Navigating Uncertainty: The Resilience of Third Sector Organizations and Socially-oriented SMEs during the COVID-19 Pandemic

This paper investigates the impact of the COVID-19 pandemic on U.K. third-sector (nonprofit organizations and social enterprises) and socially oriented small- and medium-sized enterprises (SMEs), and provides insights regarding their organizational resilience. Using data from the Longitudinal Small Business Survey, the results of an extensive empirical analysis suggest that relative to commercial (for-profit) SMEs, social enterprises were less likely, and socially oriented SMEs more likely to perceive the pandemic as an obstacle to business success. Third-sector and socially oriented SMEs were more likely to increase their activities compared to commercial SMEs. Moreover, the COVID-19 pandemic appears to have had a differential impact on the future plans of third-sector and socially oriented SMEs relative to commercial SMEs. Third-sector organizations were less likely to use government-backed loans, suggesting a need for alternative forms of support or financing to weather economic disruptions. Overall, our analysis suggests a resiliency and versatility among third-sector and socially oriented SMEs in dealing with unexpected and significant external shocks.