This research endeavors to expand the institutional lens on retrenchment decisions within SMEs, encompassing diverse facets such as employee and asset retrenchment. We empirically analyze retrenchment decisions among a sample of firms in the Rhône-Alpes region from 2005 to 2014. The results highlight the significant influence of factors such as the business climate, the firm's financial situation, and observed retrenchment practices among industry leaders. These factors distinctly contribute to shaping the retrenchment preferences of firms. Notably, the influence is particularly pronounced in employee retrenchment, revealing a heightened sensitivity to mimetic logic. These outcomes incite nuanced reflections across three pivotal dimensions, shedding light on intricate intersections within the institutional landscape of SME retrenchment decisions.