MBA Program Chair Presents at Nordic Conference on Small Business Research

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YEREVAN, Armenia — American University of Armenia (AUA) MBA Program Chair Dr. Mane Beglaryan presented a paper on “Government Aid, Financial Soundness and Going Digital” at the 21st Nordic Conference on Small Business Research (NCSB). 

Since its inception in 1980, the NCSB has been a biannual event held in the Nordic tradition: an open atmosphere encouraging the exchange of ideas among researchers with work and interests in the field of small business and entrepreneurship. The 2022 NCSB was held in Kolding, Denmark and accepted papers from all areas of small business and entrepreneurship.

The objective of the research Dr. Beglaryan presented was to study the role of digitalization and government support in helping SMEs in Armenia cope with the challenges caused by the pandemic, particularly with respect to maintaining their financial soundness. To mitigate the negative impact of the COVID-19 pandemic on the economy, governments around the world have implemented a variety of policies — including fiscal, monetary, and financial measures — the majority of which were targeted to support the most vulnerable players in the economy: SMEs. 

Following the pressure to survive and develop coping strategies, digitalization was seen as another tool to address the repercussions of the crisis. Businesses increasingly digitized operations to adapt to changing circumstances; nevertheless, temporary closures, employment and wage reductions, and bankruptcies did occur. The obstacles met by SMEs on the path to moving to a digital adoption platform during the pandemic have reinforced the need for and importance of sound government measures that would create a favorable environment for digital transformation.

“The capacity to undertake digital transformation has decreased the likelihood of taking measures to ease financial burdens, such as annulment of employee contracts, reducing staff working hours and salaries, temporary suspension of salary increases and/or bonuses, and taking new short-term borrowings,” notes Dr. Beglaryan. “Furthermore, digitalization helped companies in meeting their financial obligations associated with rental costs and in being obliged to cancel their investments. Our findings also stress the importance of government aid by showing that SMEs which received government support had a higher likelihood to meet their financial obligations towards their financial providers and tax authorities.”

Dr. Beglaryan found that government support did not contribute to a higher digitalization by SMEs. This could be explained by several factors. First, the business support programs implemented by the Government of Armenia (GoA) primarily took the form of financial assistance, including subsidies, loans and grants, and were not targeted for higher digital adoption among SMEs. Second, the implemented programs aimed at digitalization were not adequately effective, often referred to as chaotic by the representatives of Armenian enterprises. Finally, government support in the form of financial assistance could have caused a decrease in motivation and necessity for SMEs to undertake digital transformation, as the GoA aid could have been viewed as a substitute to digitalization in response to the challenges of the crisis.  

Founded in 1991, the American University of Armenia (AUA) is a private, independent university located in Yerevan, Armenia, affiliated with the University of California, and accredited by the WASC Senior College and University Commission in the United States. AUA provides local and international students with Western-style education through top-quality undergraduate, graduate, and certificate programs, promotes research and innovation, encourages civic engagement and community service, and fosters democratic values.