The Reaction of Portuguese SMEs in the Face of the Covid-19 Crisis

Resumo

Purpose of the study: this study analyzes the micro, small, and medium enterprises SMEs’ reaction toward public policies to support domestic companies during the period of lockdown in Portugal. Methodology/approach: the research used a weekly survey conducted by Statistics Portugal in partnership with Banco de Portugal. The survey, was developed to monitor the impact of the pandemic on companies and this study analyzes the results of the survey. Main results:  the survey indicated that the companies most affected by the lockdown were micro-enterprises, mainly in the hospitality and restaurant industry. However, 82.3% of SMEs completely or partially continued to perform their activities during the lockdown. Most businesses were not planning to use government support mechanisms such as access to credit at lower interest rates. Nevertheless, more than a hundred thousand companies used the instrument of simplified layoffs made available by the government to suspend workers’ contracts. Theoretical/methodological   contributions: the study shows that contrary to the expectations of the policymakers, most SMEs did not use credit as a support tool to overcome the pandemic, among the other support policies the most used was the suspension of payment of tax. Relevance/originality: this study is valuable because it allows the analysis of what types of public policies can lead small businesses to cope with the crisis caused by Covid-19. Social / management contributions: the study also contributes by demonstrating whether the formulation and implementation of public policy can impact small businesses, but policy design has often not effectively reached its target audience.