The Potential of Social Networks to Help SMEs During a Crisis: An Exploratory Study

Abstract

The year 2019 ended with a clear prospect that the year 2020 was bound to experience significant to overwhelming turbulence in the global economy. The emergence and progressive spread of COVID-19 exposed businesses both small and large to a myriad of challenges resulting in extensive disruption of their operations, with a resilience and capability to overcome and recover from the resultant implications. Today more than ever, businesses and entrepreneurs depend on their social networks to advance their businesses and adapt to changes. This is even more so in times of crisis where external sources of funds such as governments and banks become either expensive or scarce. Therefore, the primary objective of this study is to investigate how social networks helped small and medium-sized businesses to respond to the COVID-19 pandemic, with a keen focus on New Zealand SMEs. This study is guided by social network theory and social capital theory. Social network theory is developed on the background of social identity, and it analyses an individual’s behaviour when linked to others. The target population consists of small and medium business owners operating in Auckland, New Zealand. The study targeted twenty small and medium business owners or shareholders. A qualitative research methodology was adopted to guide the study. The data was collected by interviews, guided by an interview schedule. The results were analysed thematically based on the themes as elucidated by the participants. We have found that social networks help SMEs greatly during and after the pandemics in the perspectives of finance, operation, and strategy making. These results are expected to shed light on how New Zealand’s small and medium business tap into their social network and social capital more in times of crisis. The results also provide insights for SMEs into the online and international expansion in the post-pandemics.