Building urban resilience through sustainability-oriented small- and medium-sized enterprises

Abstract

The unfolding COVID-19 pandemic, and the unprecedented social and economic costs it has inflicted, provide an important opportunity to scrutinize the interplay between the resilience of small and medium-sized enterprises (SMEs) and the resilience of the communities they are embedded in. In this article, we articulate the specific ways that SMEs play a crucial, and underappreciated role in building resilience to human and natural hazards, and provide new opportunities to accelerate the adoption of sustainability practices through the configuration of ‘enabling ecosystems’ geared towards promoting sustainability in the private sector. We argue that capacity-building and experimentation are not only required within companies, but also throughout this emerging supportive ecosystem of policies, resources (i.e. finance, materials, skills), governance actors, and intermediaries to adequately focus investment, technical capabilities and innovation. Ultimately, we call for a new transdisciplinary action research agenda that centers on SMEs as pivotal actors and amplifiers of community resilience; while recognizing that these firms are themselves in need of support to secure their own capacity to respond to, and transform in light of, crises. This research program calls for recognizing and applying the lessons that the pandemic presents to the urgent need for accelerated climate action. This will be enabled by developing more targeted approaches to collaborative capacity-building activities in SMEs that feed into experimentation and allow for the accelerated adoption of deliberate and strategic resilient business practices and models.

Full text

Building urban resilience
throughsustainability‑oriented small‑
andmedium‑sized enterprises
Sarah Burch1* , Jose DiBella1, Arnim Wiek2, Stefan Schaltegger3, Wendy Stubbs4, Megan Farrelly4,
Barry Ness5 and Kes McCormick5
Policy andpractice recommendations
• An emerging agenda for policy and practice should center on SMEs as pivotal actors
and amplifiers for community resilience
• Capacity must be built within the supportive ‘ecosystem’ of policies, resources (i.e.
finance) governance actors, and intermediaries, not simply within SMEs
• To enhance the transformative potential of SMEs, support programs and policies
should target the underlying business model rather than only on resource efficiency
Abstract
The unfolding COVID-19 pandemic, and the unprecedented social and economic costs
it has inflicted, provide an important opportunity to scrutinize the interplay between
the resilience of small and medium-sized enterprises (SMEs) and the resilience of the
communities they are embedded in. In this article, we articulate the specific ways that
SMEs play a crucial, and underappreciated role in building resilience to human and
natural hazards, and provide new opportunities to accelerate the adoption of sustain-
ability practices through the configuration of ‘enabling ecosystems’ geared towards
promoting sustainability in the private sector. We argue that capacity-building and
experimentation are not only required within companies, but also throughout this
emerging supportive ecosystem of policies, resources (i.e. finance, materials, skills),
governance actors, and intermediaries to adequately focus investment, technical capa-
bilities and innovation. Ultimately, we call for a new transdisciplinary action research
agenda that centers on SMEs as pivotal actors and amplifiers of community resilience;
while recognizing that these firms are themselves in need of support to secure their
own capacity to respond to, and transform in light of, crises. This research program calls
for recognizing and applying the lessons that the pandemic presents to the urgent
need for accelerated climate action. This will be enabled by developing more targeted
approaches to collaborative capacity-building activities in SMEs that feed into experi-
mentation and allow for the accelerated adoption of deliberate and strategic resilient
business practices and models.
Open Access
© The Author(s) 2022. Open Access This article is licensed under a Creative Commons Attribution 4.0 International License, which permits
use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original
author(s) and the source, provide a link to the Creative Commons licence, and indicate if changes were made. The images or other third
party material in this article are included in the article’s Creative Commons licence, unless indicated otherwise in a credit line to the mate-
rial. If material is not included in the article’s Creative Commons licence and your intended use is not permitted by statutory regulation or
exceeds the permitted use, you will need to obtain permission directly from the copyright holder. To view a copy of this licence, visit http://
creat iveco mmons. org/ licen ses/ by/4. 0/.
PERSPECTIVE
Burchetal. Urban Transformations (2022) 4:12
https://doi.org/10.1186/s42854‑022‑00041‑9
Urban Transformations
*Correspondence:
sarah.burch@uwaterloo.ca
1 University of Waterloo,
Waterloo, Canada
2 Arizona State University, Tempe,
USA
3 Leuphana University, Lüneburg,
Germany
4 Monash University, Melbourne,
Australia
5 Lund University, Lund, Sweden
Content courtesy of Springer Nature, terms of use apply. Rights reserved.

