Exploring Crisis Mitigating Measures of Micro and Small Enterprises during the Coronavirus Pandemic Crisis in Indonesia

Abstract

This study examines the crisis mitigation measures (CMMs) implemented by micro and small enterprises (MSEs) during the COVID-19 pandemic in Indonesia. The research has three main goals: (i) to assess the impact of COVID-19 on MSMEs; (ii) to identify the business risks encountered by MSMEs during the crisis; and (iii) to investigate the most frequently adopted CMMs by MSMEs during the pandemic. The analysis utilizes secondary data from the 2020 national survey on MSEs in the manufacturing sector and primary data from a field survey of 137 MSEs across various cities and industries in Indonesia, conducted between May and September 2020. The findings indicate that the primary business risks during the crisis were (i) market risk (decreased domestic demand); and (ii) production risk (production stoppages due to lockdown measures). Consequently, many MSEs had to temporarily cease, shut down entirely, or pivot to different industries to remain operational, which was a common CMM among the affected MSEs. The study’s limitation is its small sample size, which prevents comprehensive survival analyses that could reveal significant differences in the development trajectories of MSEs during the crisis. Despite this, the study adds valuable insights to the literature on MSEs during economic crises.