The moderating role of market uncertainty in the effectiveness of government policies and R&D activities promoting innovation in manufacturing firms

PurposeThe purpose of this study is to examine the impact of government support policies and research and development (R&D) activities on product innovation under market uncertainty.Design/methodology/approachThis study applies logistic regression analysis to a sample of 4,000 South Korean manufacturing firms in order to investigate the impact of government policies and R&D activities of the firm on firm innovation performance, with particular interest in the moderating role of the firm's perceived market uncertainty (PMU).FindingsPolicies supporting industry/university/institute/local collaboration are found to have greater benefit under high PMU. Surprisingly, support for a consortium among different-sized firms has a negative effect on product innovation, although this negative effect disappears under high PMU. Both support for the protection of intellectual property (IP) and support for the resolution of manpower shortages have strong positive effects on the propensity to innovate products, but in both cases the moderating effects of uncertainty are negative. Finally, all types of R&D activities have positive effects on the propensity to innovate, more so for new product innovation than for improved product innovation.Originality/valueTo the best of the authors' knowledge, this is the first study to examine analytically the moderating effect of PMU in the effectiveness of government policies promoting innovation in the manufacturing sector. The study is potentially useful both for policymakers in deciding which policies to implement under prevailing market conditions;and for entrepreneurs choosing between different forms of government support, particularly given the abnormal levels of market uncertainty prevailing in the Covid-19 era.

The influence of entrepreneurial culture and organizational learning on entrepreneurial orientation: the case of new technology-based firms in Iran

PurposeThis paper explores how entrepreneurial culture (EC) and organizational learning (OL) determine the entrepreneurial orientation (EO) of new technology-based firms (NTBFs). These NTBFs are located in Isfahan Science and Technology Town (ISTT), Iran. These entities face substantial challenges in a highly-sanctioned economy, which makes adopting, acquiring or transferring new technologies daunting.Design/methodology/approachThis paper analyzes a sample of 200 NTBFs. The participants were trained chief executive officers and observed by applying pre-test and post-test designs. As a final step, empirical data were collected using questionnaires and analyzed accordingly. The structural equation modeling (SEM) with the partial least squares (PLS) approach was used by the SmartPLS2 software.Findings OL was found to mediate the relationship between EC and EO in the studied NTBFs. Additionally, the indirect effect of EC on EO and the direct impact of OL on EO were significant (=1.96). Therefore, this study focuses on selected NTBFs within Iran's particular and distinctive context.Research limitations/implicationsThis study has several limitations. These were the time consuming nature, the lack of cooperation by managers and the COVID-19 pandemic-related challenges. Nonetheless, the findings offer several important implications for practitioners, scholars and policymakers.Originality/valueThe paper sought to explore how EC and OL determine EO in Iranian NTBFs. It, thus, investigates the case of a highly-sanctioned context during the coronavirus pandemic, which imposed several basic and technological limitations on their practices.

Bridging theory and practice in the humane entrepreneurship domain: insights from small and medium Italian enterprises

PurposeHumane entrepreneurship (HumEnt) has been theoretically proposed as a new model of entrepreneurship supporting the idea of an enlarged entrepreneurial strategic posture. The aim of paper is to frame humane entrepreneurial orientation's (HEO) characteristics by showing how firms apply the HumEnt approach, and to offer suggestions to build an HEO measurement scale.Design/methodology/approachThe study adopts a case study approach, focusing on five Italian small and medium enterprises (SMEs).FindingsThe study (1) identifies which are the characteristics of HEO strategic posture in the enterprises under examination;(2) shows that entrepreneurs' personal values and credos are fundamental to having an HEO strategic posture adopted;(3) provides indications on the development of a measurement scale through a discussion of emerging HEO themes.Originality/valueThe value of the study is that emerging themes of HEO strategic posture was derived from the analysis of five Italian SMEs. Entrepreneur's personal values have been proven to be relevant in the implementation of HEO. Based on the emerging HEO themes, the study contributes to the literature opening the way toward the building of an all-encompassing HEO measurement scale.