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Burchetal. Urban Transformations (2022) 4:12
Sustainable SMEs’ contributions tobuilding resilient pathways
e impact of the COVID-19 pandemic on small and medium-sized enterprises (SMEs)1
parallels that of a large-scale environmental disaster. Initial pandemic restrictions took
a heavy toll on small firms, but even after the mandated closures eased, businesses in
many regions faced a shortage of personal protective equipment, the inability of employ-
ees to return to work, disrupted supply chains, reduced market demand (from the global
to local scales), cancellation of orders and absence of new orders, significant cash flow
issues due to fixed expenditures and little or no revenue. As a result, SMEs had diffi-
culties in repaying loans and interest (Lu etal. 2020; Robinson and Kengatharan 2020)
placing unprecedented pressures on operations of many SMEs. ese impacts are not
uniform across the vast diversity of small firms, however, with construction, hospitality
and the arts facing some of the most serious declines (Belitski etal. 2022; Fairlie 2020).
Similar challenges occur in the context of disasters and natural hazards, which are
becoming more frequent and severe in a changing climate. SMEs are disproportionately
affected by environmental risks compared to larger firms due to financial constraints,
limited management and human resources, focus on short-term planning and survival
with a hierarchical management culture, and lack of time and/or skills to prepare for
environmental challenges (Halkos and Skouloudis 2020). While small enterprises usu-
ally do not have the financial capacities to invest in research on preparing for and miti-
gating environmental risks (Ryu etal. 2017), especially those that may intensify or shift
course in the future, medium-sized organizations may have more financial and technical
resources. ere is value, however, in examining this varied and diverse group: they are
fundamentally different than their larger corporate counterparts, they have been slower
to develop and implement ambitious sustainability interventions, and they are crucial
drivers of economic prosperity (DiBellaet al. 2022; Westman etal. 2021). ese observa-
tions raise several questions: what is the nature of the relationship between the structure
and function of SMEs, their ability to withstand or even thrive in the face of shocks, and
the resilience of the community of which they are a part? How might that resilience con-
nect to the broader transformation towards sustainable development pathways (Westley
etal. 2011)?
Exploring thelinks betweenSME andcommunity resilience
For SMEs to build resilience to human and natural hazards and prevent disasters, capac-
ity must be built not only within the companies and their organizational structures and
processes, but also within the supportive ‘ecosystem’ of policies, resources (i.e. finance),
governance actors, and intermediaries. SMEs act as pivotal amplifiers that can enhance
resilience in the communities they serve and are embedded in. While many definitions
of community exist, we think of community as the dynamic interplay among the place-
based physical and natural environment, and the constellation of civil society organiza-
tions, individuals, government actors, and broader private sector entities within which
a business operates (see for example Howard etal. 2022). is may differ from a strict
political jurisdiction (the boundaries of a municipality for instance), and encompasses
1 We define an SME as a firm with fewer than 500 employees, in any sector.
Content courtesy of Springer Nature, terms of use apply. Rights reserved.

