Effects of Economic Conditions on Small and Medium Enterprises: Evidence from Sri Lanka

Abstract

In Sri Lanka SMEs are considered the backbone of the economy as it gives massive support to socioeconomic development. They have considered the dependent factors for many families when it comes to household income and support in the battle against poverty. However, the country’s Socioeconomic conditions badly affect it roots of the business. The purpose of this research is to explore the effects of economic conditions on Small and Medium Enterprises in Sri Lanka. The data were collected through In-depth interviews and the purposive sampling technique was used as it is a widely used technique in qualitative studies to provide evidence from the participants (Patton, 2002). A total number of 10 SMEs from different cities in Sri Lanka participated in the survey and provided their perspectives. This study disclosed the factors that are affecting the SME’s operations, such as Shortage of raw materials, Lack of fuel, banned chemical fertilizers, Supply, and demand disruption, imbalanced financial system, longest power cut, disruptions in the supply chain, and daily price varies of commodities. In line with the findings, this study also derived the solutions for overcoming challenges in terms of facilitating the support and assistance to develop value-added exportable products, innovative schemes of integration business models with large-scale organizations, continuous research and development system for further future advancements, proper progress maintenance at the regional and national level to strike them when the struggle comes.