Pandemic Depression: COVID-19 and the Mental Health of the Self-Employed: ET&P

We investigate the effect of the COVID-19 pandemic on self-employed people's mental health. Using representative longitudinal survey data from Germany, we reveal differential effects by gender: whereas self-employed women experienced a substantial deterioration in their mental health, self-employed men displayed no significant changes up to early 2021. Financial losses are important in explaining these differences. In addition, we find larger mental health responses among self-employed women who were directly affected by government-imposed restrictions and bore an increased childcare burden due to school and daycare closures. We also find that self-employed individuals who are more resilient coped better with the crisis.

Pandemic Makers: How Citizen Groups Mobilized Resources to Meet Local Needs in a Global Health Crisis: ET&P

The enormous scale of suffering, breadth of societal impact, and ongoing uncertainty wrought by the COVID-19 pandemic introduced dynamics seldom examined in the crisis entrepreneurship literature. Previous research indicates that when a crisis causes a failure of public goods, spontaneous citizen ventures often emerge to leverage unique local knowledge to rapidly customize abundant external resources to meet immediate needs. However, as outsiders, emergent citizen groups responding to the dire shortage of personal protective equipment at the onset of COVID-19 lacked local knowledge and legitimacy. In this study, we examine how entrepreneurial citizens mobilized collective resources in attempts to gain acceptance and meet local needs amid the urgency of the pandemic. Through longitudinal case studies of citizen groups connected to makerspaces in four U.S. cities, we study how they adapted to address the resource and legitimacy limitations they encountered. We identify three mechanisms—augmenting, circumventing, and attenuating—that helped transient citizen groups calibrate their resource mobilization based on what they learned over time. We highlight how extreme temporality imposes limits on resourcefulness and legitimation, making it critical for collective entrepreneurs to learn when to work within their limitations rather than try to overcome them.

Self-Efficacy in Disrupted Environments: COVID-19 as a Natural Experiment: ET&P

In two studies, we investigate whether the link between entrepreneurial self-efficacy and entrepreneurial intentions depends on outcome expectations. In Study 1, we exploit the COVID-19-induced lockdown as a natural experiment in a two-wave student sample. We compare the efficacy–intention link in survey responses submitted right before and right after the lockdown. In Study 2, we conceptually replicate and extend the findings via an online vignette experiment. Together, these studies show that a disruption of stable institutionalized outcome expectations implying increasing risk and uncertainty makes self-efficacy a weaker predictor of entrepreneurial intentions, particularly among those with pessimistic perceptions.

In the Eye of the Storm: Entrepreneurs and Well-Being During the COVID-19 Crisis: ET&P

In this paper, we examine the impact of the COVID-19 pandemic on the well-being of entrepreneurs. We surveyed a representative sample of Swedish entrepreneurs and wage employees at different stages of the COVID-19 pandemic. The survey data, combined with register data, show that the COVID-19 outbreak has a negative effect on the well-being of entrepreneurs in terms of increased perceived stress. However, this negative effect is weaker for entrepreneurs who feel younger than their chronological age and entrepreneurs who are geographically distant from the epicenter of the crisis.

Weathering a Crisis: A Multi-Level Analysis of Resilience in Young Ventures: ET&P

In the context of the external disruption presented by the COVID-19 pandemic, we investigate (1) how individual-level resilience and inter-functional coordination relate to organizational resilience and (2) the link between organizational resilience and firm performance. We view organizational resilience as a resource-based capability and draw on insights regarding psychological capital and relational resources to inform our hypotheses. Our hypotheses are tested with a time-lagged, multi-level study of young technology ventures. The results show that when such firms are resilient, they tend to perform significantly better in a crisis. Further, organizational resilience is positively influenced by the individual resilience of top management team members, as well as inter-functional coordination. We discuss implications for theory and practice and suggest avenues for research on resilience in entrepreneurship.