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Burchetal. Urban Transformations (2022) 4:12
more than a simple supply chain or set of customers. More recent threads in resilience
thinking elaborate upon this interdependency of elements of a system (Scoones et al.
2020) and the ways that transformation may unfold either as carefully planned or more
unpredictable, emergent processes (cf. Stirling 2015).
Likewise, the resilience of SMEs emerges out of, and is deeply rooted in, broader com-
munity resilience (Steiner and Atterton 2014). is bidirectional relationship of mutual
interdependency and support suggests that it is unhelpful to view SMEs as rational, eco-
nomic ‘islands’ untouched by the rich socio-political context within which they exist,
but rather an integral part of it. Indeed, resilience (the capacity of a system to withstand
or even adapt and innovate in response to shocks while maintaining its function and
purpose) (Holling 1973; Folke 2006) is one quality of a sustainable society (a normative
proposition describing a just, prosperous, socio-ecological state that respects the rights
of both future generations and non-human nature) (cf. Elmqvist etal. 2019). Sustainable
SMEs need also to be resilient, dynamically responding to crisis and opportunity, while
playing a role in the broader community of which they are a part.
Small businesses are deeply embedded in their host communities and play a crucial
role in the local economy. SMEs often serve as fixtures in the community, contributing
to local well-being, reducing vulnerability to disasters, and facilitating disaster recovery
of local communities (Halkos etal. 2018; Linnenluecke 2017; Price et al. 2013). SMEs
can diversify the local economy, help to build wider community resilience by delivering
a range of products and services that are essential for the well-being of communities and
create jobs for community members (Steiner and Atterton 2014).
As innovation incubators and learning hubs, SMEs can “respond flexibly and adapt
to higher levels of disorder and change” (Halkos and Skouloudis 2020, p. 58) than their
larger corporate counterparts. SMEs are incredibly diverse, however, and the size, make-
up and sector of the firm deeply influences the sustainable practices at play (Bakos
etal. 2020). Extremely small or new firms face greater challenges related to technical
and financial capacity, while larger or more established firms encounter organizational
complexity and inertia (but more significant resources) (Balasubramanian etal. 2021).
Sustainability interventions also vary widely by sector: manufacturing or construction
firms may prioritize more efficient resource use (for instance with ‘lean’ thinking and
strategies – cf. Caldera etal. 2019), supply chain sustainability, and mitigation of waste,
while companies in the arts, professional services, or educational sectors may focus on
employee engagement, awareness, and community-building. SMEs using a cooperative
business model (e.g., employee-owned and customer-owned), have proven particularly
resilient in times of crisis, maintaining the livelihoods of the communities in which they
operate (Birchall and Ketilson 2009). However, SMEs do not automatically enhance
community resilience simply through their existence. Dedicated efforts to build partner-
ships and capacities are necessary for SMEs to be able to fulfill this function.
Partnerships and collaboration are essential for SMEs to be able to enhance commu-
nity resilience during times of crisis. In ‘normal’ times, multi-stakeholder partnerships
and information or expertise-sharing with local stakeholders (e.g., local government,
civil society organizations) enable SMEs to access partners’ innovation resources and
overcome SMEs’ intrinsic resource constraints, while developing resilience-specific
innovations within and beyond the SMEs (Ahn etal. 2018; Alcalde-Heras etal. 2019;
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Burchetal. Urban Transformations (2022) 4:12
Halkos etal. 2018). During times of crisis, SMEs can then utilize their partners’ social
networks (social capital) (Aldrich and Meyer 2015; Fraser etal. 2021) and access impor-
tant resources for communication, coordination, and support (McNaughton and Gray
2017). Internal collaboration and empowerment of the workforce (e.g., in worker coop-
eratives) enable SMEs to self-organize in times of crisis, which in return allows them to
assist the community in meeting their recovery needs (omas etal. 2012).
Adaptability and flexibility are also significant capacities to be built for fostering the
resilience of SMEs and, in turn, the community (Andres and Round 2015; McNaughton
and Gray 2017). Such capabilities allow SMEs to successfully operate even if there are
significant fluctuations in supply or demand as well as to respond to new requirements
through changes to business practices and models. More especially in SMEs that have
adopted sustainability as core to their business model, several types of practices have
been identified to provide unique opportunities to connect with resilience building pro-
cess at local scales, such as strategic placemaking, integration of novel and varied skill-
sets in their organizational structures and a stronger focus on employee empowerment
and ownership (Burch and Di Bella 2021; Burch etal. 2020). Such SMEs might be viewed
as ‘sustainability-oriented’ when they place the ecological and social good on par with
economic profit, with societally beneficial outcomes woven throughout both their pur-
pose and activities.
Again, these traits allow SMEs to not only survive in times of crisis but also lend a
hand to community organizations and groups as needed. SMEs can also strengthen their
own resilience as well as their communities’ resilience through deliberate design or rede-
sign of their supply chains with sustainability in mind (Carter etal. 2019). Especially
intermediary SMEs have shown to be critical players in developing supply-chain resil-
ience (Weber and Wiek 2021).
In summary, there are strong symbiotic relationships between the resilience of SMEs
and their communities, and actions that strengthen SMEs often directly translate into
amplifying resilience in the wider community.
From rm‑focused sustainability policy toenabling transformations inprivate
sector activity systems
Considering the pivotal role that SMEs can play in building community resilience, it
is important to explore specific ways to enhance SMEs’ resilience and leverage their
amplification potential. A promising set of instruments include targeted policies issued
through local, regional, or federal governments. Governments have developednumer-
ous policies to support SMEs such as economic incentives, tax relief, subsidies to address
SMEs’ resource constraints; or through policies that facilitate resilience-specific training
and development programs to address SMEs’ knowledge and skill gaps; or through poli-
cies that reduce the time-to-market of resilience innovations to mitigate SMEs’ limited
innovation leverage (Amankwah-Amoah and Syllias 2020; Halkos etal. 2018; Price etal.
2013). e effectiveness of these policies will depend heavily on the size and sector of the
SME.
Under the broader perspective of resilience and sustainability, additional policies
become relevant, namely those that support SMEs in adopting sustainable business
practices and models (Burch etal. 2020). Such policies maytake a relational view of
Content courtesy of Springer Nature, terms of use apply. Rights reserved.

