“Todos pagan” (Everybody pays): SMEs and urban violence in Medellín, Colombia

Abstract

Medellín, a bustling city of 2.5 million, is marked by convivial relations between formal and informal economic activity, and between legal and criminal actors. This article examines what this context means for small- and medium-sized enterprises (SMEs) and how they respond to it. In Medellín and elsewhere, SMEs are more numerous than large firms but operate at a smaller scale. They are organizationally more informal, less mobile (i.e., more dependent on specific contexts), more accountable to customers and legal authorities, and less prominent in public debate. Their need to act collectively to counter violence may be greater than that of larger companies, yet they may also find it more challenging to organize collective action. As a result, they face possibilities that are different from those of large companies in the context of violence. The article suggests that most SMEs in Medellín have adapted to, or navigate, the multiple, intersecting layers of legality and illegality, of formality and informality, and of actual or threatened violence. Only very few respond by deliberately seeking to change the external environment. Based on a review of official documents, academic literature, and our own observations during several field trips and 39 interviews, we develop a three-part typology of SME responses to violent actors: acquiescence, avoidance, and mitigation. The implications of our findings will be relevant to managers interested in understanding business conditions in the presence of organized criminal activity and the ways in which SMEs have adapted their own practices to those conditions. The findings suggest that some SME strategies are more effective than others in supporting the survival and growth of SMEs in violent contexts. But while cooperation with illegal actors for the purpose of safeguarding economic activities may be conducive to keeping the peace and ensuring enterprise viability in the short run, it also poses challenges to outcomes that would be more beneficial to communities in the long run: empowerment, institutional strengthening, and inclusive economic development.