Act or Wait-and-See? Adversity, Agility, and Entrepreneur Wellbeing across Countries during the COVID-19 Pandemic: ET&P

How can entrepreneurs protect their wellbeing during a crisis? Does engaging agility (namely, opportunity agility and planning agility) in response to adversity help entrepreneurs safeguard their wellbeing? Activated by adversity, agility may function as a specific resilience mechanism enabling positive adaption to crisis. We studied 3162 entrepreneurs from 20 countries during the COVID-19 pandemic and found that more severe national lockdowns enhanced firm-level adversity for entrepreneurs and diminished their wellbeing. Moreover, entrepreneurs who combined opportunity agility with planning agility experienced higher wellbeing but planning agility alone lowered wellbeing. Entrepreneur agility offers a new agentic perspective to research on entrepreneur wellbeing.

How Startups and Entrepreneurs Survived in Times of Pandemic Crisis: Implications and Challenges for Managing Uncertainty

The recent pandemic crisis has greatly impacted startups, and some changes are expected to be long-lasting. Small businesses usually have fewer resources and are more vulnerable to losing customers and investors, especially during crises. This study investigates how startups' business processes were affected and how entrepreneurs managed this sudden change brought by the COVID-19 outbreak. Data were analyzed using qualitative research methods through in-depth interviews with the co-founders of eighteen startups. Results show that the three core business processes affected by the COVID-19 crisis were marketing and sales, logistics and operations, and organizational support. The way to succeed is to be flexible, agile, and adaptable, with technological knowledge focusing on digital channels to find novel opportunities and innovate. Additionally, resilience, self-improvement, education, technology readiness and adoption, close relationship with customers and other stakeholders, and incubation experience seem to shield startups against pandemic crisis outbreaks.

Understanding the Impact of Covid-19 on MSMEs in India: Lessons for Resilient and Sustained Growth of Small Firms

The pandemic has raised an issue of survival for most of the micro, small, and medium enterprises (MSMEs) because of their vulnerability in terms of size, limited financial resources, and inefficiency to deal with unpredicted situations. Therefore, the present study has adopted the contingency theory in times of change and uncertainties caused by COVID-19 on MSMEs and found out the ways to enhance its resilience and sustained the growth of this sector. This study has applied descriptive statistics and probit regression analysis to estimate the resilience and sustained growth of the firms through a change in the variables like turnover, labour employed, investment, and age of the firm. Based on the survey of 225 firms, the study observed that around 90 percent of surveyed firms realized a decline in their turnover with a 25 percent reduction in employment that mostly occur in the informal category. Interestingly, there was some increase in formal employment in around 50 percent of firms because of the business commitment of firms, shortage of informal workers, and availability of workers at lower wages. Smaller and younger firms in terms of employment and investment have a higher possibility to be affected by the external shocks indicating that the firm agility increases with firm age and size. Support measures by the government during the pandemic were found to be insufficient and have limited relevance to the MSME sector in its revival. For enhancing the resilience and sustainability of MSMEs, the study suggests small firms should be encouraged to financial planning against business uncertainties and proposes financial security measures viz. Uncertainty Corpus Fund for Small Businesses and Small Business Insurance.

Just one Damned Thing After Another: Towards an Event-based Perspective of Entrepreneurship: ET&P

Although events such as the global financial crisis, natural disasters, or the COVID-19 pandemic have large impacts on entrepreneurship, the literature lacks a differentiated analysis of such events. This editorial highlights the importance of events which are discrete and bounded in space and time, unexpected, and strong enough to produce change that can lead to subsequent events. An event based approach is well suited to integrate context and time to predict entrepreneurial activity. We provide a more systematic description of events, their characteristics, and causal mechanisms to allow more holistic and generalizable analysis of the role of events in entrepreneurship.

