Unraveling the Non-Linear Impact of Multiple Pandemics on Small and Micro Enterprises: A Longitudinal Study of Operational Challenges

Abstract

Understanding the dynamic impacts of multiple Covid-19 pandemic waves on operational challenges is crucial for mall and micro enterprises (SMEs) to enhance resilience and reduce vulnerability. This study employs a Threshold Vector Autoregression (TVAR) model to analyze operational challenges faced by SMEs during the COVID-19 pandemic, based on time-series data collected from 592 SMEs in Dongguan, China, between June 2021 to December 2022. The findings reveal that COVID-19 pandemic growth has nonlinear impacts on customer loss, business interruptions, and supply chain issues, while its influence on cost increases is linear. These effects vary by lag periods and risk regimes. Customer loss and supply chain challenges show greater fluctuations in high-risk regimes but moderate responses in low-risk regimes. Conversely, business interruptions exhibit milder fluctuations in high-risk regimes and pronounced shifts in low-risk ones. This study offers a scientific basis for SMEs owners and policymakers to design adaptive, stage-specific measures. Insights from these findings can strengthen SMEs’ crisis management strategies, contributing to the stability and sustainable development of the economy and society.