Geopolitical Conflicts and its Challenges to SMEs in Malaysia: A Conceptual Paper

Abstract

Geopolitical conflicts have increasingly influenced global economic stability and international business environments. Small and medium enterprises (SMEs), particularly in emerging economies such as Malaysia, are highly vulnerable to these disruptions due to their dependence on global supply chains, limited financial resources, and exposure to international market volatility. This conceptual paper examines the key challenges faced by Malaysian SMEs during periods of geopolitical instability. Drawing on existing literature, the study identifies four major challenges affecting SMEs: supply chain disruptions, rising operational costs, market uncertainty, and financial constraints. The paper discusses how geopolitical tensions and global economic uncertainties can negatively impact SME operational performance and long-term sustainability. The study contributes to the growing literature on SMEs and global economic uncertainty by highlighting geopolitical conflict as a critical external risk factor influencing SME resilience. The findings provide insights for researchers, policymakers, and business stakeholders to better understand the implications of geopolitical instability on SMEs in Malaysia and emphasize the need for further empirical research to explore SME resilience strategies in uncertain global environments.