Measuring the Success of Digital Transformation in German SMEs

The pace of digital disruption in firms is omnipresent and has been accelerated by the emergence of COVID-19. Using digital technologies requires financial resources to create value. As these resources are limited in small and medium-sized enterprises (SMEs) and digital use cases and best practices are not well known, the purpose of this qualitative study is to investigate how SME managers are adding value and achieving a measurable return on investment (ROI) by using digital technologies. The study reviews a range of literature and models relating to digitisation impacts within SMEs. Further, it entails in-depth qualitative research on digital transformation in SMEs to explore the usage of digitisation and measurements of the added value and return. By inductively performing a multiple-case study of eight German SMEs, the researchers provide evidence to determine the usefulness of data analytics in SMEs. The study delivers a rich overview of added value, benefits and ways SMEs can use various ROI opportunities. Five benefits are revealed: increased revenue, improved customer satisfaction, improved employee satisfaction, efficiency and productivity. In addition, the case studies yield 25 significant positive ROIs in numerous use cases where data analytics solutions are implemented to improve revenue or cut costs. The weighted ROI average in this study is 13.44. Thus, most of the investments are highly worthwhile.

Productivity and firm exit during the COVID-19 crisis: cross-country evidence

This paper examines whether the economic crisis induced by the COVID-19 pandemic exhibits a Schumpeterian "cleansing” of less productive firms. Using firm-level data collected for 34 economies up to 18 months into the crisis, the study finds that less productive firms have a higher probability of permanently closing during the crisis, suggesting that the process of cleansing out unproductive activities is occurring. The paper also uncovers strong and negative relationships of firm exit with digital presence and with innovation. These relationships are driven by small firms. The study further finds that a burdensome business environment increases the probability of firm exit, also driven by small firms, and that a negative relationship exists between firm exit and age. Finally, evidence shows that the cleansing process is disrupted in countries which have introduced policies imposing a moratorium on insolvency procedures.Plain English SummaryThe purpose of this analysis is to investigate whether firms that are more productive are less likely to cease operation during the economic crisis induced by the COVID-19 pandemic. To verify this hypothesis, the paper uses data on firm characteristics, productivity, and status of operation from 34 countries. The data on firm characteristics and productivity were collected before the crisis, while data on the operating status were collected within 18 months since the appearance of the coronavirus. The results of the paper show that indeed, more productive firms are more likely to survive the crisis. In addition, businesses that have been in operation for longer, or ones which have a website or have introduced a new product in the years before the crisis are more likely to continue existing. The positive role of digitalization and innovation is true especially for small firms. Conversely, those businesses which have to spend more time in compliance with government regulations are less likely to survive. The policy implications show the importance of digitalization and innovation, the vulnerabilities of small firms, and the significance of good governance.

Digital economic activity and resilience for metros and small businesses during Covid-19

The Covid-19 pandemic had an unequal impact across businesses and communities and rapidly accelerated digital trends in the economy. What role, then, did website use play in community resilience and small business outcomes? This article examines a new source of population data on domain name hosts to provide a unique measure of digital economic activity within communities. Seventy-five percent are commercial, including online-only, brick-and-mortar, small, and microbusinesses. With geolocated data on 20 million US domain name hosts, we investigate how their density (per 100 people) affected economic outcomes in the nation's largest metros during the pandemic. Using monthly time series data for the 50 largest metropolitan areas, the domain host data is merged with the US Census Small Business Pulse Surveys and Chetty et al.'s Opportunity Insights data. Results indicate metros with higher concentrations of businesses with an online presence experienced more positive economic perceptions and outcomes from April to December 2020. This high-frequency, granular data on digital economic activity suggests that digitally enabled small and microbusinesses played an important role in local economic resilience and demonstrates how commercial data can be used to generate new insights in a fast-changing environment.Plain English SummaryNew data show websites were a resource for small business and community resilience in Covid-19. While some studies have shown how digital technologies helped businesses during the pandemic, little research has examined how website use during this time affected communities and their small businesses. Data on the number of domain name hosts (per 100 people) provides a measure of the prevalence of website use in a community. Seventy-five percent of these domain name sites are commercial, primarily small, and microbusinesses. We examine economic outcomes for the 50 largest metros from April to December 2020, including credit and debit card spending, small business revenues and openings, and the perceptions of small business owners. With monthly data and across multiple measures, we find that this digital economic activity positively affected the resilience of communities and small businesses. These findings suggest that policies for an inclusive and effective recovery should consider support for digital skills and effective website use for small and microbusinesses.

