An Evaluation of the Strategic Responses of SMEs during an Economic Recession: An Examination of the Cypriot retail clothing sector during the 2008 recession

Abstract

Although much work has been dedicated to SMEs’ strategic responses, there is still a lack of research upon the SMEs’ strategic responses during an economic recession. This thesis focuses on the under-researched smaller European economy of Cyprus. The decision of Cyprus to join the European Union in 2004 and the single European currency have impacted upon the policy response to the recession which has created certain challenges for SMEs.
The aim of this thesis is to explore the strategic decision-making process in Cypriot family owner-managed SMEs with special reference to the fashion retail sector which is still under-researched. The research is guided by the conceptual framework developed from the findings of the literature review which give rise to a number of research questions. The thesis employs a qualitative approach with the use of six case studies of fashion retail family owner-managed SMEs in Cyprus. The data collection comprised of a screening survey questionnaire and a series of in depth semi-structured interviews, which seek to uncover the richness of the living experiences of owner-managers during the recession.
The findings of this study show that the strategic decision-making process in Cypriot fashion retail SMEs is affected by a series of internal and external factors during the latest recession. The former includes the factors of the ownership structure and characteristics while the latter factors may incorporate the degree of competition and access to funding. The bail in and bail out deal which led to a ‘haircut’ on banks’ savings in March of 2013 has affected the decision-making process of SMEs and their ability to strategically respond to the recession. The thesis suggests that Cypriot entrepreneurs give a different perspective on their strategic priorities while ownership structure and characteristics influence their strategic responses differently.