The Community Economy

Support SMEs to Promote Economic Recovery

Recent progress with coronavirus vaccines and treatments appear to have raised expectations for the world's economic recovery in the second part of 2021 (“Global Economic Prospects,” The World Bank, January 2021). While we may be eagerly awaiting a return to some sort of normalcy, we at Expandigo hope we are correct in believing that some of what we’ve learned and how we’ve adjusted our business practices will bring lasting changes to the world economy.

Of the many things we’ve learned this past year about how to address global crises, we see three main lessons:

  • Collaboration among governments, public and private institutions, and across sectors, is vital to maintaining a healthy economy.
  • Companies, no matter the size, must have a broader purpose than profit alone.
  • SMEs are critical to communities.

Collaboration

No government or business can work independently to address the social and economic challenges caused by the pandemic. By working together with a common objective, governments, public and private organizations across the globe can achieve results that are exponentially greater than their individual efforts. The fact that multiple Coronavirus vaccines are now available is largely because governments, private companies, public and private organizations have focused their combined resources to address a shared threat. One successful model during this time has been the creation of the COVID-19 High Performance Computing Consortium that brings together governments, academia, private tech companies, research laboratories, and others to enhance and accelerate research. Another example is the innovative collaboration between the University of Oxford and Astra Zeneca. In order to defeat the pandemic, it will be imperative for the wealthier countries to help ensure that vaccines are equally distributed across the world. “Me first” individualism is rarely a good strategy, and even less so in an interconnected world.

Stockholder capitalism

Companies, no matter their size, must continually reassess the way they operate, build trust, and create value for all their stakeholders and not just their shareholders. This means that a company’s aim for profit must be balanced with efforts to help address and ameliorate society’s biggest challenges (social inequalities, race-, gender-, and identity-based discrimination, climate change, access to education, and more). This adds long-term benefits to communities in which these companies operate, which in turn can helpcreate and sustain a more vibrant and stable economy. In “Measuring Stakeholder Capitalism: Towards Common Metrics and Consistent Reporting of Sustainable Value Creation”, a white paper from the World Economic Forum (September 2020), authors suggest that companies focus on four main pillars:

  • People: Evaluating and improving how a company treats employees and demonstrates equity in their business practices (wage gaps; discrimination based on race, gender or identity; etc.)
  • Planet: Evaluating and improving a company’s dependencies and impacts on natural resources (land protection, greenhouse gas emissions,etc.)
  • Governance: Demonstrating transparency in and alignment of the company’s stated vision, mission and accountability practices with their actions (ethical behavior, priorities, etc.)
  • Prosperity: Evaluating and improving a company’s impact on the financial wellbeing of its community (employment contributions and wealthgeneration, R&D, etc.).

A company’s stated values and mission need to be backed up by their decisions and actions. In addressing the needs of all stakeholders, and not just the shareholders, a company can achieve its best form and actually live up to its mission and vision.

Small and Medium Sized Enterprises (SMEs)

The pandemic has confirmed the important role that SMEs play in their communities. It has also highlighted the economic weaknesses created by continued globalization and limited government regulation.

SMEs thrive when they are fully integrated into global value chains, but it’s unlikely that many will have the resources necessary to rebuild these connections in a post-pandemic environment. As trade and supply chains reopen, SMEs will need support to connect and compete; technology, infrastructure, and tailored short, medium and long-term financial support will allow SMEs to innovate and subsequently power local and global economic recovery.

For many SMEs, investments in digital technology have been essential for survival during the pandemic. Moving forward, these same technological advances will be important to creating new business opportunities as SMEs strive to reach global markets and take advantage of the push toward economic recovery.

A recent article from McKinsey & Company (“Setting up small and medium-size enterprises for restart and recovery,” June 2020) suggests that governments’ interventions should focus on four main actions:

  • Facilitate SME access to support by easing administrative processes to increase SME access to and participation in government programs.
  • Orchestrate and focus the support ecosystem through an ‘SME nerve center’ “that will serve as a single orchestrator. Activate the full ecosystem and ensure that all efforts are aligned with the overarching goals”.
  • Sharpen the focus on building sustainability and competitiveness. “Policy makers should direct their focus to delivering three foundational interventions: access to local demand, support for internationalization, and enhancement of productivity.”
  • Replan for the next normal by introducing measures that: “a) prioritize sectors heavily affected but that can recover quickly; b) accelerate efforts to support high-performing and innovative companies with scale-up potential, c) promote a culture of entrepreneurship aimed at enhancing business creation in priority industries, increasing the number of high-quality jobs, and improving the socioeconomic resilience and competitiveness of SMEs.”

Integrated ecosystems give SMEs easier access to data, resources and connections, We at Expandigo believe that supporting the recovery of SMEs will establish the foundation for a sustainable, more equitable long-term growth strategy as we continue with and emerge from this pandemic.