The impact of Covid-19 Movement Control Order on SMEs’ businesses and survival strategies

Ahmad Raflis Che Omar, Suraiya Ishak, Mohd Abdullah Jusoh

Abstract


Coronavirus outbreak is the latest world tragedy that have affected all sectors in economy. The lockdown, confinement, limited movement order and social distancing are amongst the preemptive governments’ effort to safeguard the public health. While recognizing the importance of the national order in preventing the immense spread of the virus, the authors contend that there are certain undiscovered impacts of the control order policy on SMEs in Malaysia. The objectives of this article are to scrutinize the implications of the Covid-19 Movement Control Order (MCO) on SMEs businesses and to identify survival strategies based on the owners’ perspectives. The study applies qualitative approach conducted through phone-based interviews with six selected SMEs’ owners during the first phase of control order from March 18, 2020 to March 31, 2020. In summary, the impacts of MCO on SMEs are classified into the operational problems (i.e. operation distruption; supply chain distruption; foresighting the future business direction) and the financial problems (i.e. cash flow imbalance; access to stimulus packages; risk of bankcruptcy). Meanwhile, the major themes of current survival strategies fall under the financial and marketing strategies. The paper recommends few suggestions for future research work, business development agencies and entrepreneurs. 

Keywords: Covid-19, movement control order (MCO), small and medium enterprises (SMEs), business, strategy


Full Text:

PDF

References


Austin, Z., & Sutton, J. (2015). Qualitative research: Data collection, analysis, and management. The Canadian Journal of Hospital Pharmacy, 68(3): 226-231.

Azmi, W., Aida, I., & Diana, A.W. (2020). The role of strategic management in growth of small and medium enterprises (SMEs) in Malaysia. e-Bangi Journal of Social Sciences and Humanities, 17(1), 108-124.

Bank Negara Malaysia. (2020). Financial Stability Review Second Half 2019. Retrieved from https://www.bnm.gov.my/ar2019/.

Barney, J.B. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99-120.

Cassia, L., & Minola, T. (2012). Hyper-growth of SMEs towards a reconciliation of entrepreneurial orientation and strategic resources. International Journal of Entrepreneurial Behavior & Research, 18(2), 179-197.

Chatzoglou, P., Chatzoudes, D., Sarigiannidis, L., & Theriou, G. (2018). The role of firm-specific factors in the strategy-performance relationship: Revisiting the resource-based view of the firm and the VRIO framework. Management Research Review, 40(1), 46-73.

Congressional Research Service (2020). Global economic effects of Covid-19. Retrieved from https://fas.org/sgp/crs.

Craven, M., Liu, L., Mysore, M., & Wilson, M. (2020). COVID-19: Implications for business. Executive Briefing, COVID-19: Briefing note, McKinsey & Company. Retrieved from https://www.mckinsey.com/business-functions/risk/our-insights.

Department of Statistics Malaysia. (2020). Report of Special Survey on Effects of Covid-19 on Economy And Individual (Round 1). Retrieved from https://www.dosm.gov.my/.

Enders, A., König, A., Hungenberg, H., & Engelbertz, T. (2009). Towards an integrated perspective of strategy: The value-process framework. Journal of Strategy and Management, 2(1), 76-96.

Ernst and Young. (2020). Global Capital Confidence Barometer, 22nd ed. Retrieved from https://www.ey.com/en_my.

Mahani, A., & Suraiya, I. (2019). Faktor PSiKKIT: Pendorong inovasi pembungkusan dalam kalangan industri kecil dan sederhana berasaskan perusahaan makanan. Geografia-Malaysian Journal of Society and Space, 15(3), 90-103.

Marketing Insight. (2020). Sentiment study on the impact of Covid 19 MCO on Malaysians. Retrieved from https://marketingmagazine.com.my/.

Muhyiddin, M.Y. (2020). Additional PRIHATIN SME Economic Stmulus Package (PRIHATIN SME+), Speech Text – Prime Minister Department. Retrieved from https://pmo.gov.my/2020/04.

Nur, A.H.A., Nasruddin, Z., Abd, H.A., & Rohani, M.R. (2014). Predictors of financially distressed small and medium-sized enterprises: A case of Malaysia. IPEDR, 76(18), 108-112.

OECD. (2020). New OECD outlook on the global economy. Retrieved from https://www.oecd.org/coronavirus.

Prime Minister's Office of Malaysia. (2020). Prihatin Rakyat Economic Stimulus Package (PRIHATIN) Speech Text - Speech by YAB Tan Sri Dato’ Haji Muhyiddin Bin Haji Mohd Yassin Perdana Menteri Malaysia. Retrieved from https://www.pmo.gov.my/2020.

Segal, S., & Gerstel, D. (2020). The Global Economic Impacts of COVID-19, Critical Questions, Center for Strategic and International Studies (CSIS). Retrieved from https://www.csis.org/analysis.

SMECorp. (2019). SME Annual Report 2018/19. Retrieved from http://www.smecorp.gov.my/ index.php/en/resources.

Smith-Bingham, R, & Hariharan, K. (2020). This is the impact of the Coronavirus on business. World Economic Forum. Retrieved from https://www.weforum.org/agenda.

Sneader, K., & Singhal, S. (2020). Beyond coronavirus: The path to the next normal, Article McKinsey & Company. Retrieved from https://www.mckinsey.com/industries.

Svatošová, V. (2019). Identification of financial strategy in small and medium-sized entrepreneurship. ACTA Universitasis Agriculturae ET Silviculturae Mendelianae Brunensis, 65(4), 1435-1453.

Syed, H.A. (2019). Sustainability in Crisis: Towards Business Continuity in Small and Medium Enterprises. In: Proceedings of the 17th European Conference on Computer-Supported Cooperative Work: The International Venue on Practice-centred Computing an the Design of Cooperation Technologies - Doctoral Colloquium Papers, Reports of the European Society for Socially Embedded Technologies, DOI: 10.18420/ecscw2019_dc10.

Theedgemarkets.com. (2020). Malaysia March manufacturing output dented by Covid-19 pandemic. Retrieved from https://www.theedgemarkets.com/article.

The New Straits Times. (2020). Covid-19: Movement Control Order imposed with only essential sectors operating. Retrieved from https://www.nst.com.my/news.

The Star Online. (2020). Special online survey to study effects of Covid-19 on Malaysians, economy. Retrieved from https://www.thestar.com.my/news/nation/2020/03/23.

Wahyudi, I. (2014). Default risk analysis in micro, small and medium enterprises: Does debt overhang theory occur?. Asian Academy of Management Journal of Accounting and Finance, 10(1), 95-131.

Warnier, V., Weppe, X., & Lecocq, X. (2013). Extending resource-based theory: considering strategic, ordinary and junk resources. Management Decision, 51(7), 1359-1379.

Zalina, I., Firdaus, A., & Azman, I. (2016). International business competence and small and medium enterprises. Proceedia-Social and Behavior Sciences, 224, 393-400.

Zurinah, T., Jalaluddin, A.M., Sivapalan, S., & Yusof, H. (2019). Transformasi memajukan industri kecil dan sederhana (IKS) di kalangan wanita luar bandar. Geografia-Malaysian Journal of Society and Space, 15(4), 151-162. (in Malay)


Refbacks

  • There are currently no refbacks.