SMEs as Agents of Social Cohesion: Opportunities, Challenges, and Conceptual Framework

Small and medium enterprises (SMEs) are widely acknowledged as key contributors to inclusive and sustainable development. However, their role as agents of social cohesion remains conceptually fragmented and insufficiently developed. This paper addresses this gap by proposing an integrated conceptual framework explaining how SMEs foster social cohesion through local embeddedness, employment practices, and stakeholder engagement. Drawing on interdisciplinary perspectives from entrepreneurship, social capital, and corporate social responsibility, the study identifies key opportunities, including innovation and creativity; flexibility and agility; robust community; localized impact; and customized engagement. It also outlines critical constraints and challenges, such as limited resources, limited reach, reconciling varied interests, sustainability, and scalability. By synthesizing these opportunities and challenges, the paper advances existing literature and offers a coherent analytical model supported by research propositions for future empirical studies. The study provides valuable insights for policymakers and practitioners aiming to position SMEs as effective drivers of social cohesion, particularly within emerging and resource-constrained economies.