The current pandemic has changed the way entrepreneurship will operate during the next decade. Although many companies failed to survive, the latest crisis – like many others in the past – has given rise to new entrepreneurial activity. The question is what could be done to enhance the entrepreneurial environment to benefit from societal diversity, gender inclusion and ecology.
Crisis as opportunity
Pandemics have played a pivotal role in economic development throughout history. The so-called Spanish Flu of 1918 killed between 17-100 million people worldwide; at the same time, it increased economic growth across much of the United States by pushing states toward more capital-intensive types of production. In the 21st century, the SARS pandemic of 2002-2004 catalyzed the growth of e-commerce in Asia and facilitated the rise of Alibaba.
The current pandemic is no exception. We have already seen tectonic changes caused by the unprecedented scale of disruption during the past year. Today, the shift to remote work, automation, and the transition to a circular economy brought major changes to the way we do business. As highlighted in the World Economic Forum’s Future of Jobs Report 2020, digital platforms will push 50 percent of all employees towards reskilling in the next five years.
Businesses play a significant role in aiding society through an economic slump. External pressure encourages companies to step out of their comfort zones to become creative problem-solvers and rediscover their entrepreneurial grit. During the latest crisis, Americans have been starting new businesses at the fastest rate in more than a decade. There have been 3.2 million applications for employer identification numbers (EIN) in the first ten months of 2020, compared to 2.7 million during the same period in 2019. Entrepreneurs demonstrate high levels of resourcefulness when adapting their businesses to novel economic conditions. These new companies can be catalysts for robust economic growth, while their resilience in times of crisis gives them a strategic advantage over their competitors in the post-pandemic economy.
As we witness new technological advancements, business must pay renewed attention to the way these developments impact society. In the 18th century, moral philosopher and a pioneer of political economy Adam Smith stated that businesses and entrepreneurs owed their societies a duty. This argument is essential in light of the ongoing Fourth Industrial Revolution and the rise of artificial intelligence (AI).
According to Marcus Casey, a nonresident fellow at the Brookings Institution, “advances in automation and AI have the potential to magnify many of the challenges currently facing our society: income and wealth inequality, the concentration of corporate power, reduced mobility upward, and persistent disability, gender, and racial discrimination.”
Supporting the hardest-hit
After the prolonged struggle with COVID-19, it might be the perfect time to start investing in better and more fair business ecosystems. Acknowledging those who lost and suffered the most during the pandemic is a significant step in enhancing sustainable and inclusive entrepreneurship. Stay-home policies, lockdowns and restricted global mobility have dramatically impacted tourism operators, airlines, restaurants and many other sectors. Overall, twice as many companies globally defaulted on their debt payments at the pandemic height in July 2020 than in all of 2019.
Employees of the gig economy are also among those hardest hit by the pandemic. According to one survey, almost 70 percent of gig workers said they now have zero income, only 23 percent have some money saved, while 89 percent are currently looking for a new income source.
Women have likewise seen a greater deal of hardship during the pandemic. According to the World Economic Forum’s Global Gender Gap report, it will take 95 years to close the gender gap in political representation. And progress in economic participation has regressed because of the pandemic. The deteriorating situation has forced gender parity to a lowly 57.8 percent, meaning it will take 257 years before gender parity can be achieved. All these hurdles pose a unique challenge to aid those who suffered and build a more equitable and resilient economic future.
Investing in better business
Aiding businesses post-pandemic requires major changes to economic policies. There is no single roadmap and each country’s situation is unique, but it is vital to adopt policies that support businesses which show a long-term perspective. In that regard, family-owned businesses have outperformed non-family owned competitors during the pandemic. Similarly, the stakeholder business model has shown to be more competitive in the long-term. Businesses that depend on stakeholder expectations will care more about the environment and settings where they operate as ESG concerns go maintsream.
The rise of big tech poses a significant challenge to small and medium businesses (SMBs). As we increasingly rely on digital technologies, SMBs will need support to survive in the competitive digital environment. According to research, SMBs account for two-thirds of employment, contribute 35-50 percent of national GDP and drive more than two-thirds of job creation globally. This is why not only governments but big tech companies should support SMBs in their digital economy operations.
It is important to continue empowering the gig economy. Lockdown measures and stay-home policies made people accustomed to purchasing services online, creating an abundance of business opportunities for gig workers. The best way to capitalize on such opportunities is to increase access and efficiency to cross-border payments while honestly addressing structural inefficiencies, corruption and bureaucratic barriers.
The best way to start is to acknowledge that there is no easy solution to improving the post-pandemic entrepreneurial ecosystem. Developing effective measures will require a systems-level approach on a global scale and enough political will to confront existing orthodox capitalistic models that are solely driven by for-profit motives.
The current pandemic gives much-needed momentum to the idea that accountability, sustainability, and inclusiveness can only be achieved by prioritizing our actions and policies together for the most significant long-term economic good.
The world has witnessed many epidemics that had a major impact on global economic development. The COVID-19 pandemic presents a valuable opportunity to help businesses on the path to sustainable and inclusive practices that will lay the groundwork for a more equitable post-pandemic economy.