SME RESILIENCE IN A POST-PANDEMIC BUSINESS ENVIRONMENT: EVIDENCE FROM NORTHERN PENINSULAR MALAYSIA

Abstract

This paper develops and evaluates the Small and Medium Enterprises Resilience Index (SME-RI) as a diagnostic tool for assessing the resilience of SMEs in the northern region of peninsular Malaysia, specifically Kedah, Perlis, and Pulau Pinang. SME-RI presents SME resilience according to state, business sector, namely agriculture, manufacturing, construction, and services, as well as three key resilience dimensions: financial stability, uncertainty environment, and competitiveness. Based on survey data collected from 139 SMEs, the findings indicate that most of SMEs demonstrate moderate to high levels of resilience. Overall, 57.6% of SMEs were classified as having moderate resilience, 38.1% as highly resilient, and only 4.3% as having low resilience. Among the three states, Kedah recorded the highest proportion of highly resilient SMEs, suggesting a relatively stronger adaptive capacity in responding to uncertainty and external shocks. Across business sectors, SMEs in agriculture, manufacturing, services, and construction generally exhibited similar resilience patterns, with the agriculture and construction sectors recording no SMEs in the low-resilience category. The dimensional analysis of the SME-RI further reveals that uncertainty environment and competitiveness represent the strongest aspects of resilience, indicating that SMEs are generally capable of adapting to changing market conditions and sustaining their competitive position. However, financial stability consistently recorded the lowest scores across sectors, highlighting financial capacity as the main weakness affecting SME resilience. These findings suggest that strengthening financial stability, improving access to financial support, and enhancing business preparedness are essential for sustaining SME resilience against future economic disruptions.