SMEs, Violence and Crisis: Stylized Facts from a Survey in Latin America

Small and medium enterprises (SMEs) can be uniquely vulnerable to exogenous shocks and crises. In many Latin American cities, SMEs also face endemic challenges related to urban violence that can inhibit their operations and survival. Drawing on theory related to how small business vulnerability and resilience is shaped by firm capacity, dynamics of violence and businesses’ networks and relationships, this article examines SMEs self-reported business outcomes in fragile urban contexts. We do so by utilising a novel primary survey of urban SME owners in Venezuela, El Salvador and Honduras conducted during the COVID-19 pandemic. Our results highlight how firms that were smaller, informal and faced increasing violence and extortion tended to suffer; while those that increased engagement with both the State and non-state criminal actors and those who supported their communities tended to fare better. While SMEs may face distinct liabilities in complex institutional settings, our findings suggest they can also exercise some agency in navigating urban violence and exogenous shocks by utilising both formal and informal support networks and fostering community linkages as resilience strategies.