Leveraging Business Adaptability for Financial and Non-financial Performance in the COVID-19 Era: An Analysis of Micro, Small and Medium-Sized Enterprises in Saudi Arabia

The aim of the present study is to determine the impact of COVID-19 shocks, policy responses, business adaptability on the performance on Saudi Micro, Small, and Medium-Sized Enterprises. A quantitative approach was adopted using an online questionnaire survey from 380 MSMEs in Saudi Arabia. To accomplish the research aims, this study conducted a quantitative analysis of the data using structural equation modelling with partial least squares (PLS-SEM). The findings show that policy response is the sole significant predictor of business adaptability, whereas management/operational side shocks, demand side shocks, and supply side shocks have no significant effect on business adaptability. The findings further indicate that both management/operational and demand side shocks have a significant effect on financial performance, while policy responses and supply-side shocks have no discernible effect on financial performance. Only demand side shocks have a considerable impact on non-financial performance. However, policy response, management/operational side shocks, and supply side shocks all have a negligible effect on non-financial performance. In general, the findings of this study will assist the Saudi government and other policymakers in determining which types of MSME are most vulnerable and their expectations for assistance in coping with present and future problems created by the COVID-19 epidemic.