Surviving Amid Crisis Episodes: The Case of Women-Owned Small Enterprises in Bangladesh

Introduction

Bangladesh is an emerging economy in South Asia with annual GDP growth of 8.2 percent in FY 2019, the highest in Asia and the Pacific (Asian Development Bank, 2021). A significant portion of the economic growth can be attributed to the small business enterprises sector of the country, which contributes 20.25 percent of its GDP (Khalil, 2020). For a developing country like Bangladesh, small businesses act as drivers of employment generation and poverty alleviation (Kumar et al., 2022). They are helping the country graduate from least developed standing to middle-income developing country status (Asian Development Bank, 2020).

The spread and aftermath of the SARS-COV-2 virus and subsequent economic crisis created an exogenous shock for business enterprises worldwide, and the small business enterprises in Bangladesh are no exception to the massive economic and financial pressure resulting from it. The shock of the crisis created unique challenges for survival (Kumar & Gupta, 2022). It posed threats to the sustainability of these businesses, which were already plagued with a myriad of problems such as lack of marketing strategy, inadequate resources, skill scarcity, poor quality of products, lack of quality control, inadequate infrastructural facilities, lack of technological knowledge, high employee turnover rates and poor policy support (Alauddin and Chowdhury, 2015; Mazumder and Alharahsheh, 2019; Rahman et al., 2018; Kumar & Vidhyalakshmi, 2012). Additionally, financial challenges in the form of lack of access to formal credit, high bank interest rates, collateral-based lending contributed to financial constraints (World Bank Group, 2019). OECD (2004, 2006) states that for a developing country like Bangladesh, problems of financial nature are the most prominent for small businesses that threaten their survival (Karadag, 2015; Kaya and Alpkan, 2012).

Crisis episodes such as the COVID-19 pandemic threaten businesses, distort economies, and disrupt the global supply and logistics chain (Kumar & Malhotra, 2022). For small businesses, exogenous shocks can prove fatal compared to their bigger counterparts that get greater attention in national economies and can influence policymakers to implement reactionary measures in their favor (Morgan et al., 2020). In Bangladesh, the crisis impacted the small business entrepreneurs so significantly that they were at risk of shutting down businesses (Youth Business International, 2020). Small enterprises experienced extreme economic distress during the lockdown and post lockdown as they are dependent on short cash cycles, which were, in turn, affected by supply chain disruptions and loss of revenue.

While the COVID-19 crisis and related responses (e.g., lockdown, isolation, stay at home orders, social and physical distancing) disrupted businesses of all sizes in Bangladesh and beyond, women-owned small enterprises (WOSB) are more likely to be significantly impacted that can be attributed to pre-existing business structures and constraints (OECD, 2020). OECD (2020) identifies a number of these factors: First, compared to men, women lean toward sectors that experienced severe fall in customer demand during the pandemic (e.g., retail, hospitality). Second, women-owned businesses tend to be smaller in size and revenue, leading to lower financial resilience in the event of a crisis. Third, women finance their businesses through informal financing routes such as self-funding or funding from family and friends (due to limited access to external finance), resulting in few financial assets to buffer against crisis episodes. Fourth, women entrepreneurs have limited access to professional contacts and professional advisors who could offer essential guidance in a crisis event compared to men. Fifth, access to commercial digital solutions is limited for women small business owners that create obstacles in converting to a digital business model and overall digital adoption. Sixth, women entrepreneurs share highly disproportionate household and childcare responsibilities, which negatively impact the business in terms of time availability and business continuity. And seventh, many women entrepreneurs fail to qualify for relief and stimulus packages due to the structure and nature of their business, lack of access to banking channels – which are generally the usual routes for disbursing financial assistance.