Impact of economic policy uncertainty on the performance of SMEs in a university environment

Abstract

Purpose – This study aims to analyze how economic policy uncertainty (EPU) influences the economic and financial performance of small and medium-sized enterprises (SMEs) located in a university environment. Design/methodology/approach – To achieve the proposed objective, a sample of 449 companies located in the university environment of the Rey Juan Carlos University of Madrid (Spain) was taken for the period 2012–2020. Given the temporal and cross-sectional nature of the data, the chosen methodology was panel data analysis. Findings – The results show how EPU has a negative impact on the performance of these SMEs. However, firm size and age are not influential factors in the relationship between EPU and the performance of SMEs. Practical implications – This evidence provides more knowledge to SMEs located near a university to make decisions under uncertainty. Fiscal and monetary authorities should be aware of the impact of EPU, not only economic but also social. Originality/value – This research provides more knowledge on the impact of EPU on firm performance, focusing on a specific segment of SMEs, namely those located in a university environment.