Profitability and institutional fragility of SMEs in insecure economies: an institutional interpretation
DOI:
https://doi.org/10.71112/15s4pw72Keywords:
SMEs, profitability, institutional fragility, institutional design, unstable economiesAbstract
From a knowledge standpoint, the ongoing weakness of small and medium-sized enterprises (SMEs) in unstable economies should not be seen as a surprise, but as a result of certain institutional setups. This essay argues that such vulnerability cannot be adequately understood as an isolated business failure, but because of institutional arrangements that unevenly concentrate and distribute risks, incentives, and opportunities. Without relying on empirical evidence, the paper offers a critical examination of the concepts of profitability and business sustainability, emphasizing the role of economic rules, public policies, and structural conditions in shaping firm performance. From this standpoint, SME sustainability is better understood as a co-produced process involving multiple actors, rather than as an individual test of managerial merit.
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Copyright (c) 2026 Dr. Matías Benjamín Reynoso Vizcaíno (Author)
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