Lessons from Recent Global Shocks: Financial Performance and Competitiveness of SMEs (2020–2026) A Conceptual and Narrative Review

https://doi.org/10.5281/zenodo.21790011

Abstract

The three operating global shocks of the COVID-19 pandemic, the war in Ukraine and a 2025–2026 war in Iran that affected maritime traffic through the Strait of Hormuz battered SMEs over the period 2020–2026. This paper is a comprehensive review of existing literature and institutional data on the impact of this cascade of shocks on SME financial performance and competitiveness. We use a narrative review approach to discuss peer-reviewed studies and institutional sources, such as the OECD’s SME Scoreboard series, World Bank Enterprise Surveys, the European Bank for Reconstruction and Development (EBRD) and firm-level econometric studies.

Drawing on these diverse sources, we build a conceptual ‘three pillars’ framework-innovation, energy diversification and sustainability- to illustrate the strategic responses associated with better SME performance across the three crises.

While common themes are liquidity pressures, increasing borrowing costs and supply-chain disruptions across all three crises, geopolitical events-such as wars and sanctions and the interruption to trade via maritime routes caused by a conflict-appear to inflict more persistent damage than the pandemic alone based on current evidence. Because the 2025–2026 war in Iran only occurred very recently, our firm-level evidence to date consists of an account of its economic context and potential market impacts rather than formal academic studies, with all conclusions cautiously framed. We conclude with a discussion of the relevant policy implications regarding financing, digital and energy transition and market diversifications, acknowledging that our three-pillars framework serves as a conceptual synthesis and does not represent an empirically tested model.