Rural Entrepreneurship as a Sustainable Livelihood Alternative for the Returnee Migrants: Reviewing the Potentials and Challenges

During the Covid-19 pandemic, the earnings of migrant workers decreased due to joblessness and the lack of new work. Against this backdrop, this paper aims to look at the potential of rural entrepreneurship as a form of financially managing the insecurity and vulnerabilities caused by the pandemic. The literature review shows that although international migration has played a crucial role in economic growth in Bangladesh, remittance has been underutilized and not translated into investment usually. The qualitative research methodology of the paper followed the thematic analysis design method to apprehend and explain the research findings. The findings of the study indicate that despite several challenges, rural entrepreneurship can indeed be a sustainable livelihood alternative that improves the resilience of returnee migrants. The right kinds of skillsets and adequate measures to tackle the infrastructural and socio-political barriers can boost rural entrepreneurship appreciably. Other recently published research works also highlight that entrepreneurship can be an effective tool for the reintegration of returnee migrants. This paper concludes that the sustainability of rural entrepreneurship will require engaging local development organizations, forming incubation and support centers, and organizing peer support groups.

Were small businesses more likely to permanently close in the pandemic?

Previous estimates indicate that COVID-19 led to a large drop in the number of operating businesses operating early in the pandemic, but surprisingly little is known on whether these shutdowns turned into permanent closures and whether small businesses were disproportionately hit. This paper provides the first analysis of permanent business closures using confidential administrative firm-level panel data covering the universe of businesses filing sales taxes from the California Department of Tax and Fee Administration. We find large increases in closure rates in the first two quarters of 2020, but a strong reversal of this trend in the third quarter of 2020. The increase in closures rates in the first two quarters of the pandemic was substantially larger for small businesses than large businesses, but the rebound in the third quarter was also larger. The disproportionate closing of small businesses led to a sharp concentration of market share among larger businesses as indicated by the Herfindahl–Hirschman Index with only a partial reversal after the initial increase. The findings highlight the fragility of small businesses during a large adverse shock and the consequences for the competitiveness of markets.Plain English SummarySmall businesses were more likely to close permanently during the early stages of the COVID-19 pandemic than large businesses. Although they rebounded strongly thereafter, market concentration remains higher than before the pandemic. We obtain these results from analyzing administrative firm-level data covering all businesses filing sales taxes in California. Our analysis contributes to research by demonstrating the fragility of small businesses during a crisis relative to large businesses. Our findings imply that small businesses may need additional support given the trend toward purchases from large online retailers.

