Drivers of SME Resilience in Southeast Asia during COVID-19

Defining and measuring resilience has become a subject of interest in a world characterized by crises. Calls for empirical work on the microeconomic drivers of the resilience of small and medium-sized enterprises (SMEs) have drawn attention to the need for an enterprise resilience index. This paper fills this gap by proposing a multi-dimensional framework for firm resilience. Factor analysis of firm level data from surveys conducted in Cambodia and the Philippines before and during the COVID-19 crisis identifies a set of firm-level factors that drove successful SME performance during the pandemic. Structural Equation Modelling combines these factors into a firm level resilience index and confirms that the index is positively correlated with commonly used proxies of firm performance during crises, such as retaining employees. The insights from the analysis indicate that investment in certain dimensions of firm performance in good times can drive their resilience during crises.