Assessing the Economic Security of Small Businesses: A Composite Index Approach

Abstract

This study develops and empirically validates an integrated Economic Security Index (ESI) to measure the vulnerability and resilience of small business entities in emerging economies, using Uzbekistan as a case study. Unlike existing approaches that focus on isolated financial or operational indicators, the proposed index incorporates five interrelated dimensions: financial stability, operational continuity, market exposure, institutional support, and digital security. The empirical analysis is based on a unique dataset comprising survey responses, financial statements, and regional macroeconomic indicators from 450 small businesses across three regions of Uzbekistan. The ESI is constructed using normalized composite indicators and evaluated through econometric analysis. The results indicate that the average economic security level of small businesses is moderate (56.2 points), revealing a high sensitivity to external shocks. Operational disruptions and digital vulnerabilities emerge as the weakest components of economic security. Furthermore, OLS regression results confirm a statistically significant negative impact of external threats on economic security (β = -0.3105, p < 0.01). The findings contribute to the literature by offering a firm-level, multidimensional measurement framework for economic security and provide practical policy implications for SME support mechanisms, risk diagnostics, and early-warning systems in developing economies.