The productivity impact of short-term labor mobility across industries

The restrictions on labor mobility imposed in the COVID-19 pandemic heighten the need to review in detail the role of mobility in improving productivity and fostering economic growth. In this study, we carry out a comprehensive analysis of business visits (BVs) understood as a productivity-enhancing intrapreneurial strategy, using the most extensive set of data available, covering 33 sectors and 14 countries during the period 1998–2013. Our database merges unique information on expenditures on BVs by sector, country, and year, sourced from the US National Business Travel Association, with OECD and World Bank productivity data. We find that BVs raise labor productivity in a significant way, but short-term labor mobility exhibits decreasing returns, being more crucial in those firms, sectors, and countries characterized by less mobility and by lower productivity performances.Plain English SummaryCOVID-19 has imposed restrictions on labor mobility and this turns out to be relevant for productivity and economic growth. Business visits (BVs) are a proper proxy (unique information is taken from the US National Business Travel Association) to measure short-term mobility. Sectoral data in 14 countries over the period 1998–2013 are used. Results do reveal that BVs have a positive impact on labor productivity. However, this effect is more relevant in those sectors and economies at a lower stage of productivity evolution, i.e., the lower the initial productivity level, the larger the effect of BVs on productivity. Therefore, BVs play a relevant role in sectors and countries lagging behind in terms of productivity. Policy makers should foster, in the post-pandemic recovery, short-term labor mobility through adequate incentives and tax exemptions, particularly in those sectors where BVs are less frequent and where productivity growth is below the average.

The impact of the COVID-19 pandemic and pandemic-related policies on new firm creation: an analysis of the Italian case

This work contributes to disaster research by exploring the impact on new firm creation of the COVID-19 pandemic and the pandemic-related policies. We develop hypotheses on the individual and combined effects of pandemic severity and public policies aimed at controlling the spread of the disease (shutdown policies) or protecting the economy from its negative consequences (demand stimulus and firm support policies). Then, we test these hypotheses using data on Italy in the first and second 2020 pandemic waves. Results show that pandemic severity negatively affected new firm creation during the first wave. Shutdown policies had negative effects too, especially in the regions where the pandemic was less severe. The effects of demand stimulus policies were positive and stronger the less severe the pandemic was while the impact of firm support policies was negative in the regions where the pandemic was more severe. All these effects vanished in the second wave.Plain English SummaryDisasters cause slowdowns in new firm creation that disaster recovery policies may aggravate or alleviate. Our analysis of the effects of the COVID-19 pandemic in Italy reveals that this major disaster resulted in a large drop in new firm creation rates. During the first pandemic wave, the drop was concentrated in the regions where the pandemic was more severe. Examining the effects of the shutdown policies implemented to contain the spread of the disease and the measures designed to protect the economy provides useful guidelines for policymakers. First, we show that shutdown policies inhibit new firm creation. Policymakers can however alleviate this negative effect by implementing less strict measures in the areas not severely affected by the disaster. Second, despite we understand that policymakers need to provide relief to existing firms in the most affected industries to avoid business failures, we indicate they should simultaneously invest in stimulating demand in these industries to sustain also new firm creation.

Has COVID-19 pushed digitalisation in SMEs? The role of entrepreneurial orientation

PurposeThe authors' aim is to investigate if entrepreneurial orientation (EO) has a role in interpreting an external crisis, such as COVID-19, as an opportunity for investing in digital transformation.Design/methodology/approachThe authors undertook multiple case study research on the digital transformation of seven "Made in Italy” SMEs and proposed a conceptual framework that sees an external stimulus (e.g. the pandemic) as a driver of the digitalisation, filtered by the entrepreneurial orientation of SMEs.FindingsThe authors' results show how EO deals with the changing environment and helps address the market opportunities related to digitalisation.Research limitations/implicationsThis study contributes to the existing literature on EO and digital transformation of SMEs, creating a new model for forthcoming studies on this topic. In addition, interesting insights are offered on the role of EO to promote the introduction of digital transformation in SMEs operating in the "Made in Italy” sectors.Practical implicationsThis study shows the role of EO as a reactive characteristic during a crisis. Thus, the authors' suggestion to SMEs is to develop their EO as a part of the strategic orientation. In addition, this work encourages policymakers to invest in the promotion of specific interventions aimed at supporting entrepreneurs in enhancing their capacity to effectively manage digital transformation.Originality/valueIdentifying the most important triggers of digitalisation in times of crisis remains an underexplored area of research. Thus, this study adds value to both digital transformation and entrepreneurial orientation topics.