impacts, and rankings of global risks, and to find out if SME risk assessment and rankings differ from the global rankings. Data were gathered using an online survey of manufacturing SMEs in Turkey. The results show that global economic risks and geopolitical risks are of major concern for SMEs, and environmental risks are at the bottom of their ranking. Among the economic risks, fiscal crises in key economies and high structural unemployment or underemployment were found to be the highest risks for the SMEs. Failure of regional or global governance, failure of national governance, and interstate conflict with regional consequences were found to be among the top geopolitical risks for the SMEs. The SMEs considered the risk of large-scale cyber-attacks and massive incident of data fraud/theft to be relatively higher than other global technological risks. Profound social instability and failure of urban planning were among the top societal risks for the SMEs. Although the global environmental and disaster risks were ranked lowest on the list, man-made environmental damage and disasters and major natural hazard-induced disasters were ranked the highest among this group of risks. Overall, the results show that SMEs at a country level, for example Turkey, perceive global risks differently than the major global players.

Highlights

Small and medium enterprises (SMEs) face many small and large internal and external risks
The results show that global economic risks and geopolitical risks are of major concern for small and medium enterprises (SMEs), and environmental risks are at the bottom of their ranking
A majority of the SMEs thought that catastrophic and severe impacts can be expected from the economic risks, unmanageable inflation, high structural unemployment or underemployment, and fiscal crises in key economies (Fig. 1b)

Summary

Introduction

Small and medium enterprises (SMEs) face many small and large internal and external risks. By the WEF definition, a global risk is ‘‘an uncertain event or condition that, if it occurs, can cause significant negative impact for several countries or industries within the 10 years’’ Small and medium enterprises comprised 99.8% of the firms in Turkey in 2014 and were involved in 55.1% of export and 37.7% of import (Kaya and Uzay 2017). Considering their size and roles in the national and global economies and the fact that the enhancement of the private sector’s resilience depends on risk reduction by SMEs (Chatterjee et al 2015), more studies are needed to better understand various aspects of SME risk management

Objectives

Methods

Results

Discussion

Conclusion