The economyThe Coronavirus Crisis: A Catalyst for Entrepreneurship
Throughout human history, crises have been pivotal in developing our societies. Pandemics have helped advance health-care systems, wars have fueled technological innovations and the global financial crisis helped advance tech companies like Uber and Airbnb. The present coronavirus pandemic will arguably not be an exception; entrepreneurs can be expected to rise to the challenge. Businesses play a key role both in helping society get through an economic crisis and in creating innovations that shape society after a crisis. So one key question is: how will the ongoing crisis influence future society? While it’s hard to predict the future, we can develop an understanding of what is ahead by analyzing current trends. It’s clear the post-pandemic future will be different. What’s happening during the crisis will have a lasting impact on society. Current signs of entrepreneurial initiative and goodwill give us some cause for optimism. In the words of Stanford economist Paul Romer: “A crisis is a terrible thing to waste.”
Throughout human history, crises have been pivotal in developing our societies. Pandemics have helped advance health-care systems, wars have fueled technological innovations and the global financial crisis helped advance tech companies like Uber and Airbnb. The present coronavirus pandemic will arguably not be an exception; entrepreneurs can be expected to rise to the challenge.
Businesses play a key role both in helping society get through an economic crisis and in creating innovations that shape society after a crisis. So one key question is: how will the ongoing crisis influence future society?
While it’s hard to predict the future, we can develop an understanding of what is ahead by analyzing current trends.
Businesses Show Citizenship, Resourcefulness
The global pandemic and associated policies restricting people’s movements have caused major disruptions to many businesses. We’ve already observed major shifts in business practices. Working from home is the new norm, while many personal meetings and conferences have been replaced by video meetings and other virtual forms of communication.
Some businesses — especially restaurants, tourism operators and movie theatres — have come to a complete stop. Others, like manufacturers of consumer goods, have seen a sharp drop in demand as consumers are either unable to visit shops or lack the spare cash for nonessential purchases.
The short-term impact is likely different from the long-term impact. Consumers may simply postpone the purchase of a new car or washing machine — but they may not want to buy the same types of services in the future.
Many firms have initially responded to the crisis not only by cutting costs but by engaging in new entrepreneurial activities. Around the world, we see examples of resourceful responses to the crisis: Distilleries in the United States, Canada and Australia started to produce hand sanitizers.
Fashion businesses like Zara, H&M, Hedley & Bennett and Trigema are producing protective gear, gowns and other supplies for hospitals.
Airline crews, including those employed by SAS, are being retrained to help out in hospitals.
The shortage of ventilators in hospital intensive-care units has not only motivated health-care companies such as Philips and Draeger to increase production, but also triggered Canadian automotive suppliers and car brands like Ford to produce the life-saving medical devices.
These examples show two common features.
First, companies are showing citizenship. They realize they have an interest in societal well-being, and that they may need to give up short-term profits for the benefit of society. Second, they are showing resourcefulness. They’re developing creative responses to emerging challenges with scarce resources.