Prepared and Flexible? Swedish SME Resilience During the COVID-19 Crisis

Abstract

This study investigates how pre-pandemic firm characteristics shaped SME resilience during the COVID-19 crisis. Using a unique dataset combining nationwide survey responses with financial data for 1,000 Swedish SMEs (2018–2022), we examine how financial flexibility and operational preparedness influenced profitability and financial distress across three time horizons using cross-sectional regressions. We find that having a crisis management team or continuity plan was associated with stronger outcomes among larger firms severely affected by the pandemic. In contrast, financial flexibility showed limited effects. The impact of these characteristics varied by firm size and disruption severity, highlighting the importance of organizational context in determining the relevance of resilience traits. This study contributes to the crisis literature by integrating financial and operational dimensions, encouraging policymakers, investors, auditors, and lenders to look beyond static financial metrics when assessing firm vulnerability and preparedness in the face of systemic shocks.