Sustainability of Small and Medium Enterprises in Sri Lanka: impact of economic crisis

Abstract

The economic crisis had diverse impacts throughout the world. Countries that relied heavily on foreign markets for commerce and finance were affected by the global contagion more than the countries that relied less on them. However, there is minimal variation in the world economy with small enterprises, which are limited in product range and the ability to downsize. Small and medium-sized businesses are significant in the sourcing process of both exporting and non-exporting major sectors due to strong backward connections or widespread engagement in the supply chain. In contrast, even if generally considered less credible and more credit dependent than large companies, the credit shortage of small businesses intensified the financial crisis. Due to the small size, small businesses and enterprises were more susceptible to the financial crisis. A random sampling technique was used in the quantitative study to collect data from a sample of 180 small and medium enterprise businessmen. The study revealed a significant impact on the sustainability of Small and Medium Enterprises (dependent variable) by inflation and perceived political relations (the two independent variables).