Influence of Economic Policy Uncertainty on Tourism SME Performance: The Spanish Case

ABSTRACT

This paper studies the influence of Economic Policy Uncertainty (EPU) on the performance of small and medium-sized enterprises (SMEs) involved in the Spanish Tourism Sector and analyzes the role that company characteristics can play in this relationship. To achieve this objective, a sample of 5,529 Spanish tourism SMEs has been taken from 2012 to 2020. Applying panel data analysis, it is found that increases in EPU are associated with lower business performance in these companies. Results suggest that SMEs should increase their size, be more flexible and achieve an appropriate balance between indebtedness and liquidity to be more resilient to EPU. The findings present relevant implications for the managers of Spanish tourism SMEs and for economic policymakers.

KEYWORDS:

• Economic policy uncertainty
• tourism
• small and medium enterprises
• performance
• firm characteristics

Disclosure statement

No potential conflict of interest was reported by the author(s).

Data availability statement

The data is available as request.

Additional information

Funding

This work was supported by the Community of Madrid (Spain) and Rey Juan Carlos University under Young Researchers R & D Project. Ref. Proyect v1156 Acronym LEG-INCERT-ECON.