The Impact of COVID19 on Micro Firms and SMEs and Their Reactions: Is Digital Transformation a Solution?

The outbreak of the pandemic COVID 19 has caused great impact to the world economy. This paper aims to investigate its impact on micro firms and small and medium enterprises (SMEs) in Taiwan, these firms contribute one third of the local economy but are generally lack of scale and resources. This paper investigated 3 questions: First, impacts of COVID-19 on micro firms and SMEs. Second, how micro firms and SMEs deal with problems caused by the pandemic. Third, a special focus is on the digital tools micro firms and SMEs implement to come through to post pandemic era. Through this analysis we seek to understand the digital capabilities of the micro firms and SMEs and how they may work towards digital transformation and meet the future challenges.A questionnaire was used to collect data about the impact of the pandemic and what measurements micro firms and SMEs take to deal with the impact. Then a proposal of digital transformation for micro firms and SMEs are formed. This paper contributes to the analysis of digital capabilities of micro and SMEs, and how they may migrate to a solution of digital transformation.