Strategic Magaement Decisions of European SMEs under Uncertainty

Abstract

[EN] This doctoral thesis examines how economic policy uncertainty (EPU) and political stability shape the strategic decisions of European small and medium-sized enterprises (SMEs) across three distinct margins of adjustment, survival, scaling, and international reallocation. While prior research has focused mainly on large listed firms, often in U.S. settings, European SMEs are more financially constrained and more exposed to institutional volatility, which makes the consequences of uncertainty more immediate and more consequential for their strategic outcomes. The first essay analyses a panel of 145,611 European SMEs (2012–2021) and shows that EPU significantly increases financial distress likelihood, while family ownership acts as a resilience buffer, particularly among firms performing below historical aspirations. The second essay studies a panel of 140,334 European SMEs (2013–2022) to examine how political stability and EPU jointly shape the probability that an SME becomes a high-growth firm, finding that politically stable environments foster employment growth, that EPU suppresses it, and that directors with stronger political-action values amplify the benefits of stability while partly offsetting the drag of uncertainty. The third essay examines export intensity among 35,890 active exporting SMEs (2013–2023), showing that EPU is associated with higher export intensity, consistent with an institutional escape logic, although family ownership dampens this adjustment while greater female director representation counterbalances that conservatism. Together, the three essays demonstrate that institutional volatility does not affect SMEs uniformly. Its consequences depend on firm ownership structure, leadership composition, and governance characteristics, offering new insights for managers, family business owners, and policymakers.