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Burchetal. Urban Transformations (2022) 4:12
SME, as part of a more complex and wide-ranging private sector activity system (Burch
and Di Bella 2021). is includes policies that provide sustainable seed capital or loan
guarantees, facilitate sustainable innovation, or provide favorable regulation to sustain-
able SMEs, including regulations for zoning, public procurement (incentive contracts),
local marketing, or waste management (Sharma etal. 2021; Walker and Preuss 2008).
Prohibitive policies might also show effects, but only if consistently enforced (Wilson
etal. 2012).
Government policy intervention alone, through financial incentives or otherwise, will
not anchor resilience in SMEs and the communities they are embedded in. While gov-
ernment policies offer valuable support, multi-stakeholder support is emerging, too, in
which government plays a leading or collaborating role together with banks (e.g., social
finance), universities (e.g., incubators or labs), or consultancies (e.g., training programs)
(cf. Hansen and Klewitz 2017).
Recent research suggests that there are untapped opportunities for involving SMEs
more directly in policy-making and other governance efforts to advance community
resilience (Westman etal. 2021). Innovation policy studies suggests that a wide range of
stakeholder groups, including SMEs and government agencies, need to cooperate in a
number of transformational activities to achieve this goal, including jointly setting long-
term goals; seeing opportunity in challenges and crises; mobilizing businesses to engage
in transformative innovation; and improving policy coordination (Fagerberg 2018). is
may be more likely among larger, medium-sized firms, however which have increased
capacity to engage in lobbying and consultation efforts.
The emergence ofanew research agenda foraccelerating sustainability
transformations andcommunity resilience throughsmall rms
e complex web of macro-economic trends, hardened infrastructure, short-sighted
corporate practices, and ingrained consumption habits, which has led inexorably to
unsustainable outcomes worldwide, has been the subject of intense analysis over the last
two decades. However, being mostly problem-oriented, this body of literature offers lit-
tle guidance (with some important exceptions including Gleidt etal., 2018; Loorbach
and Wijsman 2013; Schaltegger etal. 2020) on the specific approaches that should be
taken to strengthen and amplify sustainability transformations among vulnerable (but
innovative) sectors of the economy.
e insights into the drivers of SMEs’ resilience, and the effects on broader community
resilience, illustrate such research efforts; yet, considering various knowledge gaps, they
also highlight the need for a new and much more engaged research agenda. Such an
agenda could support ongoing recovery efforts as the COVID-19 pandemic continues to
unfold and the longer-term fallout becomes apparent.
Understanding what is required to build resilience in and through SMEs calls for a new
type of transdisciplinary action research agenda. Such an agenda would center on SMEs
as pivotal actors and amplifiers for community resilience and would link (1) case studies
on resilient SMEs and their pathway to resilience (cf. Burch etal. 2020) to (2) collabora-
tive capacity-building activities in SMEs (in collaboration with government agencies and
consultancies) and to (3) experimentation in SMEs that allows for fail-safe adoption of
resilient business practices and models. In parallel, research would need to (4) explore
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Burchetal. Urban Transformations (2022) 4:12
and comparatively test government policies and public-private partnerships in support
of SMEs resilience and, by extension, the resilience of the wider community.
Transdisciplinary scholars will need to engage in more meaningful and sustained ways
with SMEs to better understand the steps, sequences, and limits in their pursuit of sus-
tainability and resilience-building practices.
Acknowledgements
We gratefully acknowledge the important conceptual contributions made by Niki Frantzeskaki, Daniel Lang and George
Basile to the overarching project of which this paper is a part.
Authors’ contributions
All listed authors participated in the early conceptual thinking, drafting and review of the article. The author(s) read and
approved the final manuscript.
Funding
This article has been supported by the Canadian Social Science and Humanities Research Council, Grant #
895-0053-2017.
Availability of data and materials
As this is a Perspective article that is conceptual rather than empirical in nature, there are no accompanying data nor
materials.
Declarations
Competing interests
None.
Received: 25 October 2021 Accepted: 10 July 2022
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